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Emergency Amendments to TABC Rule 33.5: When a Food and Beverage Certificate is Required Under the New 8/25/20 Rules

Author: Jamison Walters

Contributing editor: Harrison Long.

We have seen many different questions and understandable confusion regarding the Industry Notice issued August 25, 2020 (the “Notice”)[1].

Governor Abbott’s reopening protocols under Executive Order GA-28[2] allow “bars or other similar establishments” that have not offered dine-in services to re-open under the same rules as restaurants permitted to remain open—provided they now offer food service that exceeds alcohol sales.

The 51% threshold is the key qualifier. And technically, “bars or other similar establishments” are still required to be closed under paragraph 7 of Executive Order GA-28. The TABC’s guidelines are essentially allowing a bar, brewery, brewpub, etc. to be reclassified as a restaurant and permitted to be open under paragraph 6 of GA-28.

The Notice is clear on certain requirements, such as maintaining a permanent designated area of the business to offer food for sale—and that this does not have to be a commercial kitchen. Food trucks do qualify as a “designated permanent area.”

The Notice offers two solutions to apply to the TABC as a restaurant to reopen:

  1. Apply by submitting an Alcohol Sales Reporting Affidavit
    1. Retailer Affidavit (Brewpubs)
    2. Producer Affidavit (breweries, distilleries, or wineries that offer tasting/tap rooms)
  2. Apply for a Food and Beverage (“FB”) Certificate (available only to Brewpubs and Retailers)

One major question that remains is whether it is advisable, or required, to apply for the FB Certificate as opposed to using one of the other inexpensive affidavit options.

For Producers, the answer is simple—use the affidavit. Regulations do not allow an FB Certificate to be issued to any business that holds those producer licenses. The Producer’s Affidavit, by default, allow the applicant to affirm that a modified business model will maintain alcohol sales below 51% going forward—i.e. projected numbers.

For Brewpubs, however, the affidavit requires that the applicant affirm that the aggregate sales from April 2020 to August 2020 were below the 51% threshold. Some operations, which already had food sales in excess of alcohol, and were without an FB Certificate, were operating as restaurants and never forced to close completely. This is not the case for many others who would be disqualified under this affidavit.

This is where the Food and Beverage application is beneficial--for those that would not qualify via affidavit, the FB Certificate application allows the TABC to look at the business’ projected sales numbers and ratios.

Normally, the FB Certificate allows an alcohol to non-alcohol sales ratio of 60/40. Do not fall into this trap in thinking that your business may operate at 60% alcohol sales. Executive Order GA-28 controls, and it says that to reopen and stay open, 50/50 is the allowable ratio (note, it may be safer to maintain 49/51 or less to make compliance abundantly clear to future TABC auditors) . The TABC will issue a FB Certificate if the application states that future sales will be 51%-60% alcohol—but the bar/restaurant will not be allowed to open under GA-28.

For example, if a Brewpub received a permit in the past but has yet to open—they would qualify under the affidavit option and not be required to use the FB Certificate. But that Brewpub must maintain the other food offering requirements upon its opening, and also may garner unwanted attention from the general public, resulting in TABC reporting. In that instance, a FB Certificate may be advisable even if the Brewpub could use the affidavit to qualify as a restaurant.

Additionally, if the Brewery or Brewpub has an agreement with a food truck, it does not have to be an exclusive agreement. Food trucks can rotate between different establishments, so long as the establishment has an agreement with any food truck selling food at the location and is stating specific days and times in which it will be there. Theoretically, there could be a different food truck at an establishment every day, but each one would need to specify the day of the week and hours of operation.

Hopefully, this helps provide guidance on how to navigate some of the new guidelines. As always, I am happy to consult on an individual basis—as no businesses or locations are the same.