Virginia may unwind decades-old liquor sales mandate

February 27, 20226
Axios,  Karri PeiferAdd Axios on Google
Legislation that would lower the Virginia restaurants' food-to-liquor sales ratio is headed to Gov. Abigail Spanberger's desk. 

Why it matters: Many in the restaurant industry have been pushing for a ratio change for more than a decade. 
State of play: The bill would create a tiered structure to replace the long-standing rule that requires at least 45% of restaurants' sales to come from food and no more than 55% from liquor.

• If enacted, the new food-and-liquor ratios would be based on a restaurant's size, rather than the existing system with one ratio for all.
• Per the bill, size is determined by average monthly sales or, for the smallest restaurants, sales and the number of seats — with the caveat that a restaurant must have the same number of seats at tables as it does at the bar. 

Zoom in: Under the pending legislation:

• Large restaurants — ones with at least $48,000 in average monthly food sales — would have no ratio.
• Medium restaurants — with $25,000 - $47,999 in average monthly food sales — would move to 30%-food-to-70% liquor sales ratio.
• Small restaurants — with $4,000 - $24,999 in average monthly food sales — would keep the existing 45%-food-to-55% liquor ratio.
• Smallest restaurants — with $24,999 or less in average monthly food sales, plus fewer than 30 seats and an overall occupancy for 60 people or less — would have to meet a 30%-food-to-70% liquor ratio.

The intrigue: Under Virginia's liquor laws, wine and beer don't count as food or booze and therefore affect either ratio.

• But soda, tea, coffee and other nonalcoholic beverages count toward food sales. 
• That would remain unchanged in the legislation the General Assembly passed this year. 

Of note: The rise of craft cocktails and high-end spirits — where one drink can cost as much as a dinner entree — is what's driven the push for legislative change for more than a decade.

• But past legislation has failed to make it out of the General Assembly.

Flashback: Virginia's food-to-liquor ratio is from post-Prohibition Virginia and a mid-20th-century fight for restaurants to even be allowed to sell liquor.

• The ratio originated with the 1968 Mixed Beverage Act, which allowed restaurants to start selling liquor and mixed drinks. Before that, liquor sales were only allowed in state-run ABC stores or private clubs.
• That law set it at 51%-food-to-49% liquor, where it stayed until the 1980s, when it shifted to the existing 45%-food-to-55% liquor ratio, per the think tank R Street Institute.
• In 1990, the legislature removed wine and beer from the ratio.

What we're watching: Whether the governor signs the new ratio legislation.​​