When you run a bar, restaurant, or entertainment venue, alcohol sales are generally a big part of your business model. So, if you suddenly lose your liquor licence, it can be detrimental to your success.
In this blog, we’ll touch on how restaurants may lose their liquor licence and what to do if it happens. Keep reading for more insights!
Looking for advice on how to obtain a liquor licence in Ontario? Click here to read our guide.
How Do Restaurants Lose Their Liquor Licence?
Losing your liquor licence can cause a lot of setbacks and headaches. So, it’s better to take every step you can so as not to lose it in the first place.
There are a number of ways that restaurant owners may lose or fail to qualify for AGCO serving privileges. However, they usually fall under one of three categories – refusal, revocation, or expiration. It’s important to understand the difference between each of these classifications because it will impact how long it takes to get your licence back.
Refusal
Refusal is exactly what it sounds like. You apply for a new licence or a licence renewal and your application is rejected. While somewhat uncommon, there are a number of reasons why this might happen. When it does, you’ll have to wait a minimum of two years before you can reapply.
Revocation
Revocation is usually the most serious way to lose a liquor licence. This happens when a business breaks the rules and the AGCO takes it away completely. Again, there are a number of reasons why revocation may occur. Some examples include irresponsible or illegal serving, and interfering/tampering with an AGCO inspection. Just like refusal, revocation comes with a two-year probation period before you can reapply.
If you commit an infraction that leads to your liquor licence being taken away, losing the ability to serve could be among the least of your worries. Ontario takes AGCO laws very seriously. On top of licence revocation, most infractions also come with major fines (up to $100,000 in some cases).
Expiration
The final reason why restaurants lose their liquor licence is procrastinating on renewal. In other words, letting your current licence expire and failing to renew it in time.
If you fail to apply for renewal before your expiry date, you’ll have to start from scratch. In other words, you lose your licence completely and have to begin a brand new application – while losing your ability to serve or sell liquor in the meantime. Although the time it takes to process and approve applications isn’t usually very long, complications may arise which could cause delays.
Interested in opening a microbrewery, brew pub, or winery? Check out these blogs for more tips!
What Happens When You Lose Your Liquor Licence?
Don’t Push the Rules
If you lose your liquor licence or it’s expired, the first thing you should do is stop serving alcohol – right away. Inform your staff members to ensure no liquor is served until you have a valid licence again.
Penalties for serving alcohol without a licence can be severe, so no matter how tempting, it’s best to keep the bottles on the shelf until the situation is resolved.
Re-Apply as Soon as Possible
If your liquor license has expired, it’s best to re-apply as soon as possible. Since you’ll have to follow the application process from the start again, this will take longer than a standard licence renewal.
Get Creative
If you can’t serve alcohol, it’s time to get creative. Focus on enhancing your food offerings. Promote specialty dishes, seasonal items, or unique pairings with non-alcoholic beverages.
For example, you could craft a menu of mocktails, specialty sodas, or zero-alcohol wines and beers. On top of accommodating your usual customers, these can attract those who prefer non-alcoholic beverages, especially in health-conscious markets.
If alcohol sales drive your evening crowd, consider altering hours to focus on high-traffic daytime periods like brunch or lunch.
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Have a Communication Plan
If you’re suddenly unable to serve alcohol, your customers are going to take notice (especially if you have loyal regulars). With that in mind, you’ll need to have a plan for how you communicate this change with them.
It’s important to be transparent. However, you don’t want to give too much away either. Curious customers may ask why you’re no longer able to serve alcohol. Remember that professionalism is key. Instead of answering this question directly, you can let them know that you’re working to resolve the issue as soon as possible.
As customers continue to visit your restaurant, celebrate and promote the alcohol-free alternatives on your menu. This will help protect your bottom line and show your patrons that you’re still working hard to accommodate their needs.
Have questions about buying or selling a restaurant? We have answers Reach us at ryan@carverealestate.com or call 416-618-0054.
