Alcohol is starting to pop up in all sorts of unexpected places, including some Sonic and Starbucks locations across the country. But is adding alcohol sales really a good business decision?
While alcoholic beverages are generally considered very profitable, they can sometimes be more trouble than they are worth. The costs associated with permits, employee training, and insurance can all add up. And that’s before you even make one sale. Once you begin selling alcohol, the liability only grows.3
Because selling alcohol is a high-risk operation, we advise New Jersey businesses to proceed with caution. Before incorporating alcohol sales into any business model, businesses should consider these three important questions:
- How much will it cost to obtain a liquor license and liability insurance? In many cases, obtaining liquor liability insurance can be very expensive. Therefore, it is best to explore this issue very early in the process. It is also important to review local ordinances that address the sale of alcohol.
- Does your current business entity type provide enough protection? If you are not incorporated as a corporation or limited liability company, you may incur personal liability. Therefore, you may want to first consider an entity switch.
- How will you manage the risks that come with alcohol, including serving an intoxicated customer and the sale of alcohol to minors? How much will these compliance procedures cost? Even one underage sale can be devastating to your business. In addition to the potential impact on your reputation, a violation can also hurt your bottom line, as you will likely face a revocation or suspension of your liquor license and a steep monetary fine. Of course, should an intoxicated patron be injured or cause injuries to others, you could also be exposed to criminal and civil liability. In some cases, businesses may want to consider operating a B.Y.O.B. establishment to avoid the liability associated with “serving” customers.
While adding alcohol sales to your business operation may seem like a great way to boost revenue, it can also lead to costly liability if you don’t take the proper precautions. Therefore, we highly recommend consulting with an experienced business attorney.