Wet-dry election may not help private club restaurants

Remember all those restaurants that said their lives would be so much easier — and their booze prices so much lower — if Dallas voted to eliminate private club restrictions in November’s wet-dry election? That won’t happen for a significant number of neighborhood restaurants, which will keep their private club permit and continue to ask you for your driver’s license.

That’s because restaurants with a private club license that want to be rid of it will have to apply for a mixed beverage license in the wake of the election. They won’t be automatically upgraded or get a special exemption because they already have a private club license. State law doesn’t work that way. Instead, they will not only have to go through another round of costly and time-consuming paperwork with the Texas Alcoholic Beverage Commission, but will have to pay more than $6,500 in license fees to get a license that they basically already have.

In other words, a fair number of restaurants (no one is quite sure how many, but I’m told it’s a lot more than most people thought) won’t get a new license. It’s too expensive, so they’ll stick with the private club license that they said was so bad for their business. How this happened and what it means after the jump:How did something that seemed so straightforward turn out to be so botched? I have calls in to a variety of people in the restaurant business, including Edwin Griffin of the Greater Dallas Restaurant Association, which supported eliminating private clubs in the referendum. I’ll update this if I hear from them. Also, almost no one I have talked to wanted to be identified for this story; such is the fear of the TABC.

The first thing to understand is that this is not the TABC’s fault, and one former agency official said the TABC understands that restaurateurs may be angry about the licensing situation. But there is very little it can do.

That’s because the TABC enforces state law, and state law says a private club license is different from a restaurant mixed beverage license. The differences may seem silly to the rest of us (technically, a private club doesn’t sell liquor, but serves it), but the law is the law. It’s not unlike driver’s licenses. Just because you have a license to drive a car doesn’t mean the state will automatically give you a license to drive a semi. You need to apply for a commercial license.

The question, then, is why no one thought to mention this to Dallas restaurant owners in the run-up to the election. No one I talked to said they knew of the licensing situation. The cynical among us might say that’s because the companies that paid for the pro-wet campaign, mostly Kroger and Walmart, really didn’t care about restaurants and didn’t want to confuse the issue.

Yes, but some of you are thinking, why does every restaurant need a mixed beverage license (which allows restaurants to sell spirits as well as wine and beer)? Why can’t a pizza restaurant, where selling cocktails isn’t important and which can’t afford the $6,500-plus for the mixed beverage permit, just get a beer and wine license? The beer and wine permit is less than half the price, and it’s probably all they need.

Because the referendum was specifically worded to exclude that option, which is a common practice in wet-dry elections, says Carolyn Beck of the TABC. “That’s usually the biggest surprise after these elections,” she says. “They don’t realize they can’t get a beer and wine permit”.

In other words, Dallas restaurants in formerly dry areas that don’t want to be a private club have to get a mixed beverage permit, even if they don’t need it. Or, as the former state official told me, “I know anecdotally that the agency has been and is struggling with trying to figure out how to make this transition process as easy as possible without undue damage to the law and the public interest protected by that law.”

And if that’s not silly enough, consider this: Restaurant A, which has been open for years and has already paid for a private club license, will be at a competitive disadvantage to Restaurant B, which opened after the wet-dry election. Restaurant B will pay less for its mixed beverage license than Restaurant A paid for its private club permit, won’t have to pay the surcharge that Restaurant A pays to buy booze from its distributor, and won’t have to keep the private club paperwork.

Or, to be cynical again, Restaurant A is being penalized for being successful while it operated in a more restrictive business environment. And who said this election was going to make our liquor laws more rational?


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