The Texas Alcoholic Beverage Commission (TABC) regulates the sale and service of all alcoholic beverages throughout the state of Texas. Part of this regulation involves your business obtaining and maintaining the correct license or permit in order to sell or serve alcoholic beverages. One of the larger distinctions between licenses / permits is whether they allow for on premise consumption, off premise consumption, or both. But what does that distinction really mean? And what is considered on premise for TABC? We’ll break those distinctions down below as well as some additional important information to learn about if you have an On Premise license or permit.
What Is the Difference Between On Premise and Off Premise?
While some businesses are permitted to sell alcohol for both on-premise and off premise consumption, the majority are permitted for one or the other.
On Premise
On premise means that the business not only provides an alcoholic beverage but also provides consumers a place for the beverage to be consumed. For example, a bar or restaurant has seating such as a bar with stools or tables with chairs and likely also has a food and beverage certificate so they can serve food alongside drinks. The most common businesses with On Premise permits or licenses are:
- Bars
- Restaurants
- Night clubs
- Hotels: this includes that drinks from on-site bars or restaurants can be taken to private rooms, as well as things like minibars inside the rooms
Off Premise
Off premise means that the business sells an alcoholic beverage (package of alcoholic beverages) for consumption in a place other than the point of sale. For example, a convenience store that sells six packs of beer. A common liquor permit with off premise distinction is a package store permit. The most common business with Off Premise permits or licenses are:
- Convenience stores
- Grocery stores
- Liquor stores
- Wine stores
Why Does It Matter How a Business Is Permitted?
How a business is permitted will determine what regulations the business must follow in how it sells and serves alcoholic beverages. So while you may have a mixed beverage permit or a malt beverage retailer’s permit what matters here is the consumption distinction for on premise consumption. These differences include:
Hours of Operation
These are the hours that the business can legally sell alcoholic beverages. For example, a restaurant which has an alcohol license in addition to a food and beverage certificate may be able to be open outside the hours that it is permitted to sell alcohol, since it also serves food and other types of beverages. On the other hand, a liquor store cannot be open outside the legal hours of operation for selling alcohol.
Hours of Consumption
A place with on premise consumption must follow both the hours of operation requirement and the hours of consumption. Hours of consumption refer to when an alcoholic can be consumed during. Typically this lasts an additional 15 minutes past the hours of operation. Ie if an establishment’s last call is at 1:00 AM, then the patron would be able to finish their drink by 1:15 AM.
Promotions
Once of the biggest distinctions is in what kind of promotions a business can run. Businesses with on premise permits can be held liable if patrons excessively consume alcohol on their premises. In fact, the TABC strictly regulates against Excessive Consumption. This means that businesses cannot have promotions that will likely lead to a customer excessively consuming alcohol. What does this mean specifically? We’ll explain by breaking down two common forms of promotion.
Free and Discounted Drink Promotions
Free and discounted drinks are likely prohibited under most TABC rules. However, there are some regulated exceptions such as a Mother’s day special where mothers receive one free drink alongside a meal. See our post on TABC rules for serving drinks.
Coupons and Rebates
Coupons and rebates are prohibited across the board. For example, if you wanted to do a buy one get one sale on alcoholic drinks or a discount if customers bought a large quantity of drinks. The exceptions to this rule surround things like hotel or meal packages which include a complimentary drink. The other exception are airlines who provide free drink tickets, though these still do hold certain regulations.
Ultimately, when in doubt about a promotion for your on premise permitted or licensed business, you should discuss this with your lawyer to ensure that all regulations are being responsibly followed. Failure to follow TABC regulations for on premise consumption can lead to revocation of your license, penalties or fees, the closure of your business, and even jail time.