How Does a Restaurant Properly Calculate Its Food-to-Liquor Ratios?

How Does a Restaurant Properly Calculate Its Food-to-Liquor Ratios?

Food to Liquor Ratios

Q:  How do I properly calculate my food-to-liquor ratios under Virginia ABC Law?  I have a restaurant with both a beer/wine license and a mixed beverage (distilled spirits) license.  I know that 45% or more of my sales must be food.  I read the code and I still don’t understand it.  Can you tell me in plain English how I must calculate my Mixed Beverage Alcohol Ratio?

A:  The Mixed Beverage Alcohol Ratio is, indeed, confusing.  I think the Code is flawed in its explanation.  Here is the Code verbatim:

§ 4.1-210. Mixed beverages licenses.

A. Subject to the provisions of § 4.1-124, the Board may grant the following licenses relating to mixed beverages:

1. Mixed beverage restaurant licenses, which shall authorize the licensee to sell and serve mixed beverages for consumption in dining areas and other designated areas of such restaurant. Such license may be granted only to persons (i) who operate a restaurant and (ii) whose gross receipts from the sale of food cooked or prepared, and consumed on the premises and nonalcoholic beverages served on the premises, after issuance of such license, amount to at least 45 percent of the gross receipts from the sale of mixed beverages and food.

This is confusing.  For example, in one part it says food includes “nonalcoholic beverage” sales and in another it does not.  On top of that, it’s just written in a confusing way.

In practice, here is how ABC calculates it.

“Food” means food and nonalcoholic beverages.  “Mixed Beverages” means liquor.  It does not include beer and wine.  So, here is the formula you need:

Food / (Food + Mixed Beverages) = 45% or more

In other words, take your gross receipts from food and nonalcoholic beverage sales and divide it by your gross receipts from food, nonalcoholic beverage sales, and mixed beverage sales.  The resulting figure must be 45% or more.  What do you do with your beer and wine sales?  Nothing.  This liquor ratio doesn’t consider beer and wine sales at all.

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