Breweries & Food Sales
By Andrew Smith
Over the last decade, South Carolinians have watched as breweries not only grew in number, but also became family-friendly establishments, like many other restaurants. While both breweries and restaurants may offer local cuisine, breweries offer fresh craft beer and the ability to see how the sausage gets made. Besides vat-to-table beer, breweries are often located in industrially zoned areas, where there is ample space for their operations. This extra space enables breweries to have live music, copious amounts of parking, Cornhole, a dog park, a kids’ play area, wedding receptions, space for social distancing, and much more.
While eating dinner at a brewery may be a typical Friday night for many South Carolinians, this was not always an option. The most significant change in our state’s laws came in 2014, when former Governor Nikki Haley approved a bill “to authorize a brewery to sell beer produced on its premises for on-site consumption at an eating area within the brewery.” 2013 S.C. H.B. 3512. However, since the bill was passed, the idea of an “eating area” has become much less about serving food and more about being in compliance with DHEC standards for eating and drinking establishments.
Before this law, breweries were only authorized to sell their beer for on-site consumption if the beer was sold in conjunction with a tour of the facility. If breweries choose to offer tours, among other requirements, they cannot serve beer with an excess of twelve percent alcohol by volume, they cannot serve more than forty-eight ounces of beer to a single person within twenty-four hours, and the sales must be held in conjunction with a tour. See S.C. Code Ann. § 61-4-1515(A).
Nowadays, a brewery can sell their beer “to consumers on site for on-premises consumption within an area of its permitted and licensed premises approved by the rules and regulations of the Department of Health and Environmental Control governing eating and drinking establishments and other food service establishments.” S.C. Code Ann. § 61-4-1515(B)(1). Even without serving food, a brewery may qualify for a retail on-premises consumption permit for the sale of beer and wine so long as DHEC approves their “eating area” for eating and drinking.
On the other hand, breweries can sell liquor in a food area only if they have a liquor license, and the business is bona fide engaged primarily and substantially in the preparation and serving of meals. See S.C. Const. Ann. Art. VIII-A, § 1 (B)(2). This condition imposed by the South Carolina Constitution has the following legislative interpretation:
“Bona fide engaged primarily and substantially in the preparation and serving of meals” means a business that provides facilities for seating not fewer than forty persons simultaneously at tables for the service of meals and that: (a) is equipped with a kitchen that is utilized for the cooking, preparation, and serving of meals upon customer request at normal meal times; (b) has readily available to its guests and patrons either menus with the listings of various meals offered for service or a listing of available meals and foods, posted in a conspicuous place readily discernible by the guest or patrons; and (c) prepares for service to customers, upon the demand of the customer, hot meals at least once each day the business establishment chooses to be open.
S.C. Code Ann. § 61-6-20(2).
(1) “Kitchen” means a separate and distinct area of the business establishment that is used solely for the preparation, serving, and disposal of solid foods that make up meals. The area must be adequately equipped for the cooking, serving, and storage of solid foods and must include at least twenty-one cubic feet of refrigerated space for food and a stove.
(2) “Meal” means an assortment of various prepared foods available to guests on the licensed premises during the normal mealtimes that occur when the licensed business establishment is open to the public. Sandwiches, boiled eggs, sausages, and other snacks prepared off the licensed premises but sold there are not a meal.
(3) “Primarily” means that the serving of the meals by a business establishment is a regular source of business to the licensed establishment, that meals are served upon the demand of guests and patrons during the normal mealtimes that occur when the licensed business establishment is open to the public, and that an adequate supply of food is present on the licensed premises to meet the demand.
S.C. Code Ann. § 61-6-1610(I).
Consequently, a brewery which does not have a kitchen but instead allows food trucks to sell food on their premises wound not qualify for a liquor license.
Ultimately, it is much easier for a brewery to refrain from selling liquor as it enables the brewery to focus completely on its product quality and atmosphere. However, if a brewery can afford to designate a portion of their business to be bona fide engaged primarily and substantially in the preparation and serving of meals, then that brewery would be able to increase its profitability by serving liquor as well.
On a side note, a brewery could, hypothetically, sell liquor-infused ice cream for on premises consumption without first obtaining a liquor license or serving food. This is due to the Alcoholic Beverage Control Act’s treatment of alcoholic ice cream as a food product rather than a beverage. The ideology is the same that allows a brewery to sell its beer cheese without any age restrictions.
If you or someone you know runs a brewery or is thinking of starting a brewery and does not wish to run afoul of the law, contact an attorney from the Collins and Lacy Retail & Hospitality team to speak with someone with experience in licensing and alcohol liability.
Contributor: Justin Lawlor