Changes in Catering Permit Policies at the SLA Create Some Challenges for Event Venue Operators and Caterers
Wedding season is just around the corner as caterers continue to book events for the 2024-2025 season. The State Liquor Authority (SLA) policy limiting the number of catering permits at event venues has thrown some of the industry into a difficult situation. While the Commissioners granted some exceptions for calendar year 2023 for events that were already booked prior to adopting the new policy, the SLA indicated that it will apply the new limit on catering permits starting January 1, 2024.
The new policy is only to issue only 12 catering permits for any 6-month period to a single location. This applies whether the premises are licensed or unlicensed. Some event venues (such as wineries or breweries) may have an on-premises license, but limited menu capability for an event such as a wedding. In the past, caterers were allowed to obtain a catering permit to provide food and beverage for events as long as the permanent licensee permitted the caterer to do so- an option used for many years for some beautiful event venues with limited capability to provide larger catered events.
Some event venues allow catering because they are not in the food and beverage business and only want to rent their space for a fee. In this business model, the event venue user could separately contract with caterers to provide food and beverage for their event. Under the new policy, however, an event venue can only permit a limited number of events where alcohol is served (weddings for the most part).
The SLA wants venues that host more frequent events to get a permanent license rather that use single event permits to get around the fuller review for a permanent license that involves municipal and public involvement in the licensing process. Some event venues, however, do not have the capability of qualifying for food and beverage establishment licenses because of limited availability of electric, water or sewer or local zoning restrictions. (Take for example, the increasingly popular barn wedding venues in rural settings without full utility services serving the barn.) To satisfy health department and SLA requirements for a permanent license, the premises must generally have refrigeration, a means for heating of food, a staging or food prep area, a 3-bay sink, and commercial dishwashing equipment. There is not specific required refrigeration and heating equipment, rather the SLA evaluates it on a case-by-case basis, stating that the type of equipment must make sense with the proposed method of operation and menu being proposed.
Despite some of the challenges this new policy has created, there are a number of options for these event venues, including some seasonal license options. Typically, the investment in permanent licensing is around the same as the earned revenues from one or two events at the event venue. Return on investment is generally fairly quick with the increased revenue generating asset.
A license can be applied for by the event venue property owner, the caterer, or a joint arrangement between the two. In any arrangement, there will be licensing issues and the need for written agreements as both businesses will be responsible with respect to the liquor license, sales tax, payroll and insurances.
Our team can help the two businesses involved (event premise and catering business) mitigate risks and select the business structure that best meets the event venue’s goals and needs for operations under the SLA’s new catering restrictions. An investment will protect the existing business from unnecessary risk exposure for regulatory compliance, being closed down by the SLA, or denied catering permits that will leave you in breach of contract with customers. Our goal is to help industry members to navigate their options for moving forward given the changes in policy at the SLA in this highly competitive industry.
Tracy Jong is a Senior attorney at Evans Fox LLP with 30 years of experience focusing her practice in business law, intellectual property and licensing for alcohol and cannabis. Tracy Jong is a member of the New York Bar and is a registered attorney at the United States Patent and Trademark Office. She can be reached at [email protected].
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The content has been prepared for informational purposes only; it should not be construed as legal or tax advice, does not create or constitute an attorney-client relationship, and readers should not act upon it without seeking professional counsel.