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April 11, 2022

INDUSTRY NOTICE: Food and Beverage Certificate Audits

To: Food and Beverage Certificate Holders

TABC will begin scheduling audits in the coming months with current Food and Beverage Certificate holders. TABC randomly selects businesses for this audit each year to ensure the certificate holders meet the eligibility requirements.

Step One: Ensure You Remain Eligible to Hold a Food and Beverage Certificate

Eligibility Option 1 (new as of Jan. 1, 2022, see Senate Bill 911, 87R)

Your location must meet the definition of a “restaurant” as defined in Section 1.04(29) of the Alcoholic Beverage Code.  “Restaurant” means a business that:

(A)  operates its own permanent food service facility with commercial cooking equipment on its premises; and

(B)  prepares and offers to sell multiple entrees for consumption on or off the premises.

License/permit holders who partnered with a separate business at their location for the service and sale of food items (e.g., a third-party food truck) will not meet the requirement under Option 1 to operate their own permanent food service facility under the new definition of a restaurant in law. However, such third-party food sales on the licensed premises do count toward the total sales calculation under Option 2 below.

Eligibility Option 2

The sale of alcoholic beverages by the permit holder at the location are 60 percent or less of the total sales from the location. 

Eligibility Requirements for all FB Holders (Option 1 or Option 2) include:

  1. multiple entrées are available to customers;
  2. permanent food service facilities are maintained at the location; and
  3. hours of sale for food and alcohol are the same, except food may be sold or served before or after the legal hours of the sale of alcoholic beverages.

Step Two

  • If you are eligible based on the options above — See Step Three below to prepare for your audit.
  • If you are not eligible based on the options above — If you obtained a Food and Beverage Certificate within the past two years using relaxed Food and Beverage guidelines and feel that you no longer qualify to hold the certificate under one of the above options, please contact your local TABC office to discuss your options.

Step Three: Prepare for the Audit, Which Will Include

  • An Inspection of the Premises — A review of the food service facilities. If a third party conducts the food service, TABC will inspect their food preparation areas.
  • A Review of Sales Records — If your business qualifies for this certificate based on the business’s sales, you must keep records with separate totals for (1) alcoholic beverage sales or service, (2) food sales, and (3) all other sales categories at the location. TABC will review the most recent 12 months of alcohol invoices and sales tax reports. When combined, they should make up the location’s total sales. If a third party is responsible for food service at your location, make sure that they can provide the information for food sales.
  • A Review of the Food Menu.

The following provides added clarity to the terms used in the options presented above:

  • Food Service Facilities — Refers to a designated permanent portion of the licensed location where food is stored and prepared for consumption at the location. If you operate in a hotel or motel, there must be food service facilities for each separate licensed location.
  • EntrĂ©e — Refers to a course of a meal that may include an appetizer, small plate, main dish, dessert, or other similar food item.

If you have questions concerning this notification, please contact your local TABC office and ask to speak with the auditing division. This notice does not cover every requirement for obtaining and maintaining a Food and Beverage Certificate. For a more detailed explanation of the certificate’s requirements, refer to TABC Rule 33.5, Food and Beverage Certificate. (Adopted 12/3/2021)

Sincerely,

Josh Alexander, Interim Director

Audit and Investigations Division