The Washington Post has an article today on the proliferation of Chipotle-inspired “fast casual” restaurants that allow customers to customize their meals with a variety of fresh ingredients. The article notes that, while more traditional fast food establishments (think McDonalds or Wendy’s or Taco) are struggling to find new opportunities for growth, fast casual restaurants are booming. One of the things missing from the story’s analysis of why these restaurants are so popular is the fact that many serve alcohol. For Millennials on a budget, or Generation Xers looking for a place to get dinner with three little kids (like my wife and I, for example), the prospect of getting a beer with my burger or burrito is an attractive one. It makes the whole dining experience seem just that much more civilized.
In my own law practice, I work regularly with fast casual restaurant clients lately on liquor license and leasing issues. In the latter instance, one of the critical elements of my lease review and negotiation is to ensure that the lease contains provisions related to liquor licenses, including that service of beer and wine be included in the permitted uses and, where possible, the inclusion of a liquor license contingency, i.e. a provision that allows the tenant to terminate the lease if it cannot obtain a liquor license for the establishment.
Where the lease is for a more traditional sit-down restaurant, such provisions may be included as a matter of course, but where a tenant is seeking to open a small burrito shop, that may not be the case. Indeed, the landlord may not even be aware of the tenant’s intention to apply for a license to serve beer and wine, or the importance of such a license to the tenant’s overall business model. If not, the landlord (who generally prepares the first draft of the lease) may not include a liquor license contingency, or even include the service of alcoholic beverages among the permitted uses at the establishment. If either is not included, it can create significant problems down the road.
Of course, that is why a thorough review of any proposed lease is necessary before the tenant signs, preferably by a lawyer with a strong familiarity with the restaurant business — and who has discussed with the tenant in detail his specific business plan.