A Portsmouth restaurant filed a lawsuit challenging Virginia’s food-to-alcohol ratio requirements that it argues are outdated and unfair for mixed beverage licensees — especially as the state recently welcomed casinos and exempted the gaming centers from such rules.
Regulations from the Virginia Alcoholic Beverage Control Authority stipulate that a minimum 45% of the total gross sales must be from food and nonalcoholic beverages, while liquor sales should comprise no more than 55%, for eateries with a mixed beverage license.
“This is an antiquated rule that does not work in today’s society,” said Bill Stanley, a state senator and attorney involved in the litigation. “We can’t use an antiquated philosophy or policy and apply it to a modern day business. It’s not right.”
The plaintiff is Fish and Slips, a bar and grill within Tidewater Yacht Marina. The lawsuit, filed in the Portsmouth Circuit Court, names Gov. Glenn Youngkin and Dale Farino, the chief executive officer of beverage control authority, as defendants, as well as the Virginia Alcohol Control Board.
The governor did not respond to a request for comment. A Virginia ABC spokesperson explained Thursday the agency was aware of the litigation but had not yet been served, and subsequently declined to comment further.
The lawsuit states the historical framework of the food-to-alcohol ratio requirements harken to the days of Prohibition.
“Today, the (Mixed Beverage Annual Review) law does not achieve the rationale of prohibiting saloons but rather it is effectively adversely impacting the ability and freedom of restaurant entrepreneurs to freely price the food and meals that they serve to their customers,” the lawsuit reads. “… For any restaurant that is maintaining the 45/55 ratio, if the ABC raises prices (for liquor), the restaurant, to maintain the required ratio and to keep its license to sell mixed beverages, has no choice but to raise its food prices.”
The Mixed Beverage Annual Review (MBAR) is the name of a report that documents the food and beverage sales of mixed-beverage licensees.
The lawsuit further asserts that it creates an unlevel playing field because exemptions have been granted to other types of businesses, such as amphitheaters and gaming facilities.
“A law passed by the General Assembly in 2022 allowed Virginia to exempt casino and gaming parlors from MBAR, enabling them to operate (24 hours a day) without the same food-to-beverage ratio requirements imposed upon Virginia restaurants, thereby giving those establishments that have a bar and restaurant facility within them a competitive advantage over restaurants that operate in the same region as the gaming establishment,” it states.
Fish and Slips is about 4 miles from Rivers Casino Portsmouth, which opened in January 2023.
The lawsuit argues the regulations are subsequently in violation of the 14th Amendment of the U.S. Constitution, which guarantees the right to due process and equal protection under the law, and the state constitution, which says that no man or set of men are entitled to exclusive or separate privileges from the community.
Fish and Slips is asking the court to declare MBAR statues, ABC regulations and exemptions granted by the General Assembly as unconstitutional, and to grant temporary and permanent injunctive relief, and any other relief the court finds just.
Stanley said he believes the current rules go against “everything we believe in Virginia.”
“This comes from the belief that the MBAR structure that we have in Virginia is unconstitutional and adversely effects small businesses and small restaurant owners who are competing in a world where we are giving special advantages to things like the casinos,” he said.
Legislation that would have eased the rules around how much food Virginia bars and restaurants serving liquor must sell died in the House of Delegates this year.
Several Hampton Roads restaurant operators voiced support for the bill. But the measure faced opposition from a Richmond-based lobbying group called the Virginia Restaurant Association, made up of owners of restaurants such as The Tobacco Company Restaurant in Richmond and Northern Virginia’s Great American Restaurants group.
Similar legislation was put forth in 2019. Former state Sen. Dick Saslaw, who was among those that opposed that attempt, argued that “if you can’t meet (the current) ratio, you ain’t running a restaurant; you are flat running a bar.”
Stanley said the failed attempts at legislative reform signaled it was time to try a different route.
“When the legislature fails to act to protect its citizens,” Stanley said,” then that’s what our courts are for.”
Katie King, katie.king@virginiamedia.com
