Wednesday, May 6, 2009

Dewhurst Wine Bill (SB 2523) Revisited

So I've spent over a week away from blogging after tackling such weighty issues as SB 2523, among other things. Work needed to be done, spring garden needed to be planted and after last Saturdays drenching rain, a french drain needed to be installed (what, pay a landscaper?). But last night after logging in and reading a comment on the previous post about the wine bill being discussed down in Austin, I've returned from my hiatus ready to address the issue further.

Calling my position a "red herring", and calling on us not to "throw the chains under the bus", he, or she decided to impart their knowledge as Anonymous. Which in my book, just makes them another opinion-sayer, with no actual industry knowledge of this bills effects on small businesses.


In fact I think I exactly bored into the heart of the issue - that the Texas Alcoholic Beverage Code, a mish-mash of political wrangling over 80 years that contains more editing than my son's last English essay, no longer works. In fact it fails the ideals it was originally intended to protect. And this bill does not make any of that better, actually it goes so far as to further the decline in the code's effectiveness.

At what trade-off? To now be able to bring wine into an establishment, unfettered by law, but only by the owner's policies on the issue. Does the owner have the requirement to ensure that the wine consumed and served (but not sold) on premise is done responsibly? Of course they do - a minor in possession on premise would be a violation of any liquor license, no matter if it was provided by their older sibling. Somebody has a few cocktails before coming in for dinner, then cracks open a bottle or two - over intoxicated? Perhaps, and the business must still monitor the behavior and administer care in sending that person home in his or her car.

Most small businesses start out with a model of their expected income and expenses, this ties into the rent they pay, the labor and training of their staff, the insurance coverage they need. Take away those sales, without the accompanying lowering of expenses is a stifling weight for an owner/operator to bear. I posted about the problems in restaurant sales tax receipts last October and it hasn't improved since then. And for our employees whose income is directly tied to their sales, replacing a $60 bottle sale with a $25 corkage just twice a shift is a $3,600 cut in income per year - at a time when they've already seen 10 - 20% reductions due to declines in overall dining trends.

I've made the point previously that there are many ways that the cost to the restaurateur could be lowered, in our case as a club we are prohibited from purchasing our wines from a wholesaler, adding 20% or more to our cost of product. The lineage of distributorships in Texas is also one in which creates bottlenecks in the system of supply and demand, according to the Texas Sunset Advisory Committee Report of 2004 (Appendix A):

"While the system was certainly appropriate at one point in time, it now seems to be focused on protecting the interests of the various industry segments and not on public safety."

And taxes? From the 14% "hidden tax" we restaurateurs pay on sales to the $2.40 per gallon liquor excise tax (isn't this more than our gas taxes?) paid at wholesale, this all gets passed on to the consumer. Believe me, no one wants to offer the consumer a better deal than those of us serving the guests.

So I thought I would share with you some of the feedback I've received since this post, I've also received several phone calls from restaurant owners who are worried about the economic havoc this could cause for the small owner/operator.

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Did you see that Dewherst's bill went on the 'local and uncontested' calendar? Only way to stop it at this point is to call your State Rep and ask him to contest it in the House before it can be put on their local and uncontested calendar or raise a stink about it so Perry will veto it before it becomes law. Uncontested, sure. This not only a very, very poorly conceived bill but it is also a glaring example of how politicians are able to push their own agenda into law.

SB 2523Relating to the possession and consumption of wine on the premises of a mixed beverage or private club permittee; providing for separate statement of the mixed beverage tax.4/30/2009 S Placed on local & uncontested calendarAlcoholic beverage retailers really need to get organized to stop things like this - the Restaurant Association is only interested in helping the big chains."

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"I am sure you all are aware of this wine bill dewhurst is going to get passed unless we all contact our state representatives easily by email with the link provided below asking them to be our voice and vote against thebill Texas HB 4813 which states that anyone can bring in a bottle of wine regardless of what type of liquor license you have. This not only will take money out of our pockets, it opens a whole new can of worms of liability and the ability to cut off an intoxicated guest because it is their wine... I do not know if it carries over to catered events, but, can imagine selling a wedding for 200 guests at your venue and they bring in their own wine? Not good. This is a special interest B.S. Back door deal that is exactly what iswrong with politics in the US. What is next? Beer? Alcohol under a certain proof? This is OUR BUSINESS. WE SELL FOOD, WINE AND ALCOHOL. Please readthe email from [deleted] below for further information.Please do not just discard this email. DO something. 10 minutes can save OUR industry in Texas for the duration of OUR CAREERS. Think about it; we bring them in with the great food, we impress them with the total package,but we make real MONEY with alcohol sales. This has already passed the senate because we did not respond fast enough.Please, help me save our wine programs!"

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"Chefs/Restaurant Owners/Friends,....Urgent!!!!.....Please contact your Texas State Senator to let them know to kill the below bill (senate bill 2523). It could be severely damaging to many white tablecloths restaurants!!!! Also contact Richie Jackson at the Texas Restaurant Association to ask him why the TRA sided with Dewhurst on this bill that could potentially damage our business' so badly. Please forward this to all of your restaurant associates to get this defeated."

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"We will be rescinding out membership in TRA. The TRA represents chain restaurants and not white table cloth restaurants."

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"Pursuant to our discussion last week, here are my initial concerns, from a restaurant liability perspective, on SB 2523 - Dewhurst’s BYOB bill:

From a liability standpoint, restaurants that allow BYOB are still saddled with many alcohol-related laws, including the requirement to prevent minors from obtaining alcohol, etc.

Most importantly from the liability perspective, however, the Dewhurst bill would apply to establishments with a mixed beverage certificate or private club permit, which can serve liquor as well as wine. That means a diner could bring his own wine to the restaurant but still drink cocktails in the bar. If the restaurant’s TABC-certified employees prevent the diner from being over-served before dinner, but the diner then overindulges in his own wine, there is the very real possibility of “dram shop” liability if that diner drives out and injures someone. To prevent such an event, the restaurant would have to initiate one of the following policies: (a) prohibit those bringing their own wine from obtaining on-premise alcohol, or (b) prohibit those bringing their own wine from actually consuming it if they appear over-served (that’s a nice scene playing out in the middle of a dining room). Neither of these choices are feasible from either an economic or public relations standpoint. The idea of limiting the number of bottles a customer may bring with them or charging prohibitively high corkage fees also fail to address the issue, because scrupulous operators will be at the mercy of their neighbors who charge low corkage and/or allow a patron to show up with a picnic basket full of wine.

And just because the restaurant doesn’t “sell” the alcohol when it’s BYOB doesn’t mean it won’t be named as a defendant when the patron who over-serves himself crashes into a family while driving home. The restaurant would – at the very least – find itself listed as a defendant and be faced with paying an attorney to prove it didn’t sell the diner any alcohol.

Another facet of the bill is that the BYOB patron will be allowed to leave with her partially-drunk, re-corked bottle. BYOB establishments might need to impose rules requiring the bottle be placed in the trunk of the patron’s car, away from the driver and occupants, but even with a valet stand enforcement of such a measure would be virtually impossible.

And from a semantic perspective, for those who pay all that money for a private club permit, the language of the bill as drafted does not provide that “a member” of the club can bring in his own wine, just “a person.”

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Hi Amy my name is [deleted] from Austin, Texas. I was sommelier at Steel and Nana restaurants and a judge many times in the Dallas morning news Wine competition. I'm writing to tell you that I agree with your outrage at the current proposed legislation to change the wine laws. I was speaking with my Operating Partner of Flemings Steakhouse here in Austin, Darryl Wittle(whos x wife owns Aquarelle here in Austin as well) who is a long time restaurant personality here in the Capitol city. He was asking me if I knew any people in the Dallas market who would stand up to help him and other restauranteurs from Austin and Houston to stand up and try to derail this legislation! I'd love to speak with you further and put you in touch with him. I have emails out to many colleages in Dallas to see if we can jointly unite to put an end to this scary proposition! I look forward to hearing from you!

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Two Words: Road Trip!

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