Restaurants Seek Relief from Restrictive Alcohol-to-Food Ratio Rules

In Virginia, restaurants with mixed-beverage licenses face a strict regulation that limits the ratio of alcohol sales to food sales. This rule, enforced by the Virginia Alcoholic Beverage Control Authority, has become a source of frustration for many restaurant owners who argue that it is too restrictive and negatively impacts their businesses. A recent lawsuit filed by a Portsmouth restaurant aims to challenge the legality of this regulation, known as the MBAR (Minimum Beverage-to-Food Sales Ratio).

Challenging the Status Quo: Restaurants Seek Regulatory Relief

The Restrictive Ratio: A Burden on Restaurants

Under the current MBAR regulations, restaurants with mixed-beverage licenses cannot have more than 55% of their sales coming from alcohol, excluding beer and wine. This means that for every dollar spent on liquor, the restaurant must generate 82 cents in food sales to meet the required ratio. William Baldwin, who owns several restaurants in the Tidewater region, including the Edge and Twist Martini, argues that this ratio is too restrictive and forces them to lose money every year to comply with the regulations.

The Uneven Playing Field: Exemptions for Certain Establishments

Baldwin points out that the MBAR rules do not apply equally to all establishments that serve alcohol. Amphitheaters, casinos, and breweries are exempt from the ratio requirements, which he believes creates an unfair advantage for these businesses. "Most people don't realize amphitheaters don't have to meet the ratio. Casinos don't have to meet the ratio. They have a whole separate license where they don't have to file an MBAR," he explained.

The Prohibition-Era Origins: Questioning the Relevance of the MBAR

According to Louis "Mike" Joynes II, the attorney representing the Portsmouth restaurant Fish & Slips Marina Raw Bar & Grill in the lawsuit, the MBAR regulation has its roots in the Prohibition era. "They didn't want, they being the powers that be, the government, did not want to have bars, saloons, speakeasies. They wanted to eliminate those and the way they did it was by coming up with the need to serve food at the same time you're serving alcohol, which is why Virginia does not have a bar. At least they didn't," Joynes explained. He believes that the MBAR requirement is no longer necessary and impacts the freedom of restaurants to set the price of their goods.

The Lawsuit: Challenging the Legality of the MBAR

The lawsuit filed by Fish & Slips Marina Raw Bar & Grill against the Virginia ABC and Governor Glenn Youngkin aims to address the perceived unfairness and outdated nature of the MBAR regulations. Joynes, the attorney, stated that the "ultimate goal is to get rid of the MBAR" and that they believe the regulation is an "illegal tax" being forced on Virginia restaurateurs.

The Impact on Restaurants: Struggling to Maintain Profitability

The strict MBAR requirements have forced many restaurants to adopt strategies to cope with the burden, such as lowering drink prices. Baldwin explained that this money could have been used to offer better pay and employee benefits, ultimately impacting the overall profitability and sustainability of these establishments. The lawsuit seeks to address the challenges faced by restaurants in maintaining a delicate balance between alcohol and food sales to comply with the regulations.

The Broader Implications: Questioning the Rationale for the MBAR

The lawsuit also raises questions about the underlying rationale for the MBAR regulations. Joynes argued that the original goals of the regulation, which were to eliminate bars and speakeasies, are no longer relevant in the modern era. He believes that there is no longer a need for the MBAR requirement, as it does not serve the intended purpose of public safety.The outcome of this lawsuit will have significant implications for the restaurant industry in Virginia, potentially paving the way for a more equitable and flexible regulatory environment that better supports the success and profitability of these businesses.