Cocktails To-Go Help Restaurants Stay Afloat

This story originally appeared on Stateline.

Worried that the four Virginia restaurants she runs were headed for disaster during the pandemic, Sarah White branched out.

The neighborhood restaurants, which serve casual-style foods such as burgers and sandwiches, started providing curbside pickup. One of the owners applied for and got funding from the federal Paycheck Protection Program. And when Democratic Gov. Ralph Northam in April allowed restaurants to offer cocktails to-go, White decided to give it a try.

“At first, we were apprehensive about the logistics, but then we realized this was the new reality and opted to do it,” said White, the chief operating officer of YHR Holdings, which operates the Cowboy Café and three Lost Dog Cafés in Northern Virginia. “It’s not a huge chunk of sales, but it’s something, and right now, something counts.”

Virginia is one of at least 32 states that decided during the pandemic to allow restaurants to sell cocktails to-go in some form, according to Mike Whatley, a vice president at the National Restaurant Association, an industry trade group.

Beer and wine to-go are included as well, said Steve Gross, a vice president at the Wine Institute, a wine industry trade group.

Lawmakers in some states are pushing to make the changes permanent.

Some states, counties and cities also are trying to help restaurants and bars by reducing or waiving alcohol licensing fees, which can range from a few hundred to thousands of dollars. But some industry officials said the money saved from reduced fees is miniscule compared with the money gained from cocktail sales.

The cocktails to-go rules—such as whether the alcohol needs to be placed in a specific container, what the packaging looks like and whether it must be placed in a vehicle’s trunk—differ from state to state.

The most recent approvals came in late December, when North Carolina Democratic Gov. Roy Cooper signed an executive order authorizing to-go sales in his state, and the Oregon legislature approved a bill that Democratic Gov. Kate Brown signed into law.

“It has been really important to restaurants during this crisis. Typically, alcohol, especially cocktails, is one of your highest margins,” Whatley said. “When you’re relying more on takeout and delivery, if you’re missing cocktails to-go you’re missing that revenue stream.”

But some health care advocates worry that making alcohol more easily available during the pandemic will lead to increased substance use disorder and underage drinking.

“We really don’t have underage drinking under control. We really don’t have problem drinking under control. And we’re doing this now?” said Jean-Philippe Dorval, an advocacy liaison at the Prevention Action Alliance, an Ohio advocacy group that focuses on preventing substance misuse.

“Now is not the time you want to increase availability of a substance that makes these problems worse.”

Restaurant Woes

The restaurant industry has been hit hard during the pandemic. Most states halted indoor dining in the early months. Even after states adopted limited indoor dining, patrons often have been reluctant to come inside.

As of early December, 17% of restaurants nationally—110,000—have closed either permanently or for the long term, said Whatley.

While more than two dozen states allowed beer or wine to-go sales before the pandemic, typically in conjunction with the sale of food, mixed drinks are a new addition, said the Wine Institute’s Gross.

And the change has become quite popular, Whatley said.

The added revenue represents an average of 10% of restaurants’ off-premise sales, according to Whatley. That has enabled some restaurant owners to bring back one or two laid-off staffers, he said.

The industry is concerned, however, that once state emergency COVID-19 orders are lifted, alcohol to-go won’t be allowed anymore. They want state legislatures to pass laws making it permanent.

At least three states—Iowa, Ohio and Oklahoma—as well as the District of Columbia, already have done that, said Jackson Shedelbower, spokesperson for the American Beverage Institute, a Washington, D.C.-based trade group for restaurants that sell alcohol.

Lawmakers in Missouri and Florida also have filed bills for this year’s session.

While restaurants and bars have lost a huge chunk of alcohol sales during the pandemic, alcohol tax revenue for states hasn’t dropped, because home consumption has jumped, said Ulrik Boesen, a senior policy analyst for the Tax Foundation, a Washington, D.C., conservative-leaning think tank.

“People have been drinking the same amount of alcohol, they just stopped consuming it at bars and restaurants and started consuming it at home,” he said. “From a state tax point of view, this is fine.”

Some areas are trying to help restaurants by reducing or waiving alcohol licensing fees. In Kentucky, Democratic Gov. Andy Beshear waived alcoholic beverage renewal fees for restaurants and bars for 12 months in November. In Pennsylvania, Democratic Gov. Tom Wolf did the same, starting in 2021.

The restaurant association supports such actions. It’s unfair, Whatley said, to charge restaurants liquor license fees when they’re not allowed to have customers drink inside.

But Shedelbower said waiving alcohol licensing fees is “really just a drop in the bucket.” Providing restaurants the opportunity to sell to-go alcohol, however, offers them a “much more robust lifeline.”

Plus, mixing cocktails to-go allows them to show their creativity.

“It creates an experience at home, something normal, something fun during such a terrible time,” said White, the northern Virginia restaurant executive. “Our bartenders make the drink, we send along the garnishes and the cup with the ice in it. You put our cherry on top and the orange slice and it’s like you’re here.”

Although customers can’t order more than two cocktails per entrée and more than four per order under the state’s rules, it still helps with the bottom line, she said. “We’ll take any advantage we can get right now.”

Delivery Risks

Restaurants and bars may be hurting during the pandemic, but so are people who have substance use disorder, advocates say.

Heavy drinking among adults has shot up during the pandemic, according to a September study by RAND Corporation researchers.

Making it easier to access alcohol from restaurants and bars is a bad idea, said Dorval, of the Ohio substance misuse prevention group.

His organization opposed a bill signed into law by Ohio Republican Gov. Mike DeWine in October that permanently allows restaurants and bars to offer drinks to-go. While Dorval’s group was disappointed the measure makes the practice permanent, it did successfully lobby to include a three-drink limit per order and a requirement that alcohol must be purchased with food.

“The industry has really taken the narrative of the economic devastation of restaurants and bars—which is very much real—and used it to push this agenda of drinks to-go,” he said.

One of his group’s biggest concerns is that meal delivery services will bring cocktails to people under 21. While companies must obtain a special alcohol delivery state permit that requires delivery drivers to check IDs, the language is “very basic and very broad,” Dorval said.

“They have to make a bona fide effort to check the ID, but there are not enough guardrails on these third-party delivery vendors,” he said.

“If you’re going to a restaurant, there’s a far greater chance your ID will be checked.”

But Ohio Republican state Rep. Jeff LaRe, who co-sponsored the bill, said in an interview with Stateline that requiring meal delivery companies to get the special permit was a way to put teeth into the law to make sure those under 21 aren’t getting their hands on alcohol.

“It’s not really different than walking into the gas station and getting a sixpack,” he said. “These companies need to ensure they are delivering products to someone of age. They risk fines and potentially losing their license.”

Restaurant industry officials say operators are working hard to ensure deliveries are done responsibly, safely and legally.

“These restaurants have to follow the same protocols that they would follow if you walk into them. The same rules apply,” Shedelbower said. “It’s harder to do that during COVID; it’s more challenging. But as an industry we can make it work.”