Category Archives for Food Primary Licence

CSI BC: Illicit Liquor Edition

We have all had the experience: that niggling suspicion that the bar or nightclub we’re in is watering down its booze – or maybe that the liquor coming out of the bottle isn’t of the same quality as the label would suggest. Personally I’ve only ever felt that way in questionable nightclubs, but as the decision of the General Manager of the Liquor Control and Licensing Branch in re 395047 B.C. Ltd. dba Boston Pizza makes clear, even family-friendly chain restaurants can fall into the trap of cutting corners with their liquor supply.

The facts in re Boston Pizza relate to a Boston Pizza franchise in Cranbrook, B.C. with a food primary liquor licence. 395047 B.C. Ltd. operated the Boston Pizza pursuant to a franchise agreement with Boston Pizza International Inc.

In January, 2006 a liquor inspector attended the restaurant and seized a quantity of liquor from the display shelves behind the bar as well as the liquor storage area. The seized liquor was subsequently sent to a government laboratory in Ottawa for analysis, and the restaurant’s liquor purchasing records were examined. The Branch alleged that the licensee was in contravention of s. 38 of the Liquor Control and Licensing Act by keeping for sale or selling liquor not purchased from the Liquor Distribution Branch as well as contravening s. 38.1 of the Act by diluting or adulterating liquor.

It was a term of Boston Pizza’s licence that all of its liquor purchases be made at the government liquor store in Cranbrook.  Government liquor stores keep a record of all purchases made by licensees.  The licensee was also required to keep at its premises an up-to-date register of all liquor purchased. When the liquor inspector attended the restaurant to do an illicit liquor check the manager of the local government liquor store attended as well.

The liquor inspector took possession of several bottles of liquor displayed behind the bar and kept in the liquor storage area. The seized liquor included a variety of rums, whiskies and wines.  The seized liquor were brands that were either not available in British Columbia, not available at the government liquor store in Cranbrook, or were available in Cranbrook but the manager of the government store had no record of the licensee purchasing them.  None of the liquor seized was identified in the licensee’s liquor register.

The lab results confirmed that certain of the rums and whiskies submitted for analysis were not consistent with the brands identified on the respective label.  This suggested to the liquor inspector that the licensee was either marrying different brands of whisky and rum together or was filling “premium” whisky and rum bottles with less expensive brands of liquor.

The licensee/franchisee provided the Branch with a series of excuses or justifications for the illicit liquor being on his shelves and in his store room, including:

  1. Certain of the seized liquor had been purchased in Alberta for personal use and was not actually for sale at the establishment;
  2. One of the varieties of rum seized had been confiscated from youth in a nearby parking lot and it too was not for sale; and
  3. With respect to certain of the seized wines, the licensee submitted that the liquor store shipped this variety of wine to the restaurant by accident.

Needless to say these submissions by the licensee were not well received by the Branch. In his reasons the enforcement hearing adjudicator found the evidence “overwhelming” that the licensee had in its liquor display and storage area liquor that was not purchased at the Cranbrook government liquor store, in violation of the terms and conditions of the restaurant’s licence.  Additionally the evidence supported a finding that the illicit liquor held on site was sold or being kept for sale by the licensee in contravention of the Act.

Based on the lab results, the Branch found it to be an “inescapable conclusion” that certain varieties of rum and whisky being sold at the restaurant had been adulterated or tampered with.  While there was no direct evidence on how that situation came to be, the licensee had an obligation to maintain control of the liquor in its possession to such a degree as to eliminate any possibility of the product being adulterated.

In arriving at a penalty, the Branch found that a suspension of the restaurant’s food primary license was necessary.  What should be of particular interest to owners and managers of franchised bars and restaurants is that in arriving at its decision to suspend the restaurant’s licence the Branch took into account that the “licensee operated a well-known franchise” with “many locations” throughout British Columbia and Canada.

Moreover the Branch took into the consideration the public’s reliance on established and well known operators to provide a high degree of security and consistency.  In selling illicit and adulterated liquor, the licensee “endangered the public and abused its confidence”.  Accordingly a hefty 14 day licence suspension was ordered.

I contacted Boston Pizza before publishing this post, and its legal department confirmed that the licensee’s actions as described in re Boston Pizza constituted a breach of the licensee’s franchise agreement. Boston Pizza also confirmed that the licensee 395047 B.C. Ltd. no longer operates the Boston Pizza restaurant in Cranbrook.

If your business is being investigated for contraventions of the Liquor Control and Licensing Act, or you have concerns about the impact of a breach of the Act on your franchisee agreement, consult with legal counsel at your earliest opportunity.

*Alcohol & Advocacy publishes articles for information purposes only. They are not a substitute for legal advice, and persons requiring such advice should consult legal counsel.

What signage will your establishment be required to display as “Public Educational Materials” in 2015?

In response to Recommendations #3, #4 and #5 contained in the Final Report, the Liquor Control and Licensing Branch is considering a requirement that in 2015 all licensed establishments and liquor stores display “social responsibility educational materials” in their premises.

The authority to require the posting of such materials will be contained in section 49.1 of the Act. This section is not yet in force pending industry consultations.

The basis for the government’s new “social responsibility messaging” will be Canada’s Low Risk Drinking Guidelines developed by the Canadian Centre for Drink Abuse. Beer Canada, Spirits Canada, and the Canadian Vintners Association all participated in the development of the guidelines. The Low Risk Drinking Guidelines have been adopted by Provincial Ministers of Health across Canada.

British Columbia has a history of voluntary involvement by licensees in promoting social responsibility messaging. Following the Stanley Cup riots in 2011 for example, the Branch ran an anti-binge drinking campaign with its partners at Vancouver Coastal Health and Fraser Health as well as the City of Vancouver. Posters were mailed out to all licensed establishments in British Columbia. While many establishments displayed the posters, some did not.

The feedback from licensees was that large and graphic posters are not a  “fit” with all businesses. Some establishments simply do not have the space, while for others (such as restaurants) a large poster with images of binge-drinking is not acceptable for their atmosphere.

With mandatory posting of educational materials the likely result of the Branch’s deliberations on the Recommendations, the only real outstanding question is what options will be available for licensees to display the information? Clearly a  “one-size fits all” approach is not consistent with the diverse nature of licensed premises.

The signage that is acceptable in a sports bar is different than what will be effective in a restaurant, a stadium, or a liquor retail store. The volume of information, the theme of the information, and how the information is presented are some of the key issues to be considered by the Branch.

Licensees should turn their minds now to what will be the most effective, and least disruptive, way to promote the Branch’s social responsibility messaging in their establishments. Remember, once section 49.1 of the Act takes effect failure to display the required information could result in a contravention notice.

If you have concerns about how this matter is to be dealt with you should be in touch with your industry organization representing your interests.

*Alcohol & Advocacy publishes articles for information purposes only. They are not a substitute for legal advice, and persons requiring such advice should consult legal counsel.

Minimum Wage for Liquor Servers

The minimum wage in British Columbia is set out in the Regulation of the Employment Standards Act. Since May 1, 2011 there has been a separate minimum wage for employees who serve liquor in British Columbia. The general minimum wage is currently $10.25 per hour, whereas the minimum wage for those who serve liquor is $9.00 per hour.

Though the lower minimum wage for liquor servers provides bar and restaurant owners with a slight break in their payroll costs, they must pay close attention to the language of the Regulation to ensure they stay on the right side of the law and avoid a potentially costly complaint to the Employment Standards Branch.

To be certain, the “liquor server” rate only applies to employees whose employment duties include serving liquor directly to customers and guests in premises for which a liquor licence has been issued under the Act. The “liquor server” rate does not to apply to employees who serve food and drink, but not liquor. The lower rate also does not apply to employees who work on the floor of a bar but do not serve liquor such as bussers and hosts

The definition of “liquor server” in the Regulation has the potential to create some interesting outcomes:

  • Which rate of minimum wage would apply to a bartender who mixes and pours drinks, but doesn’t serve them directly to customers?
  • Is management entitled to change a server’s hourly wage depending on whether he or she works a breakfast shift (where liquor is not likely to be sold) versus a dinner shift?

While effective payroll management is an important aspect of all successful businesses, more important still is taking the time to understand the Employment Standards Act and how it applies to your licensed establishment.

*Alcohol & Advocacy publishes articles for information purposes only. They are not a substitute for legal advice, and persons requiring such advice should consult legal counsel.

Focusing on Food Part 2

 

On December 5, 2014 the British Columbia Supreme Court published the reasons for judgment in Brownco Holdings Ltd. v. British Columbia (Liquor Control and Licensing Branch) (“Brownco Holdings”).

Brownco Holdings was a judicial review of a decision of the Branch to issue a $7,500 fine to a licensee who failed to comply with the terms of its food primary licence. The Court upheld the Branch’s decision. The Court’s reasons should be reviewed in detail by licensees as a reminder of the consequences of a food primary establishment that permits its focus to shift during the end of the evening from food sales to liquor sales.

Brownco Holdings Ltd. does business as The Local Bar and Grill in Victoria (the “Local”). The Local holds a food primary liquor licence with a lounge endorsement allowing it to serve liquor in a lounge that forms part of the establishment with no requirement that food be offered for sale in the lounge. However, for the lounge to be open the kitchen must be open and be prepared to serve food in the restaurant portion of the business.

Just after midnight on December 22, 2012 two liquor inspectors entered the Local to conduct an investigation into their belief that the Local was in breach of its licence by permitting the primary focus of the establishment to be the service liquor and not food. When the liquor inspectors entered the restaurant they were greeted by a staff person, and seated in the restaurant area. A server asked the inspectors about ordering a drink, and when the inspectors inquired about food they were told by the server that the kitchen was closed. The inspectors walked through the premises and noticed the following:

  • No other patrons were eating;
  • There was so sign of plates or cutlery on tables;
  • The kitchen appeared empty;
  • The menu boards listed drink items, but no food items; and
  • The lounge area was crowded.

The inspectors formed the conclusion that the Local that evening was focused primarily on the sale of liquor rather than food. A week after the investigation they issued a Contravention Notice to the Local, and followed up with a Notice of Enforcement Action, which led to a Branch Enforcement Hearing before an adjudicator.

The food primary terms and conditions set out in the Guide make it clear that in determining whether an establishment is operating as a restaurant or a bar, the adjudicator does not have to establish that the licensee failed to meet all of the requirements for operating as a restaurant. Failing to meet any operating requirement is sufficient for the adjudicator to conclude that a food primary licensee is operating the establishment as a bar. The adjudicator may also take into account any other relevant considerations on determining whether an establishment is operating as a restaurant or a bar.

Although the adjudicator concluded that the kitchen was in fact open until 1:00 a.m. (based on evidence from kitchen staff), and that the inspectors could have ordered food had the server properly advised them, the adjudicator nevertheless found that in all the circumstances the focus at the Local that evening was on the sale of liquor, and not food, and therefore the contravention of the licence was proven. The Supreme Court upheld the adjudicator’s decision, leaving the Local with a $7,500 fine.

If the circumstances of Brownco Holdings sound familiar, you should discuss the “late night” dining situation with your kitchen and floor manager immediately. The full decision can be read here.

*Alcohol & Advocacy publishes articles for information purposes only. They are not a substitute for legal advice, and persons requiring such advice should consult legal counsel.

Focusing on Food Part 1 – Liquor Licence Laws BC

 

The Liquor Control and Licensing Branch issues food primary licences to businesses (restaurants) where the primary purpose, through all hours and areas of operation, is the service of food. This is in contrast to liquor primary licences (bars, lounges and night clubs) where the primary purpose of the business is the service of liquor.

The rules that apply to the operation of each type of licence reflect the primary purpose of the establishment. For example food primary establishments must offer both appetizers and main courses, whereas liquor primary establishments need only offer snacks. The approval process for the two types of licence is also different. The approval of a liquor primary licence is more rigorous and depends on the views and support of local residents and government. The approval process for a food primary licence is less stringent and typically does not require the support of local government.

As a result of the different processes and considerations involved in obtaining a liquor primary licence, the Branch considers it a serious contravention of the Act to circumvent the approval process by applying for a food primary licence and then operating the establishment as a bar.

Prudent owners and managers should periodically review the terms and conditions contained in the Guide for Liquor Licensees in British Columbia to ensure that during all hours of operation, and in all areas of the restaurant, their food primary establishment meets the following requirements:

  • The kitchen is open, and staffed, whenever liquor is served
  • A menu that contains a reasonable variety of appetizers and main courses is available (chips and salsa or a bowl of peanuts do not count)
  • Tables and chairs, plates and cutlery suitable for eating are available for customers
  • Entertainment and games offered in the restaurant do not distract from the primary purpose of the service of food.

Previously there was confusion in the industry as to whether or not a food primary licensee could serve liquor to a customer without food. Fortunately the Branch clarified this area of the law recently, and confirmed that so long as you are running your restaurant “properly” a customer seated at a table in a dining area may be served liquor without food.

Despite widespread practice within the industry, if your establishment operates under a food primary licence it is not acceptable for the kitchen to be closed while alcohol is being served. Food primary establishments must be focused on the service of food during all hours of operation. Liquor must be an accompaniment to the service of food – not the other way around.

Remember that the Branch continues to monitor the restaurant industry to ensure that the conditions of food primary licences are being met, and it will take enforcement action against those establishments that choose not to follow the rules.

*Alcohol & Advocacy publishes articles for information purposes only. They are not a substitute for legal advice, and persons requiring such advice should consult legal counsel.