If you own a café or restaurant in Los Angeles and do not serve alcohol, you may be missing out on a very profitable component of your business. We’ve compiled a list of the five top questions that we suggest you ask before you get started on the Liquor License process.
1. What type of license best suits the needs of my restaurant? Two of the most common license types for restaurants are (a) Type 41 – beer and wine only, and (b) Type 47 – beer, wine and hard liquor. An important state requirement to be aware of is that your restaurant must be a “bona fide eating place” to qualify for either of the above license types. What does “bona fide” eating place mean? Basically, it means that your restaurant must include a suitable kitchen equipped to serve ordinary meals (versus only appetizers to accompany drinks), and show that a minimum of 51% of your gross receipts are from food sales.
2. What type of local permit do I need to serve alcohol? Before issuing a state liquor license to you, the ABC requires that you obtain any zoning permits that may be required by your local municipality. These zoning permits are most often called Conditional Use Permits (CUP) and, although the CUP process may occur concurrently with the state process, it is different than a liquor license. A CUP permits the serving of alcohol on the property itself and may remain for use by a future business if ownership changes. Whereas, a liquor license is issued to the owners of the business allowing the sale of alcoholic beverages at a particular location. Once you have your liquor license you may be able to bring it with you if you choose to relocate your restaurant. However, you will still likely need to obtain a new CUP.
3. How many other restaurants are serving alcohol in the area? Both local municipalities and the ABC monitor the number of restaurants serving alcohol within census tracts to avoid “overconcentration” and/or “high crime” rates. “Overconcentration” means that the ratio of existing licenses to population exceeds the ratio of licenses to population in the County. “High crime” exists if the crime rate exceeds the municipality’s average by 20% or more. Therefore, it is possible for two adjacent restaurants to be in separate census tracts and subject to different requirements based upon overconcentration and crime rates. If either overconcentration or high crime rates exist, then you may need to obtain a finding of “public convenience and necessity” (PCN), which may include an additional public hearing. By state law, if the local municipality does not grant a PCN approval, then the ABC cannot approve your license application.
4. How much time am I willing to spend obtaining my license? The time required to obtain zoning approval can take as little as 3 months to over 12 months. The time to obtain ABC approval can also vary, but usually not as widely. Some local municipalities offer expedited application review that could cut the approval time in half, but costs considerably more than standard review. In the City of Los Angeles for example, expedited review could double your application fee. This leads to the next consideration…your budget.
5. What can I afford to spend obtaining my liquor license? Submittal fees for a CUP in the City of Los Angeles are approximately $8,000 for standard review and $14,500 for expedited review. For your state license, submittal fees are approximately $650 for a Type 41 license, and approximately $12,000 for a Type 47 license. If a new license is unavailable, you may be able to purchase an existing license, which could cost about $30-50,000.
Although these are some of the primary considerations that you should keep in mind before starting the approval processes for alcohol and local permitting, there are many other details that a qualified permit consultant can provide you with. The bottom line is that evaluation of your needs, timing, budget and location as well as comprehensive research with the local and state agencies early in the process can save you time, money and a lot of stress later.
For more information on how we may help you with your liquor license and conditional use permit, contact us!