T he issuance of a liquor license in New York
is a privilege. The New York State Liquor Authority is vested with the broad
discretionary power to determine whether the “public convenience and
advantage” will be promoted by the issuance of licenses to traffic in
alcoholic beverages. The State Liquor Authority is granted the power to issue
or refuse to issue licenses, and to revoke, cancel or suspend licenses.
a Liquor License
A prospective restaurateur is most concerned about three matters when
applying for an on-premises liquor license. First, whether the premises are
licensable. Second, whether the individual owners of the company to be licensed
may be disqualified in any respect. Third, if the “500 foot rule” applies,
and it usually does in New York City, whether the applicant can demonstrate,
as required by statute, that it is in the “public interest” for
the license to be issued.
Before signing a lease for restaurant space or purchasing an existing
business, it is critical to investigate those matters thoroughly with experienced
Are the Premises Licensable?
Two of the most important rules in New York are what are commonly known
as the “200 Foot Rule” and the “500 Foot Rule.” The 200
Foot Rule disqualifies any location from obtaining an on-premises liquor license
if its entrance is located within 200 feet on the same street or avenue of
a building used exclusively as a school, church or other house of worship.
There are a number of nuances to this rule. For example, premises around
the corner from a church, school or house of worship would not be disqualified
since they are not on the same “street or avenue” as the premises
sought to be licensed. Additionally, if the building housing the school or
church is used for any non-church or non-school purpose, the preclusion will
not apply. In a close situation, there are also very specific rules as to
how the 200 feet is measured and which exits or entrances count and which
What is most important about the 200 Foot Rule is that if and when it
applies, there are few and very limited exceptions to this rule. It is therefore
critical to conduct an area survey before you sign a lease.
The “500 Foot Rule” is a bit more complex in its application and
has proven to be the greatest obstacle to obtaining a liquor license in the
City of New York. The rule essentially states that no license for on-premises
liquor consumption may be granted for any premises within 500 feet of three
or more existing premises licensed and operating with an on-premises liquor
license, except that the State Liquor Authority may issue the license. If,
after consulting with the local community board and after holding a public
hearing upon notice, the Liquor Authority determines that the license would
be “in the public interest.”
The statute identifies a number of factors to be considered in applying
interest” test, including the number, classes and character of licenses
in proximity to the location, evidence that all necessary licenses and permits
have been obtained, the effect of the grant of the license on traffic and
parking, history of prior liquor violations and criminal activity at the location,
its effect on noise level, and any other factors relevant to determining the
public convenience and advantage.
Naturally, the location of the business to be licensed, and its method
of operation, are primary factors in determining the ease or difficulty of
satisfying the 500 Foot Rule test. For example, a white tablecloth restaurant
in midtown should have few problems. However, a bar open late at night, or
a restaurant with an outdoor courtyard in a residential area may be expected
to meet more community resistance.
A prospective licensee must deal with both the local Community Board
and the State Liquor Authority in satisfying the 500 Foot Rule test, although
ultimately the decision rests with the State Liquor Authority. The Community
Board has limited power, which is only to recommend approval or disapproval
to the State Liquor Authority, and that recommendation is not binding.
Nevertheless, the Community Board can be persuasive, depending on the extent
of any opposition. The best strategy is to try to win over the Community
Board and not simply wait for the 500 Foot Rule hearing at the State Liquor
The applicant must be prepared to make presentations to both the Community
Board and the State Liquor Authority to demonstrate why it is in the “public
interest” to obtain a license when the 500 Foot Rule applies, which,
in some situations, requires careful and thoughtful planning and preparation.
Who May Be Licensed?
There are also numerous restrictions by law as to who may be licensed.
For example a person convicted of a felony or certain misdemeanors may not
be licensed unless he or she has received a Certificate of Relief from Disabilities.
A police official also cannot be licensed.
Another important rule, the “Tied House” Rule also makes it unlawful
for a liquor manufacturer or a wholesaler to be interested directly or indirectly
in any premises where any alcoholic beverage is sold at retail. This rule
is an absolute prohibition and cannot be waived by the State Liquor Authority.
There is, however, a limited exception allowing a licensed brewer to apply
for a license to sell beer or liquor.
An applicant must also keep an eye on timing - a license application
cannot even be filed until thirty days after written notification of an intent
to file is given to the Local Community Board. This has to be taken into
account in negotiating a rent concession period, and even more critically,
in planning an opening.
Keeping the License
Liquor license issues do not end merely upon the issuance of the initial
license and the opening of the restaurant for business. The restaurateur
must make sure that any changes to the ownership of the company, or in the
physical space that is licensed, all comply with law.
For example, the Alcoholic Beverage Control Law states that if there
is any change after the granting of the license in any facts required to
be set forth in the original application, a verified notice of such change
is required to be filed with the State Liquor Authority within ten days of
such change. Failure to do so, if willful and deliberate, may be cause for
If there is a change in the officers, directors or shareholders of a
corporate licensee, or a change in the members of a limited liability company,
the change must first be approved by the State Liquor Authority. A change
in the tradename of the business must also be approved.
The law also requires that before any “substantial alteration” is
made to a licensed premises, an application for approval must be filed. This
includes any enlargement or continuation of the licensed premises, or any
other physical change that materially affects the character of the premises
or any change in the location or size of bars. If a licensee wishes to serve
liquor at a private function outside the licensed premises, it also must apply
for and obtain a caterer’s permit.
The licensee should also have its staff educated on most common liquor
license violations that could be cause for suspension, cancellation or revocation
of a liquor license. The most common violations are sale to a minor,
disorderly premises, and infestation of bottles, although there are many
others. Repeated violations not only prove very costly, but also, depending
on the number and character of the violations, could jeopardize the continued
existence of the license.
This website designed by Business Edge. Click here for Restaurant Website design information