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Glover Law is a boutique law firm that helps businesses and individuals navigate complex corporate and government affairs matters. The firm works with members of the hospitality industry on issues relating to state licenses, alcohol beverage sales, and potential franchise agreements.

Beverage Trends: Movie Theaters Taking Advantage of New Law

I remember the old days when a movie theater operator had to purchase a six-figure quota liquor license if he or she wanted to sell liquor. It seems like a long, long time ago. It was 2016.

 
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Back in those days the Division of Alcoholic Beverages and Tobacco simply would not grant movie theaters a special restaurant license (now known as a “special food service” license) that would allow them to serve hard liquor if 51% of their food and beverage revenue came from food and non-alcoholic drinks. The Division had a good reason for the denials – the statute specifically required that the licensee be able to serve 150 persons at tables. Very few theaters had anything even resembling tables, let alone enough for 150 people.

Theater operators had two options at that point – they could slog along with a beer and wine (2COP) license or they could invest in an expensive quota license to open up cocktail possibilities.

Of course, as the reader likely knows, alcohol at the movies has become perhaps the hottest trend in the industry over the past five years. Theaters all over the country are adding lounge areas and drink offerings, hoping to add another high-return stream of revenue. Beer and wine are strong offerings on their own (I'll take a craft beer with my Stephen King adaptation, personally) but liquor-based drinks are much more profitable for the retailer.

Movie-goers are becoming accustomed to having libations with their popcorn, and there’s no reason to think that the trend will reverse itself. AMC is a particularly interesting case – in the last seven years they have started serving alcohol at over 200 locations. It is no coincidence that the company’s food and beverage revenue increased 63% year-over-year in the first quarter of 2017.

So it was major development when the Florida Legislature amended the law in the spring of 2016 to remove the table requirement, making virtually every theater with food service and $1,820 (for licensing fees) eligible for the special food service license. A review of publicly available licensing data shows that the large national chains have started to take advantage of the opportunity, but that there has not yet been significant movement among the regional chains and independent operators.

Research and analysis of the law's requirements, the state's auditing and enforcement methods, and how those will interact with the business' food and beverage sales projection will be required prior to preparing and submitting a license application. Still, those that opted for the beer and wine license in lieu of a quota are now closer than ever to adding profitable cocktails and cordials to the mix.

Those that invested in the expensive quota license now possess a highly-marketable license that they can sell without modifying their bar menu. They would be dealing from an enviable position of strength – because they are currently using the license as required by law and can replace it with the cheaper special license on short notice, they could put their quota on the market and simply wait for the best deal.


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