How to Get a Restaurant Liquor License

/ Foodservice Tips, Restaurant Tips / April 1

How to Get a Liquor License for Your Restaurant

Because of its long shelf-life, low labor costs and high customer demand, selling alcohol is very profitable for restaurants. In fact, the average profit margin on alcoholic drinks is 60-70%, far above the 2-6% profit margin for restaurants as a whole. 

Although selling alcohol is very profitable, many business owners don’t know how to get a restaurant liquor license. The process varies by state, so this guide will explain the general process of getting a liquor license so that you can sell alcohol and increase profits.

Types of Liquor Licenses for Restaurants

It’s important to realize that there is more than one type of liquor license, each type varying in costs and restrictions. Although each state is different, the general types of licenses include:

Beer and Wine Liquor License 



  • Allows your restaurant to sell beer, wine, cider and malt liquor

  • No hard alcohol like vodka, rum and mixed cocktails.

  • License may cap alcohol sales to less than 50% of total sales.

  • In most states, this is the least expensive license.


Beer and Wine Liquor License

A beer and wine liquor license allows your restaurant to sell beer, wine, cider and malt liquor.


Restaurant Liquor License 



  • Also known as an “all-liquor license.

  • Permits restaurants to sell not only wine and beer but also hard alcohol.

  • Limits alcohol sales to about 40% of total sales, sometimes up to just under half of all sales.

  • More expensive than a beer and wine liquor license


Tavern Liquor License



  • Allows the sale of beer, wine and spirits (same as restaurant liquor license).

  • However, there’s no limit on alcohol sales.

    • Alcohol sales can be more than 51% of total sales.



  • If a restaurant’s alcohol sales exceed the restaurant liquor license limit, the establishment has to upgrade to a tavern liquor license.

  • Usually the most expensive license of the three


Liquor License Cost for a Restaurant

There are a lot of costs when opening a restaurant, and the liquor license is one of them. Points to consider include:


  • Liquor license costs vary greatly by state – Some liquor licenses cost as little as $100 in Alabama and Alaska, while a license in California can cost as much as $16,000.

  • Fees can vary within states, too – In New York state, a restaurant wine and beer license (RW 341) costs $960 in the cities of Buffalo and Rochester but only $480 in the cities of Albany and Niagara Falls.

  • Less restrictive licenses are more expensive – A New York state on-premises beer, wine and hard liquor license for restaurants (OP 252) can cost up to $4,352, significantly more than the most expensive wine and beer license.

  • Consider legal fees – As you can see, obtaining a liquor license isn’t a straightforward process, so hiring a lawyer can definitely help. Legal help can be expensive, so plan accordingly.


All Liquor License

A tavern license, also known as an “all liquor license,” allows your restaurant to sell wine, beer and spirits.


Restaurant Liquor License Requirements 

In addition to paying a fee, you have to apply for a license. Although it varies by jurisdiction, the basic requirements to apply for a restaurant liquor license may include:


  • Photo ID

  • US Citizenship or Permanent Residency

  • Be 21 years of age or older

  • Tax ID Number

  • Proof of Owners (i.e. certificate of incorporation)

  • Lease Agreement / Title to Property

  • Photos of the restaurant

  • Business plan, including menu

    • If applying for a license that caps alcohol sales, you may have to show that your business will not rely primarily on alcohol sales.




Liquor License Restrictions

Even if you meet the requirements to apply for a restaurant liquor license, restrictions may apply:


  • Some cities deny liquor licenses for restaurants near churches and schools – For example, an IdahoPress.com article details the story of a restaurant that wanted to upgrade to an all-liquor license but was denied because of its proximity to a church.

  • Some states limit the total number of liquor licenses – According to a Bizfluent.com article, California restricts the number of all-liquor restaurant licenses to one per every 2,000 residents in a county, forcing restaurateurs to opt for beer and wine licenses.

  • Secondary market liquor licenses can be bought from other restaurants – If your state limits the number of liquor licenses, you can purchase a liquor license from an existing restaurant or one that is going out of business.

    • NOTE: Be aware that the restrictions will be the same (i.e. if you buy a beer and wine license, you can’t sell hard alcohol).



  • Restaurateurs may be disqualified for personal reasons – Legal issues or other characteristics can disqualify applicants from having a license. For example:

    • New York – Applicants may not be police officers.

    • Chicago – Applicants may not have any outstanding debt to the City of Chicago.

    • Texas – Applicants may not have received a felony conviction in the last five years.




Multiple Licenses

Depending on your location and business needs, you may need more than one license:


  • Most states have separate licenses for on-site and off-site consumption – For example, California’s Type 21 license, primarily for liquor stores, allows the sale of packaged beer, wine and spirits that are consumed offsite, while the Type 48 license is a general “all-liquor” license for restaurants.

    • So, if you want your restaurant to sell packaged alcohol for guests to consume in a different location, you will need more than one license.





  • In order to sell alcohol at certain times, you may need multiple licenses – For instance, if you are in Texas and you want to serve mixed drinks late at night, you will need a Mixed Beverage (MB) and a Mixed Beverage Late Hours (LB) permit, totaling over $7,000.


How Long Does it Take to Get a Liquor License?

In a YouTube video, Texas lawyers Hernandez & Associates say that after all the documents are signed and they receive payment, it usually takes about 90 days to get a liquor license approved. 

Since it takes a few weeks to a few months to have your restaurant’s liquor license approved, be sure to start the process well in advance of your opening day.

Liquor License Renewal

Just like a driver’s license, your restaurant’s liquor license has to be renewed. When it comes to liquor license renewal, there are a few things to keep in mind:


  • Liquor licenses must be renewed every 1 to 3 years – It varies by state, so be sure to check.

  • Liquor license renewal fees are much lower than the initial fee – For example, obtaining a California liquor license can cost up to $16,000, but renewing a license is significantly less, ranging from $50 to $895.


Losing A Liquor License

Unfortunately, it is possible to lose a liquor license. Your restaurant may lose its right to sell alcohol by:


  • Serving people under age 21

  • Allowing unruly crowds to form in your establishment

  • Being convicted of a felony

  • Overserving customers

  • Not reporting illegal activities at your restaurant (i.e. drug dealing)


Summary

Selling alcohol can be very profitable for your restaurant, but you need a license to do so. Although you will need to submit an application and pay a fee, the exact process and cost varies by state. Obtaining a liquor license can be a bit of a hassle, but it is worth the effort if you want to sell high profit margin drinks and increase your profits.


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