MRM EXCLUSIVE: Risks and Rewards of BYOB

“Sorry. We don’t have a liquor license yet.” Naturally, new restaurateurs hate to deliver such disappointing news to guests who ask about beer and wine. Unfortunately, however, liquor licenses tend to be extremely expensive necessitating that many new restaurateurs proceed without licenses as they build their cash reserves. An interim solution here is to go “BYOB” by encouraging customers to bring their own alcohol. Many restaurateurs see this as a way to retain the loyalty of guests who might otherwise defect to competitors where the spirits flow freely.

The BYOB approach can work well for some restaurateurs. However, it is important to pay attention to a few operational considerations and potential legal risks. Operationally, whether BYOB makes sense for your restaurant depends in large part on how your insurance company feels about the idea, because some insurers will impose hefty rate increases if guests are allowed to tote bottles onto the premises.

Compliance-wise…