Restaurant Law Blog

Sunday, November 13, 2011

State Liquor Authority Authorizes Groupon Coupons For Liquor Sales

The New York State Liquor Authority would prohibits a licensed establishment from transferring the financial interest in its business to an unlicensed third-party.  This is done to prevent those who otherwise would not qualify for a license from benefiting financially under someone else's liquor license. At the request of Groupon, the New York State Liquor Authority issued a declaratory ruling as to whether Groupon’s proposed coupons would be in violation of the Alcohol Beverage Control Law.

The SLA described the proposal as a third-party provider desiring to sell coupons on its website to be redeemed for discounted food and alcohol at bars and restaurants.  The questions before the SLA were: (1) whether the agreement between Groupon and a licensed retailer would be deemed an illegal availing of the license, and (2) whether the promotion constitutes a prohibited unlimited drinks offering.

Section 111 of the Alcohol Beverage Control Law prohibits an establishment from making its license available to a person who is not been approved by the SLA.  The SLA determined that Groupon, through its coupons, would be entitled to a relatively insignificant percentage of the establishment’s income from the sale of alcoholic beverages and therefore its proposal would not constitute a violation of Section 111.  Section 117–a of the Alcohol Beverage Control Law prohibits establishments from offering unlimited drinks to their patrons during a set period for a fixed price, and the authority has adopted an informal standard that any promotion in which drinks are offered at less than half the retailer’s regular price will be deemed a violation of Section 117–a.  The SLA determined that since Groupon would agree to not give customers more than a 50% discount off the establishment’s prices its coupon proposal would not violate Section 117–a.

James DiPasquale, Attorney at Law

DIPASQUALE LAW GROUP

Restaurant Law New York

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