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Restaurants, bars, breweries scramble to reinvent themselves to get around Abbott's bar shutdown
10 August 2020
(Christen Rowan, Nightcap)
Sign outside NightCap in downtown Austin this summer.
Hundreds of Texas bars and restaurants are scrambling to change how they operate, maneuvering through loopholes that will allow them to reopen after being closed by Gov. Greg Abbott's latest shutdown targeting bars.
Abbott has shut bars down twice since the coronavirus pandemic emerged in Texas. The first time bars were swept up in a total lockdown of statewide businesses. But the second time, on June 26, Abbott singled bars out while allowing virtually every other kind of business in Texas to stay open.
But other operations such as restaurants that sell a lot of booze, wineries and breweries were ensnared in the same order and also forced to close because alcohol sales exceeded 51% of total revenue, meaning they were classified as bars.
"Generally everyone has a common sense understanding: 'What is a bar? And what is a restaurant?' I think that 51% rule is so broad that it actually picks up or encompasses businesses that we would normally think of as really being restaurants," said State Rep. John Wray, R-Waxahachie, one of more than 65 lawmakers who signed a letter asking Abbott to update his order's definition of a restaurant.
Wray gave the example of a burger restaurant, where a patron might buy a burger and two beers. Oftentimes, the beer will cost more than the food, but that doesn't make the restaurant a bar, he said.
Emily Williams Knight, Texas Restaurant Association president, estimates that about 1,500 restaurants ranging from steak houses to coffee shops that sell wine were "inadvertently" forced to close when Abbott shut down bars, translating to about 35,000 lost jobs in the state.
The Texas Alcoholic Beverage Commission responded to outcry from the service industry with new guidance in a July 30 notice allowing businesses to either demonstrate that they recently had less than 51% alcohol sales or use alcohol sales projections and apply for a Food and Beverage Certificate, documentation that allows them to reopen as a restaurant.
The certificate workaround requires the business to have a permanent kitchen. It allows bars and restaurants to use projected sales numbers instead of requiring past sales to determine if alcohol sales exceed food sales.
The TABC received more than 600 requests from existing businesses for Food and Beverage Certificates since Abbott's order took place and granted about 300, according to commission spokesperson Chris Porter. Almost 90 businesses have also requested to update their alcohol sales numbers in an effort to reopen.
The Texas restaurant industry is already struggling, with Knight projecting that up to 30% of restaurants in the state could go out of business.
For those forced to shut down due to the bar order, it can be a death sentence and business owners see these changes as their last hope.
After his Dallas restaurant was closed for a second time, Lava Cantina owner Ian Vaughn knew he'd have to figure out a way to reopen — and fast — for the sake of his more than 100 employees and to save his business.
After three weeks of pursuing various options to reopen, Vaughn updated his sales numbers to include live music ticket sales from concerts, knocking his alcohol sales percentage down to about 39%. This allowed him to resume operations.
"I was highly distressed throughout the entire time," Vaughn said. "I had over 100 people out of work, and I just needed to get my staff back, and I had bills to cover and no idea how we were going to ultimately make ends meet. You feel completely helpless."
Even some traditional bars can reopen using the same workarounds outlined by the TABC — as long as they have, or will obtain, permanent food service facilities.
Justin Kaufman, owner of the El Paso Drafthouse and The Rey Muerto, decided to reopen his bars as restaurants by using future sales projections to get a Food and Beverage Certificate.
Functionally, Kaufman's businesses operate almost the same as before the second shutdown, using the safety measures he implemented when he was first allowed to reopen. He offers the same menus but now requires all patrons to purchase food with their drinks to ensure he stays under the 51% alcohol sales limit. He also hired additional chefs to deal with the increased food sales.
Although he's happy to be open, finding a way through the state's loopholes took time and money.
Kaufman estimates that the entire process, from hiring new chefs to deal with increased food sales to applying for the permits cost him around $10,000.
"I wish things have been a little different, and I wish we'd been taken into consideration," he said. "I've had no choice but to kind of sidestep these situations and do what I got to do to stay open."
However, the option to reopen doesn't work for everyone. Kim Finch, owner of Dallas bars the Double Wide and the Single Wide, said adding just one kitchen to her facilities would cost about $30,000. A grease trap alone would cost $15,000, she said.
After already draining her savings to keep the bills paid while her businesses are bringing in zero income, adding that expense not an option for her.
"You're just in the dark, you know nothing," she said. "No one's mentioned a 'maybe date.' There's not too much longer that we can all just stay closed and keep paying bills."
Breweries also found themselves forced to shut down by Abbott's order, with two-thirds of Texas craft brewery owners predicting that their businesses could close permanently by the end of the year under the current closures, according to a July survey by the Texas Craft Brewers Guild.
Hopsquad Brewing Co., an Austin brewery, reopened as a restaurant using a Food and Beverage Certificate with an onsite food truck serving as its kitchen, General Manager Greg Henny said.
He was lucky, because the brewery already had a food truck on site, Henry said. But he thinks breweries and wineries should have their own classification separate from bars, because they operate differently.
Henny said the guidance from the TABC has been confusing and harmful to breweries. To help other businesses survive the pandemic, the agency allowed "retail and manufacturing businesses" to serve and sell alcohol in a patio or outdoor area that wasn't part of its original designated premises, which some brewery owners took as being able to reopen.
However, the TABC later released a clarification saying that businesses with more than 51% alcohol sales were not eligible.
"The circumstances are constantly changing as a result of which way the winds are blowing with [the TABC]," he said. "It makes us feel frustrated. We're fighting tooth and nail just to stay open, and we've shown time and time again that we can operate safely," he said.
State Rep. Matt Krause, R-Fort Worth, and Texas Legislative Tourism Caucus chairman led the efforts behind the letter sent to Abbott asking for an updated restaurant definition.
"You've got a lot of these establishments — these restaurants — that are kind of in limbo just because of how much alcohol they sell," he said. "Restaurants that have already been decimated by the first initial shutdowns with the pandemic [and] by some people's reluctance to want to come in and eat."
The letter asks that any business with a permit or license from the TABC still be considered a restaurant if it has a permanent kitchen that is operational during all business hours, serves multiple entrees, includes an exhaust hood and fire suppression system, only serves seated customers and follows social distancing protocols.
Abbott did not respond to requests for comment.
Krause said he also believes bars could safely reopen as well.
"I'd like to see them be able to open up under certain restrictions under certain guidelines," Krause said. "They're ready, willing and able to comply with those."
Angela Clendenin, an epidemiologist at Texas A&M University School of Public Health, said that the rise of COVID-19 cases can't be attributed to any one factor, including to bar activity, but instead is a combination of many. However, it is likely bar activity did have an impact on the overall transmission rate and some areas saw declines after their bars were closed and the mask mandate was in place, she said.
The typical bar environment makes it easy for the virus to be transmitted, she said. People are typically in much closer quarters, willing to socialize with strangers and can't wear masks as they're drinking. Even speaking loudly or singing over music can propel droplets further than usual, she said.
Clendenin said to reopen bars safely, it will take consumers making sure that they are holding themselves accountable and bar owners enforcing social distancing, masking and other safety practices.
"But ultimately at the end of the day, bar owners need to be able to provide for their employees and their families," she said. "This is a very difficult time for everybody, but it goes back to individual responsible behavior and I can't emphasize that enough."
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The Texas Alcoholic Beverage Commission issued a notice over the weekend that the governor had expanded alcohol laws and would allow bars to sell mixed drinks in takeout orders, with some exceptions.
The new rules follow a second shutdown of bars—part of an executive order that also reduced restaurant capacity to 50%.
"The COVID-19 crisis has significantly impacted the alcoholic beverage industry, requiring new methods of operation to prevent the spread of the virus," the notice says. "As such, Governor Abbott has waived certain laws so businesses can adapt to new operating conditions."
Establishments can sell mixed drinks to go when:
- Alcohol is accompanied by a food order prepared on the premises
- The container is sealed with tape and placed in a bag sealed with a zip tie
- The beverage is not transported in the passenger area of a motor vehicle
The guidelines specify that the beverages can be transported in the glove compartment, the trunk or behind the last upright seat of the car.
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(Karen Brooks Harper)
Austin sports bar owner Trey Dart was excited—along with the general drinking community—when last month Gov. Greg Abbott told establishments like his that they could sell cocktails to go during the pandemic shutdown.
"We saw it as one form of relief to help restaurants and bars weather this storm," said Dart, who owns Shooter's Billiards, where alcohol accounts for more than half of his sales.
The buzz wore off, he said, when it became clear that the new rules would increase his financial risk and lower his margin. That is a deadly combination at a time when Texas restaurants have seen a 70% drop in business and been forced to lay off at least 60% of the workforce, estimated at 1.2 million in the state, according to the Texas Restaurant Association.
The problem is that the rules, clarified by the Texas Alcoholic Beverage Commission within a few days of the governor's March 18 order, still forbid the sale of drinks mixed in-house to be picked up or delivered.
Restaurants are allowed only to serve cocktail setups—without the alcohol in them—to go. The accompanying alcohol must be in the form of sealed single or double-shot alcohol bottles purchased from the local package store.
So while Austin is excited about Abbott's comment this week that "alcohol-to-go sales" may become a fixture in Texas, the reaction from restaurants is mixed.
For some, like Curra's Grill in South Austin, they've been a lifeline. For others, like Taco Flats, it isn't worth the trouble.
"There's no margin in it," said Simon Madera, founder and owner of Taco Flats, which is not serving the drink kits because he said the demand isn't there.
Dart also saw the kits as a risk he wasn't ready to take because he would have to purchase the single-serve bottles, which cost much more than the large handles used behind the bar.
"Sinking money into additional inventory just doesn't make fiscal sense in this environment," he said.
Neither availed themselves of a law passed last year allowing them to offer mixed drink set-ups through delivery services.
What would truly help restaurants and bars is to be allowed to mix cocktails and pour glasses of wine, seal them at the restaurant and sell them to go, said local attorney Kareem Hajjar, who represents thousands of restaurant and bar locations in Texas, including several hundred in Austin.
That lets them clear inventory from the bar, employ bartenders, raise their margins, and attract more drink customers, he said.
But regardless of what version he supports, if any, Abbott can't change the alcoholic beverage code by himself—this is why his much-celebrated Tweet included the hashtag #txlege—so any permanence would require the act of a legislature that is not historically prone to quick changes to the code.
Alcohol-to-go sales can continue after May 1. From what I hear from Texans, we may just let this keep on going for… https://t.co/w8Nw1V91Lj— Greg Abbott (@Greg Abbott) 1588130317.0
Some restaurants have found a way to profit from the setups, however. Jorge Garcia, the founder of Curra's, says the restaurant sells close to 150 to-go margarita set-ups per day at about $10 each.
About 90% of those sales are Curra's signature avocado margaritas, Garcia said. The iconic 25-year-old restaurant is on the edge of Travis Heights, whose residents are tipping handsomely during the shutdown.
Not all restaurants are so lucky, he said, but he knows several that have figured out a winning formula.
"That is what has saved Curra's Grill and many restaurants in Austin, the ability to send drinks out," he said. "So I hope this to-go business lasts forever."
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