TABC Allows Brewery Restaurants to Reinstate Dine-In Services — But More Help is Needed — Updated

As previously reported, Governor Greg Abbott’s reinterpretation of the “51% rule”, which deems businesses that make at least 51% of revenue from alcoholic beverage sales as bars rather than restaurants, forced breweries to halt dine-in services at onsite restaurants. That was true even when those restaurants adhered to or exceeded the Open Texas Guidelines for safety and social distancing standards to prevent the spread of COVID-19. At the time, the interpretation included beer sold to distributors as counting towards restaurants’ total alcoholic beverage sales, which put these over the 51% mark, thus redefining these establishments as bars — which were ordered to shut down for the second time this year on June 26. As of today, those restaurants can now reopen thanks to the TABC reexamining the ruling. The 51% calculation now only includes gross receipts for on-premise consumption. The clarification reads as follows:

Gov. Greg Abbott’s Executive Order GA-28 limits on-premises sale of alcohol to restaurants that have less than 51% of their gross receipts from the sale of alcoholic beverages. The Texas Alcoholic Beverage Commission has determined that the 51% calculation of gross receipts should only include the sale of alcohol for on-premise consumption. Therefore, the calculation should exclude to-go, retail and wholesale sales of alcoholic beverages.

Buffalo Bayou Brewing restaurant dining room
Buffalo Bayou Brewing Company’s second-floor restaurant is among those that can now reopen thanks to TABC’s reinterpretation of what counts towards the 51% alcohol sales rule. Photo by David Leftwich.

According to Saint Arnold Brewing Company owner Brock Wagner, that means 75 employees who have either had no work or massively reduced hours get to return to their jobs. The onsite restaurant and beer garden is reopening today. “We cannot express how much we appreciate the massive outpouring of support we received from the community with so many people reaching out to the Governor’s office about this issue,” said Wagner. “Also, the coverage from the media on this topic helped the Governor become aware of the profound negative consequences of the previous interpretation of his order. We also want to thank the Governor and the TABC for taking the time to reexamine the rule and amend it in a way that has a positive impact and follows the original intent and purpose of the order.”

The change also means that Buffalo Bayou Brewing Company’s restaurant at 2101 Summer has reopened for dine-in service. Marketing manager Damien Franco says, “The TABC change that came in on Friday is a good ruling for breweries like ours. We have a full-service restaurant and should be treated as such, and for that we are thankful. Our facility is as safe, if not safer, than most other restaurants in Texas due to our size and open-air layout. We are still adhering to a self-imposed 33% cap on occupancy, and our staff will continue to follow our above-standard guides on safety and sanitation.” Franco also noted that the TABC’s role is simply to “enforce and interpret rules and guideline presented to them”. In this case, those guidelines reportedly came from the governor’s office.

Southern Yankee Beer Co.
Many bars, small breweries and brewpubs such as Southern Yankee Beer Co. need more ways to make money and survive the current shutdown. Courtesy photo.

This is still cold comfort to owners of smaller breweries (and bars) with fewer resources and no separate onsite restaurants. Many were shuttered as part of Abbott’s most recent bar-closing order. “It’s not just been Saint Arnold. Dozens of breweries that have food available on premise have been forced to close as well,” said Sydney Porter with Southern Yankee Beer Company, a small brewpub at 930 FM 1960 in north Houston that relies entirely on in-house beer sales. “We can do to-go but not offer seating like a restaurant can,” she said. “We get four or five phone calls a day asking if people can sit inside. [The 51% rule] is meant to stop dance clubs and packed bars, which I understand, but it has adversely impacted tap rooms that act more like restaurants than traditional bars.”

Wagner, who with his friend Kevin Bartol founded microbrewery Saint Arnold in 1994 after years of brewing at home, recognizes that more needs to be done to help those small, independent businesses. “We also want to point out that while this new ruling is helpful to Saint Arnold, it is narrow in scope and doesn’t benefit most Texas breweries with taprooms,” he said via email. “We are drawing attention to the Texas Craft Brewers Guild petition to allow Texas breweries to deliver and ship craft beer, a right that will help breweries whose taprooms remain shuttered.”

Franco independently expressed a similar sentiment, recognizing the struggles smaller craft beer businesses are enduring. “There are many small craft breweries throughout the state of Texas that will not be able to serve patrons on patios or in any other capacity than curbside to go,” he said. “We support them in their efforts to open and encourage our fans and followers to continue to pour their support to craft breweries throughout our great state.”

Updated 7/25/2020, 5:08 p.m. to add Damien Franco’s comments.

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