HB 442

Here are some thoughts on HB 442. Make suggestions below and tag them with your thoughts.

Section 32B-6-404.1.  Transition from dining club license to full-service restaurant license

Line 3101 (3) (a) through line 3114 of the bill state that a licensee holding a dining club license and converting to a full-service restaurant license shall comply with the section 32B-6-205.2 provisions by July 1, 2022, or when a remodel of the facility is completed to comply with the provisions of 32B-6-205.2, or when there is a change in ownership.

Recommendation:  Change the wording in this section to state that owners of a current Dining Club license shall have until July 1, 2022 to fully convert from operating under a Dining Club License to operating under a restaurant license, and meeting the requirements of a full-service restaurant license, as specified in section 32B-6-205.2. 

We would further recommend that the language on change of ownership be dropped from the bill, as keeping this language has a significant detrimental effect on the ability for a current owner to sell the business, as many of the current locations operating with a Dining Club license cannot physically meet the requirements set out in section 32B-6-205.2. 

Section 32B-6-405 Specific licensing requirements.

paragraph (7) (a) (ii) states “effective July 1, 2018 the department shall convert each dining club license to a full-service restaurant license or a bar license in accordance with the provisions of this Subsection (7)”, and further requires licensees to notify the department no later than May 31, 2018 on whether the licensee elects the full-service restaurant license or a bar license.

Without further clarification, the issue of the timeline for compliance could be interpreted as subject to the decision of the DABC, which has a track record of significant inconsistency.  To ensure that licensees maintain a level playing field in this regard, without receiving unequal or arbitrary interpretations, we would recommend:

Recommendation:  add the following language to the end of section 32B-6-405, paragraph (7) (a) (ii) to read: “In compliance with section 32B-6-404., paragraph (3) (a), the licensee shall have until July 1, 2022 to comply with the requirements for a restaurant license set out in section 32B-6-205.2.   

Section 32B-6-202.  Definitions.  Line 2270 (7) states that “a full-service restaurant licensee shall maintain at least 70% of its’ total restaurant business from the sale of food”.

This is completely impractical from the standpoint of a restaurant owner, as the profit margin on food in the restaurant is typically 2% or less, and restaurant owners make the majority of their operating profit from the sale of alcohol, (e.g. wine, beer, cocktails, etc.) that accompany food orders.  The state should not be dictating to small business owners how they should running their business to make a living. 

Recommendation:  change the wording in this section to read: “a full-service restaurant licensee shall be required to sell food as its’ primary retail offering, and may sell alcoholic beverages to supplement the patron’s dining experience”.    

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