SB 2523 - "F" Me?

I remember distinctly the moment yesterday when I read the article in TDMN about a new wine bill in Austin that had passed the Senate committee and was on it's way to the legislature for debate. I remember it distinctly because the Diet Dr. Pepper shot right out of my nose and onto my laptop - for a moment I was worried I had shorted out the letter "F". Because really, how was I going to respond without an "F"?!? All was fine, but I decided I could probably do a better job of responding by leaving the "F" on the sideline and really examining the issues that scream for a debate about this bill.

It's impossible to even attempt to summarize the Texas Alcoholic Beverage code, originally written in the 1930's and amended enough times to no longer represent the cohesive intents of it's original writing. But here, and here, are a few previous posts I've written about the subject on this blog and SideDish that might help provide some background. Yesterday I shot Nancy Nichols at DMagazine a (semi) tongue-in-cheek email about the issue which she posted, and there is more information in the comments section over there.

But I don't want this to be a rant on the TABC code, because it's the law and like it or not those are the rules we agreed to open our business under. Dry vs. wet? Well that 's a local argument, the state plays no role in that a limited role in that. And this isn't a rant about "yes or no" on BYOB policies, though as a business owner I feel I should have the right to decide what is served (or isn't) in my establishment.

No "F" needed or used here.

Our profession revolves around always trying to make the guest happy, and we've all faced the person who has a very special occasion and wants to bring their (husband's, wife's, boss's) favorite wine to make it even better. And fine wine drinkers - well hey, they're like our best friends, which is why at our restaurant we stock many, many delicious varieties of upscale wines (with a wide range of prices) to serve our guests.

The bill, appearing very quickly and passing through less than normal channels in the Senate, and the "pet" name given to tie it to our Lieutenant Governor has added a comical twist to the issue. For all I know, Mr. Dewhurst believed that this would be good for business, and it was a way for him to enjoy his favorite wine while dining at an establishment. And the Fiscal Report of the impact of the bill indicated that the state could potentially reap even more tax revenue from this change, it certainly didn't appear to be a money loser for them.

But excuse me for feeling a little like having been kicked in the groin for the opening wording of the Author/Sponsor's Statement of Intent:

"A person may wish to eat at a restaurant or a private club and may not care for the wine selection, but desire to have wine with his or her dinner."

WT, um, H? I'd like to give Mr. Dewhurst the benefit of the doubt, after all these were not his words, but maybe I should suggest to him that his favorite restaurant probably wouldn't keep showing him the love if this had passed. If one is consuming a very nice vintage, one is (hopefully) consuming the appropriate cuisine to compliment such and I have to wonder if his "favorite" restaurant doesn't offer many excellent choices that are for sale on-premise. So to say "I don't care for your wine selection", is rather akin to shoving a wine opener up the rump of the owner.

See, another paragraph with no "F".

The really bad thing for the business owner is no matter what stance they take they are ultimately going to make a guest unhappy. Do you selectively allow? People don't like a "no". Do you have a standard corkage? People think $75 might be harsh, but you have to make up for the cost of labor, glassware and the cost of the liability of the service. Ironically, the higher you set your corkage, the higher the price of the "walk in" replacement might be, after all retail price + $75 might be a real discount for a $300 bottle the restaurant sells.

I'm still trying to work my mind around the mathlete wonks who said this would be a potential revenue increase for the state's coffers. My public school math tells me that when one multiplier is reduced - in this case the sales revenue (retail vs. restaurant prices) would be lower, as would the sales tax rate (8.25% vs. 14%) - then the total will be lower. Unless you increase the other multiplier, which would be the volume of sales. Of course there's the corkage fee which would be subject to a 14% tax, but it would probably still be lower than the gross margin a restaurant would make selling an on-premise bottle.

I sent an email out to restaurant owners here in Dallas, one who is involved with the TRA said he'd seen a previous copy of the bill, but "the great news is we now get to add on the 14% Gross Receipts Tax". I hated to burst his bubble, but the wording of the bill did not state this. The bill allows restaurants to now print out on a separate line how much of the alcohol sales would be going to the state of Texas. So if you offer a wine for sale for $50, you may now print on the check something like "includes $7 in Texas Gross Receipts tax", or "Wine $43, Texas tax $7, total $50", but you absolutely would not be allowed to add the tax to the published price of a drink. Which is a financial wash, because we pay the tax regardless if it is printed on a statement or not. And as I pointed out to my brother in food, our guests right now are looking for a better deal on nice wines, not getting stiffed with a new tax. Bad PR move from my view.

Another restaurateur, gobsmacked by this apparent "sell out" by the TRA notes the high number of chain restaurants that occupy board seats in the organization. He theorizes that for them it's a back door to "fooling" the public into believing that they've lowered their prices, i.e. the $6.50 margarita becomes now becomes $5.59 for the drink and .91 in Texas taxes on a guest's check. Given the wording of the bill, the Comptroller would probably accept this as long as the business doesn't advertise $5.59 Margaritas. I know, it's complicated. And it may result in a backlash, one restaurateur is considering openly calling for small restaurant owners to drop their membership in the TRA, after all is this what we get for our annual fees?

Close, very close to an "F" on that one.

So I have a different recommendation for our politicians in Austin, because I would love to be able to offer our guests a lower priced alternative to enjoy while they dine on hubby's delicious food. Help us in the industry find ways to lower the cost of what we offer, by changing other "protective" legislation that controls the complicated maze of producer to table. Let us be the ones to find ways to make people come through our doors, sans paper bag to enjoy the entire dining experience we are offering.

And to Mr. Dewhurst (or "Dewie" as I now think of him), honey, if you're going to a joint that doesn't serve a decent wine, for god's sake, have a beer.

UPDATE: Apparently we accountants "stick together", read the former Comptroller's letter to LGov.