ARIZONA STATE SENATE
Forty-seventh Legislature, Second Regular Session
FACT SHEET FOR H.B. 2740
spirituous liquors, restaurant license; grills
Purpose
Modifies requirements of restaurant liquor licenses for the Arizona Department of Liquor License and Control.
Background
A restaurant license (series 12) allows a licensee to sell and serve spirituous liquor only for consumption on the premises and is exempt from the 300-foot prohibition from being near a church or school. In order to qualify for a restaurant license, an establishment must derive at least 40 percent of its gross revenue from the sale of food. Included with the application filed with the Arizona Department of Liquor Licenses and Control (ADLLC), an applicant must file a copy of its Restaurant Operation Plan that includes information regarding:
a) the make, model and capacity of the kitchen appliances.
b) the menu, including prices.
c) the seating capacity of the restaurant area and bar area with additional questions asking if the restaurant has a bar area distinct and separate from the restaurant seating and the percentage of the public premises used for restaurant dining.
d) type of dinner and utensils utilized (reusable or disposable).
e) how many games or televisions are at the premises and information about live entertainment and dancing.
f) a list of employee positions and their duties to staff the restaurant.
The Director of ADLLC (Director) may require a restaurant to submit to an audit of its records to ensure compliance of the 40 percent gross revenue from the sale of food requirement. If the licensee does not meet the requirements, ADDLC is required to revoke the license. According to ADDLC, it does allow a licensee that has failed an audit, six months to find either a bar license or beer and wine bar license.
There is no anticipated fiscal impact to the state General Fund associated with this measure. However, there is a potential positive fiscal impact to the ADDLC. H.B. 2740 allows ADDLC to permit a restaurant licensee to continue operation as a restaurant if the restaurant falls below the 40 percent gross revenue requirement from food if specified requirements are met. The Director is allowed to establish an additional fee for the modified restaurant license and retain the amount.
Provisions
Restaurant Licenses
1. Allows a restaurant licensee whose audit resulted in a determination that at least 30 percent but less than 37 percent of the gross proceeds were derived from the sale of food, within six-months, to either:
a) replace the license with a bar or beer and wine bar license. At the end of six months, ADDLC is required to revoke the restaurant license or the licensee is required surrender the restaurant license.
b) obtain permission from ADDLC to continue to operate with a modified restaurant license if it meets the qualifications.
2. Allows a restaurant licensee whose audit resulted in a determination of at least 37 percent but less than 40 percent of gross proceeds were derived from the sale of food to, within one year, to either:
a) replace the license with a bar or beer and wine bar license. At the end of one year, ADDLC is required to revoke the restaurant license or the licensee shall surrender the restaurant license.
b) obtain permission from ADDLC to continue to operate with a modified restaurant license if it meets the qualifications.
3. Requires ADDLC to immediately revoke a restaurant license if an audit conducted by ADDLC, determines less than 30 percent of gross proceeds are from the sale of food.
Modified Restaurant License
4. Allows ADDLC to permit a restaurant licensee to maintain its restaurant license if an ADDLC audit determined at least 30 percent and less than 40 percent of the restaurant’s gross proceeds were derived from the sale of food and all of the following apply:
a) the restaurant has sufficient number of cooks, food preparation personnel and wait staff to prepare and provide restaurant services.
b) the restaurant’s equipment is a sufficient grade.
c) the size of the restaurant’s kitchen is appropriate to the menu offered.
d) the menu is consistent with the restaurant operation.
e) the aggregate area of all dance floors on the premises is not greater than 10 percent of the total floor space of the public area at the premises.
f) no more than 20 percent of the public area floor space consists of pool tables, dart or arcade games, barstools, cocktail tables and similar seating.
g) the restaurant name does not include terms such as bar, tavern, pub, spirits, club, lounge, cabaret, cantina or saloon.
h) does not allow disposable dinnerware, expect for outdoor areas.
5. Requires ADDLC to notify a city, town or county of its intent to approve of the restaurant license continuation.
6. Allows for the restaurant licensee to continue operating with a modified restaurant license, if the local jurisdiction does not object within 60 days.
7. Requires ADDLC to set a hearing before the Arizona State Liquor Board (Board) if ADDLC or the local jurisdiction intends to disapprove of a restaurant’s continuation and requires the Board to determine whether the restaurant may continue its operation.
8. Allows ADDLC to require the licensee to specifically acknowledge the representations made by the licensee regarding its restaurant operations if the licensee is allowed to continue its restaurant operations.
9. Allows ADDLC to audit or revoke a license if the licensee changes its operation in any way that materially and detrimentally affects the representations made by the licensee.
10. Prohibits the Director from requiring an establishment to be audited more than once a year if the establishment is allowed to continue with a modified restaurant license.
11. Allows the Director to determine the fee for a modified restaurant license.
12. Requires the ADDLC retain the additional fees and specifies ADDLC is not required to transfer all or any portion of the amount collected in the state General Fund.
13. Specifies a continuation of a restaurant license does not apply to any audit, disciplinary action completed or any consent agreement signed before January 1, 2006.
Miscellaneous
14. Allows a restaurant licensee that is within 300 feet of a church or school and that has not met the 40 percent gross food requirement, but is above 30 percent, to be replaced with a bar or beer and wine bar license if the school or church began its operation after the issuance of the restaurant license
15. Makes a technical change.
16. Becomes effective on the general effective date.
House Action
COM 2/22/06 DPA/SE 6-1-0-2-0
3rd Read 3/13/06 35-21-4-0
Prepared by Senate Research
March 27, 2006
BP/HG/ac