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Feb 1

District of Columbia Alcohol License Renewals for Restaurants begin Feb/March 2013

Every three (3) years, alcohol licenses in the District of Columbia come up for renewal.  The renewal period begins in March of 2013 for CR/CX/DR/DX licenses, and September of 2013 for CT/CN/DT/DN licenses.

In order to renew a license,  all licensees must submit the following documents to the Alcohol Beverage Regulation Administration (ABRA):

  • Certificate of Good Standing from DCRA – this form demonstrates that the licensee is properly registered with the District of Columbia and has submitted all of its 2 year reports;
  • Business Clean Hands Form from OTR – this form certifies that the licensee does not owe the District any outstanding taxes (sales & use taxes, unincorporated business tax, etc);
  • Individual Clean Hands Forms from OTR – this form certifies that the owners of the entity do not owe the District of Columbia any outstanding taxes; and
  • Annual License Fee – Please refer to the chart below to determine the license fee that applies to your particular license.

During the renewal period, all establishments (licensees) will be re-placarded, and the ANC Commissions as well as neighbors will have an opportunity to review the license.  Because all licensees will be placarded, it is a good time for you to consider requesting substantial changes to your license (i.e., increase hours or seating occupancy) or changes to your Voluntary Agreement, if you have one.

If your Voluntary Agreement has been in effect for at least 4 years, you may request that the ABRA board terminate the Voluntary Agreement.  To do so, however, you must first negotiate with your ANC to request this change.

Please let us know if you need any assistance with renewals or negotiations with you respective ANC for any changes to your Voluntary Agreement.

  Class       Type                   Capacity           Fee

CR-01    Restaurant          99 or fewer         $1,000

CR-02    Restaurant        100 to 199             $1,300

CR-03    Restaurant          200 to 499          $1,950

CR-04    Restaurant          500 or more       $2,600

CX         Multipurpose    facility                      $1,950

DR-01    Restaurant          99 or fewer         $600

DR-02    Restaurant          100 to 199           $780

DR-03    Restaurant          200 to 499          $1,170

DR-04    Restaurant          500 or more       $1,560

DX        Multipurpose    facility                       $650

Dec 3

Arlington Treasurer Frank O’Leary to Publicize Tax Delinquent Restaurants in Media; Lobbying for Power to Shut Restaurants Down

Arlington County Treasurer Frank O’Leary announced today that he intends to acquire the power to seize and shut down restaurants that have large meals tax debts.  Arlington County imposes a 4 percent food and beverage (“meals”) tax on restaurants in addition to Virginia state’s sales tax.  O’Leary asserts that restaurants owe more than $900,000 in unpaid meals taxes to the county.

O’Leary’s first step in targeting delinquent restaurants will be to send a letter to owners warning them that their tax delinquencies will be publicized in the media and on the county’s web site if they do not pay their tax bill or enter into a repayment plan.  Simultaneously, O’Leary is meeting with the county’s state delegates to gain support for a bill to be introduced to the Virginia General Assembly that will grant him the authority to close down severely delinquent restaurants.

Click here to read the complete interview with O’Leary.

Nov 12

Application Available for Extended Alcohol Serving Hours for Inauguration Week Celebrations

The District of Columbia’s Alcoholic Beverage Control Administration (“ABRA”) is accepting applications from alcohol licensed establishments to sell or serve alcoholic beverages until 4 a.m. and to operate 24 hours a day during Inauguration Week, from Monday, January 14, 2013 through Monday, January 21, 2013.

To be eligible for the extended hours, a licensee registering with ABRA either: (1) must not have a voluntary agreement, or (2) possess a voluntary agreement without any closing hour restrictions.  Nightclubs are also required to submit a public safety or security plan.  This extension of hours does not extend the permitted hours of entertainment for the establishment nor does it alter the requirement that restaurants maintain their kitchens open at least two-hours prior to closing.

There is a registration fee based on the license class.  The daily license fee is $250 for nightclubs, $100 for restaurants and taverns, and $50 for hotels, multipurpose facilities and other license classes.  The deadline to apply for this license is Monday, January 7, 2013.

ABRA is also accepting extension of hours applications for certain holidays in 2013, including New Year’s Eve and New Year’s Day.  Applicants must submit an application and safety plan no fewer than 30 days prior to the holiday that the licensee wishes to extend its hours of service and operation.  The deadline to extend hours for New Year’s Eve is Monday, December 3, 2012.

In the last quarter of 2012, 49 bars and restaurants extended their hours until 4 a.m. on Columbus Day and Veterans Day.  Here is the complete list: 1) Haydee’s Restaurant; 2) Haydee’s 2000; 3) Boundary Stone Public House; 4) Old Ebbitt Grill; 5) U Street Music Hall; 6) 18th Street Lounge; 7) K Street; 8 ) Eye Bar/Garden of Eden; 9) Café Asia; 10) Taste; 11) Mova; 12) Sabor Latino; 13) Toledo Lounge;  14) Phase I of Dupont; 15) Rock N Roll Hotel; 16) Ziegfeld’s Secrets;  17) Jimmy Valentine’s; 18) Current Sushi;  19) Midtown;  20) Dangerously Delicious DC; 21) The Argonaut;  22) Jr’s Bar and Brill; 23) Dupont Italian Kitchen;  24) Cobalt/30 Degrees/Level One;  25) Bachelor’s Mill/Back Door Pub;  26) Dirty Martini Inn Bar/Dirty Bar;  27) Little Miss Whiskey’s Golden Dollar;  28) Jackie Lee’s Lounge;  29) Phase I (SE);  30) Lux;  31) Ultrabar/Chroma; 32) Cities; 33) Barcode; 34) Opera Ultra Lounge; 35) Lima Restaurant and Lounge; 36) Tattoo; 37) Lotus; 38) Camelot; 39) Portico; 40) Marnon Café; 41) Josephine; 42) Music and Arts Club; 43) Redline; 44) Sesto Senso; 45) Johanna’s Restaurant;  46) Stadium; 47) Red Palace; 48) Café Dupont, and 49) Bravo Bravo.

Nov 5

DCRA Announces Business License Amnesty Program to Run Through December 31, 2012

On October 31, 2012, District of Columbia’s Mayor Vincent Gray announced a temporary amnesty program that will allow businesses operating without or on an expired business license (expired prior to August 1, 2012) to obtain one without receiving $2,000 in penalties, from November 1 through December 31, 2012.

The amnesty program, which will be administered by the Department of Consumer and Regulatory Affairs (“DCRA”) mostly targets delis, restaurants, grocery stores, beauty salons and barber shops, all of which have the lowest compliance rates of businesses in the city for obtaining proper business registrations and licenses.

Additionally, any corporate entity with expired or missing corporation filings, and businesses operating without current registration of their UPC scanners, commercial weights or scales, produce scales or gas pumps may also take advantage of this amnesty program.

The program comes in the wake of the controversy that arose this summer between DCRA and a group of six businesses that sell used records, furniture, clothing, and jewelry.  DCRA investigators visited these stores and required them to obtain secondhand business licenses, which have more requirements than a general business license.  The secondhand business license costs nearly $700 every two years and comes with strict inventory-reporting and background-check requirements as checks against the receipt of stolen goods.

After intense lobbying by the Adams Morgan Business Improvement District (“BID”) and a group called “Save Our Shops”, DCRA published new regulations exempting used and vintage stores from obtaining a secondhand business license, as long as certain requirements were satisfied.  To read the full text of the regulations, click here.

Oct 31

No Compromise: Food Truck Association Continues Campaign Against DCRA Regulations

The D.C. Food Truck Association (“DCFTA”) activated its public relations and lobbying campaign to oppose the District of Columbia’s Department of Consumer and Regulatory Affairs’ (“DCRA”) second attempt to update the vending regulations in the District.  On October 5, DCRA published proposed regulations to update the 30-year-old regulations which provide health and safety guidelines for sidewalk and roadway vendors but currently do not include food trucks.

In a continuous effort to encourage food truck owners to operate in designated areas and avoid overcrowding city streets, the Government’s most recent legislation establishes Mobile Roadway Vending (“MRV”) zones, wherein up to three food trucks may park from 11:00 a.m. to 3:00 p.m. so long as the individual trucks hold operating licenses.  Outside of these zones, food trucks are still permitted to park in metered parking spaces as they have been, provided they pay for the meter.

In spite of the flexibility that this legislation gives to food trucks while also clearing up traffic in otherwise crowded streets, the DCFTA vehemently opposes the newly proposed regulations.  In particular, the DCFTA cites the need for dense concentration of food trucks during certain planned events as a primary incentive to turn down the Government’s proposal.  DCFTA also objects to the requirement that an MRV may not be established “[w]here the adjacent unobstructed sidewalk is less than ten feet (10 ft.) wide in the Central Business District or seven feet (7 ft.) wide outside the Central Business District.”

Sidewalk vendors currently have a similar restriction, which requires vendors to maintain ten feet (10 ft.) and seven feet (7 ft.) walkways where they vend.  Restaurants with sidewalk cafes must also follow strict regulations that maintain unobstructed walkways.  Food trucks claim they are being unduly burdened by these long established rules for maintaining clear walkways for pedestrians.

DCFTA is lobbying the D.C. Council, which ultimately must vote on these regulations, and is asking food truck supporters to petition Mayor Vincent Gray to rewrite the rules.  The public can still make comments on these regulations until 5pm on November 13th.

Comments may be sent to Helder Gil, Legislative Affairs Specialist, the Department of Consumer and Regulatory Affairs at 1100 Fourth St. SW, Room 5164, Washington, D.C. 20024. Comments may be e-mailed to DCVendingRegs@dc.gov.

Oct 2

Is it legal for restaurants to charge for No-Shows and to have different prices for Peak Hour Dining?

With low profit margins, restaurants must be innovative when it comes to maximizing resources.  Restaurants allocate enormous resources into confirming nightly reservations and increasingly, owners are seeking ways to stop the resource drain that occurs when diners cancel reservations or do not show up.

Many restaurants are now requiring credit card numbers to reserve a table, and charging a $50 no-show fee if guests do not cancel at least 48 hours ahead of time.  Both the New York Times and the Wall Street Journal recently refer to the research of Sherri Kimes, a professor at the Cornell School of Hotel Administration: “[H]er research has found that consumers are open to being charged for last-minute cancellations—as long as restaurants keep up their end of the bargain.”

Renowned restaurants such as Del Posto in New York City and Coi in San Francisco charge $50 and $100 respectively for no-shows.  Closer to home, Restaurant Eve, CityZen, Rouge 24, and the Inn at Little Washington all have cancellation policies that include fees for late cancellations and no-shows.

Another innovative method restaurants are utilizing is charging different prices for meals at different times.  Currently, websites like Savored and Leloca give diners a discount for making a reservation during off-peak hours.  In D.C., there are 65 restaurants that offer discounts through Savored.  Following the trend started by airlines and hotels, restaurants are also considering charging more for services during high peak hours.  Professor Kimes’ research indicates that consumers are okay with “different prices by time of day and day of week” as long as the inverse, that “it’s 20 percent cheaper to come during the week than on the weekend,” is advertised to the consumer.

While charging for no-shows may help the bottom line, restaurants must be very clear with customers of the rules that are set in place.  The best way for a restaurant to protect itself is to create a contract with the customers.  The contract provisions must be clear and if a reservation is made online, there should be click options that indicate the customer understands the terms of the agreement and when a contract is formed.  Both OpenTables and CityEats have terms of each reservation available when the diner is required to give their credit card information for reservations.  Rouge 24 has a guest questionnaire which explains its policies and also asks in advance about dietary restriction.

The same rules apply when a restaurant employee orally asks for a customer’s credit card to secure a reservation.  As the restaurant employee takes the credit card number, he or she must disclose to the customer that unless the customer cancels by a certain time (i.e., some require 24 hours notice, 4 hours notice) that the customer’s card will be charged a deposit fee for the reservation of the table.  The contract issues relate to informing the customer of the terms of the reservation, including both the costs and the obligation to cancel within time limits.  The terms and conditions must be clearly stated prior to the customer’s purchase of a meal ticket or deposit to secure a reservation.

Sep 28

Clyde’s Former Corporate Controller Pleads Guilty to Embezzlement

Susan Preston, former corporate controller for Clyde’s Restaurant Group, pleaded guilty before the U.S. District Court for the District of Columbia to a federal charge of mail fraud for her embezzlement of approximately $647,547 from the company.  She faces maximum of 20 years in prison as well as fines and other penalties.

Preston worked for Clyde’s from 1982 until September 2011, where she oversaw the centralized accounting function, which included budget matters, accounts payable, accounts receivable, among other responsibilities.  In November 2011, she started her own consulting firm, which specializes in restaurant operations, financial reporting, budgeting, inventory management, and employee benefits.

According to a press release from the United States Attorney’s Office for the District of Columbia, from 2001 to 2011, Preston embezzled approximately $647,547 from Clyde’s by diverting her former employer’s money to pay her personal credit card; charging the corporate credit cards in Clyde’s name (and paid by Clyde’s money) to pay for her unauthorized personal expenses, and using a Clyde’s vendor (paid by Clyde’s funds) to obtain goods for her personal use.  Preston attempted to hide her embezzlement by asking a vendor to alter invoices, fabricating e-mail messages, and  re-categorizing credit card expenses.  When she learned of an audit on the corporate credit cards, she falsified her Clyde’s corporate credit card statement to delete those items which she knew were not authorized business expenses.

Preston’s sentencing date is set for December 20, 2012.  As part of her plea agreement, she has agreed to sign over $258,000 worth of equity-based incentive stock awards and/or options to Clyde’s, and agreed to additional forfeiture of a money judgment of $389,069.

This prosecution serves as a reminder to all restaurant owners that they must be wary of employee theft.  Restaurant owners need to know the warning signs of embezzlement.  A person who embezzles money from the restaurant is usually in the position to manipulate documents or accounts when other employees are not around.  Therefore, as an owner, one needs to be on the lookout for any profit declines, abnormal expenses, or unorganized financial records.  Once a restaurant owner suspects an employee of embezzling money, a lawyer can help gather evidence for the investigation.  A comprehensive audit of all financial accounts is usually necessary so in addition to hiring a lawyer, a restaurant owner would also need to hire a forensic accountant.  Embezzlement cases can be handled internally within the company, or, as was done in Clyde’s case, the business owner can turn it over to the authorities so that it can be handled as a criminal matter.  Business owners can also choose to file a civil lawsuit against the employee who embezzled to recover lost money.

Sep 26

Restaurant Chain Fined $850,000 for Failing to File Premerger Notification with DOJ, FTC

On September 25, 2012, the Federal Trade Commission (“FTC”) announced that Biglari Holdings, Inc., which owns Steak ‘n Shake and Western Sizzlin restaurant chains, agreed to pay $850,000 in civil penalties to resolve allegations that it failed to make a premerger notification filing in connection with its acquisition of 8.7% of the outstanding voting securities of Cracker Barrel Old Country Store, Inc.  http://www.ftc.gov/opa/2012/09/biglari.shtm

Premerger Rules

The Hart-Scott-Rodino (“HSR”) Act requires that parties notify the FTC and the Department of Justice (“DOJ”) of transactions that exceed $68.2 million.  After submitting the notification form, parties must observe a waiting period before closing their transaction while the two agencies determine whether the transaction may harm competition.  The HSR Act contains an exemption for acquisitions of up to ten percent of voting securities if the acquisition is made solely for the purpose of investment.   

Allegations

On September 25, the DOJ filed a complaint on behalf of the FTC in the U.S. District Court for theDistrict of Columbia.  According to the DOJ’s complaint, in May and June 2011, Biglari Holdings acquired voting securities of Cracker Barrel.  On June 8, 2011, Biglari Holdings exceeded the then-$66 million threshold for HSR filings, and continued to acquire additional voting securities through June 13, 2011.  The complaint alleges that, at the time of its acquisitions, Biglari Holdings intended to actively participate in the management of Cracker Barrel, including seeking a seat on the company’s board of directors.

Investment Intent

Biglari Holdings released a statement indicating that the FTC mischaracterizes Biglari Holdings’ investment intent.  The statement indicates that Biglari Holdings has made clear in all of its public filings that it has no intention of becoming actively involved in day- to-day management or in seeking control of the Board of Cracker Barrel.  At the same time, however, Biglari Holdings has been trying to gain a seat on Cracker Barrel’s board of directors.  Reportedly, Biglari Holdings will nominate Chairman Sardar Biglari and the company’s vice chairman, Philip L. Cooley, for Cracker Barrel’s board at the company’s annual meeting November 15, 2012.

Lessons Learned

The enforcement action sends a strong message to corporate executives and lawyers to take HSR reporting requirements seriously.  The HSR Act’s investment exemption is limited to acquisitions that are “solely” for the purpose of a passive investment and does not apply if a corporation or individual intends on actively participating in the management of the business being acquired.  In alleging that the exemption did not apply, the complaint stated that shortly after the 2011 acquisition Biglari sought Cracker Barrel board representation and proposed business changes to Cracker Barrel’s top management.  Because Biglari sought board representation, the FTC took the position that Biglari’s investment is not passive.  The antitrust agencies have construed the exemption narrowly and the agencies have made it abundantly clear that they will prosecute those that rely on aggressively broad interpretations of HSR exemptions.

 

Sep 20

ABRA Deputy General Counsel Resigns; Edward Rich Joins Staff

Thea Davis, the Deputy General Counsel at the District of Columbia’s Alcoholic Beverage Regulation Administration (“ABRA”) has resigned effective Friday, September 21, 2012.

Ms. Davis joined ABRA in December 2008 after two years as a Corporate Associate with Varnum LLP, a Michigan law firm.  Ms. Davis received her law degree from Thomas M. Cooley Law School in Michigan, and her Master of Laws in Taxation from Georgetown University Law Center.

The ABRA Adjudication/Legal Division advises the Alcohol Beverage Control Board (“ABC Board”) to ensure its decisions are in compliance with federal and local alcohol beverage laws, as well as proposes to the D.C. Council new laws regulating the manufacture, distribution, and sale of alcoholic beverages in the city.

Edward Rich will replace Ms. Davis as Deputy General Counsel.  Mr. Rich previously worked as General Counsel at the D.C. Taxi Cab Commission.

Sep 17

D.C. Hospitality on the Rise in Spite of Slow Economic Growth

The most recent national monthly employment report was anything but promising.  With only 96,000 jobs created nationwide in the month of August, signs of a full recovery still seem far off in the distance.  However, in spite of these numbers, there are some positive trends for small businesses in the area.

An in-depth analysis of the jobs report reveals that nearly one third of all employment in the last month was provided by the hospitality sector, which includes such businesses as local restaurants, bars, theaters, and hotels.  According to Mark Lee of the Washington Blade, in the District of Columbia, about one half of August employment originated from the hospitality industry, and in total, hospitality accounts for around 100,000 of the 490,000 private sector jobs in the District.

These numbers point to the growing presence and importance of the local hospitality community, which analysts believe will remain a proactive employer in the DC area for the foreseeable future.  As the metropolitan area sees continuously strong population growth, the demand for food, drink, and entertainment will rise as well, fueled by the needs of city-dwellers who desire to live a comfortable urban life.  However, as Lee points out, hospitality businesses in DC suffer from strict legislation that hinders their profitability and their ability to operate efficiently.  In particular, the ability of protestors and dissidents to intervene and bottleneck restaurants’ attempts to acquire alcohol licenses results in a large amount of tedium and unnecessary restrictions on their business operations.  As discussed in our July 13 blog post,  the D.C. Council will consider legislation this Fall that will address some of these concerns.

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