RD135 - Pilot Project on Alternative Method for Calculating the Food-To-Beverage Ratio for Mixed Beverage Restaurants

Executive Summary:

Chapter 238 of the 2009 Acts of General Assembly created a two-year pilot project for a limited number of restaurants, providing an alternate method for calculating the food-to-mixed beverage ratio required for a mixed-beverage restaurant license. The legislation directs the Alcoholic Beverage Control Board to submit a report with findings and recommendations to the House Committee on General Laws and the Senate Committee on Rehabilitation and Social Services by July I, 2011.

Alternate Method

The alternate method prescribed by Chapter 238 provides that participating licensees "shall generate at least $350 in food sales per proof gallon of spirits purchased from the Board" and a proof gallon is defined as "one gallon of 100 proof spirits."

Traditional Method

The traditional method, found in § 4.1-210 of the Code of Virginia, provides that "... food cooked or prepared, and consumed on the premises and nonalcoholic beverages served on the premises ..." of the restaurant must constitute, "... at least 45 percent of the gross receipts from the sale of mixed beverages and food." Mixed beverage sales cannot exceed 55 percent of total sales of mixed beverages and food.

Participating licensees in the pilot project were deemed to have complied with the food-to-mixed beverage ratio by complying with either the traditional method or the alternative method. ABC made its stakeholders aware of this pilot program and solicited participants by advertising it in the agency's Spring/Summer 2009 edition of the "LICENSEE," the newsletter sent to all ABC licensees.

A "proof gallon" is one gallon of 100 proof spirits or its equivalent. To calculate the number of proof gallons represented by a particular container of spirits, one must multiply the volume of the container in gallons by the proof of the contents, divided by 100. Here are the equivalent measures in gallons of popular spirits containers:

750 ml = .198 gallons
1 liter = .264 gallons
1.75 liter = .462 gallons

So, to determine the proof gallons of a liter of 80 proof Bourbon, you would multiply .264 by .8 (which is 80 proof divided by 100). The result would be .2112 proof gallons.

To meet the food sales qualifications under the pilot project, you would have to sell $73.92 of food and non-alcoholic beverages to offset that liter of Bourbon (.2112 proof gallons times $350 per proof gallon).

Pilot project participants did not have to maintain any additional records or file additional reports. Each participant filed the Mixed Beverage Annual Review form as usual, and ABC used its records of spirits sold to the licensee to compute the food sales per proof gallon figure.