Post written by: Alex Cejer
Over the past few years, there has been a rising trend across the country that permits patrons to bring their own wine, beer or cocktails into restaurants. This could range from “Mom and Pop” style restaurants in your local town, to a fine dining Flemings Steak House, both of which are trying to remain competitive in this industry.
So what is causing this trend that is estimated to grow 10% annually? It’s largely believed to be a result of the downturn in the economy.
BYOB Regulations and Insurance Liabilities
Beginning in 2008, more restaurants opted to allow patrons to bring their own beverages; saving restaurants the expense of obtaining a liquor license (which can cost up to $70,000 in some cities) and consumes the average 300-400% markup on alcohol. To recoup some of the expenses lost by customers not buying alcohol, restaurants usually have a corkage fee ranging from $5 to $50.
With BYOB establishments exploding in popularity, restaurants and agents are in an interesting position in terms of insurance coverage and legality. In terms of regulations, this trend is still so new that some states and/or municipalities have yet to adopt any BYOB regulations. And when regulations are in place, there is no consistency amongst states or even among municipalities within the same state.
As you can see below, here are two states that show how different these regulations can be:
“BYOB may be prohibited or highly restricted by the local liquor licensing authorities. Because each municipality may have different rules, a retail licensee is strongly recommended to confer with the local licensing authority prior to allowing BYOB at their business. As a general rule, the licensee and/or its agents must avoid serving, storing, or handling alcoholic liqour in any manner.”
“Bringing wine to licensed premises is prohibited, except that it is legal to bring wine that you have manufactured yourself into a restaurant. Taking BYOB wine to unlicensed restaurants is apparently not prohibited. However, an unlicensed restaurant cannot pour out the wine, or ‘serve’ it in any way. Based on a strict interpretation of the law, and the length of the licensing procedure,a guest cannot take his wine into an establishment while the establishment is applying for a license.
It appears, but it is not certain, that corkage fees are technically prohibited.
Customers may take a partially finished bottle back with them. Indiana does allow re-corking by law, but a number of experts feel that the liability issues around letting consumers have re-corked bottles of wine back are still unresolved.”
In addition to regulatory compliance, there are insurance implications for restaurant owners with this new BYOB trend. It is important for restaurant owners offering BYOB service to work with their independent agent to determine the best possible solution for their insurance needs.
Do you run a BYOB establishment? What were the perceived benefits that led you to selecting this business model for your operation? Feel free to leave a comment in the section below!