Pizzeria owners that want to start serving beer, wine and spirits should consider rules, training and costs

For pizzeria owners, adding alcohol to the menu can result in a boost in revenue. The markup on beer, wine and spirits is high, and pouring a glass of chianti is much less labor intensive than crafting pies. Still, owners who want to start serving alcohol need to consider certain issues, including engaging with various government agencies, training staff on more than how to prepare cocktails, and calculating whether the liquor license is worth the cost.

To start serving alcohol, the first thing the business owner must do is obtain a license. “This will likely mean reaching out to their state alcohol beverage control division to learn about how to procure a license,” says John Bodnovich, executive director of American Beverage Licensees (ABL). “Selling alcohol without a license is illegal and would endanger a pizzeria owner’s legitimate business.”

The state liquor authorities have slightly different names, such as Division of Liquor Enforcement (Colorado), State Liquor Authority (New York), or Liquor Control Commission (Illinois). The application asks for certain details such as the restaurant’s state sales tax license number, liquor licenses in other states, and whether the applicant has been denied a previous liquor license.

In addition to the state, operators should also check with local governments where the restaurant is located. “In some states there are different rules for every city or every county,” says Michele L. Stumpe, a partner at the law firm Taylor English Duma in Atlanta. “There might be distance requirements, such as restrictions if the location is near a school, church or alcohol treatment facility.” If the business owner has more than one location, the rules can vary, even if the two pizzerias are a short distance away from each other.

The costs of the licenses vary widely among states. There is an upfront cost, and annual fees. The fees vary according to several factors, including the type of license, such as beer and wine, beer, wine, liquor or even BYOB, which can stand for Bring Your Own Bottle, Bring Your Own Beer, or in Pennsylvania, Bring Your Own Alcoholic Beverage. While BYOB is often casually referred to as “no license,” in California, an establishment that allows people to bring their own alcoholic beverages must have a liquor license from the California Department of Alcoholic Beverage Control (ABC).

In some states, the restaurant owner can apply for the liquor license and get it in weeks, while other states take months. The number of licenses available varies from state to state, and in some places, the licenses are sold on an auction.

“Operators can sometimes overlook the time it takes to get an alcohol license, as well as the cost,” Bodnovich says. “In some jurisdictions, licenses are not unlimited, and securing one may take patience and resources.” He recommends doing some math to figure out whether the benefit of selling alcohol at the pizza business justifies the cost of the license.

That math should take into consideration which type of license to get, because not all beverages pair well with pizza. “Do an analysis of how beneficial is it going to be,” says Stumpe, the attorney. “For my pizza type clients, most models are they find value in having beer, and some find value in having wine, but they do not find a whole lot of value in having distilled spirits.”

In addition to calculating the cost of the license versus expected revenue of the added drinks, pizzeria owners should consider that serving alcohol can attract new customers who previously might not have dined there. That means the eatery can accommodate groups where the wine enthusiast has a veto vote, or families where the parents want to enjoy a beer with their pizza or wine with pasta.

With the potential for added revenue, there are other added costs, such as higher premiums for insurance. “You’re going to need liquor liability insurance, so talk to your broker,” Stumpe says. “There will also be a new round of inspections. Health, building and fire inspectors will all come for a visit. You need to be prepared for that.”

Training is crucial, and pizzeria owners must make sure employees know how to safely serve alcohol. In some states, training is mandatory, while in others, it is voluntary and can help mitigate liability in the event of an alcohol-related lawsuit. “Make sure you know the law and your staff and servers are trained in selling alcohol, including ID’ing and refusing service,” Bodnovich says. “It is a great responsibility to sell alcohol and making sure it doesn’t end up in the wrong hands – specifically those of people under 21 – is important for the community and for the business.”

The National Restaurant Association offers ServSafe Alcohol, which the association says is designed to train employees and managers to prevent sales to minors, recognize signs of intoxication, intervene to handle alcohol-related incidents and handle refusal situations. The training has state-specific materials and exams, and online and classroom training is available. The employee can earn a ServSafe Alcohol Certificate, which the Association recognizes for three years.

Some states do not recognize the ServSafe Alcohol certificate, and require servers, managers and others employed by the restaurant to take responsible alcohol service training courses through the state. Some states have requirements about classroom versus online training. Local municipalities may have their own requirements. In some counties in Maryland, the licensee (restaurant owner) or a designated supervisor must earn a certification and be on the premises during the hours that alcohol is served.

The right training is important, Stumpe says. Live training is the most effective but also the most expensive. Operators that rely on online training need to make sure the training is specific to the restaurant’s locality, and that it engages the employee with questions and interactive sections. Also, managers should take the training to make sure they are aware of rules and best practices. Some states require documentation of the training, and it’s generally a good idea to have the procedures in writing anyway. “We have rules in place, we satisfy our responsibility, here’s the proof of that,” Stumpe says.

Nora Caley is a freelance writer who covers small business, finance and lifestyle topics.