What is a Food and Beverage Certificate (FB) and which permits can it attach to?

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A Food and Beverage Certificate (FB) is a certificate TABC issues to a licensed location that has permanent food service facilities and qualifies either as a restaurant or by keeping alcohol at 60 percent or less of its receipts. It attaches to four retail authorizations: the Mixed Beverage Permit (MB), the Wine and Malt Beverage Retailer’s Permit (BG), the Private Club Registration Permit (N), and the Retail Dealer’s On-Premise License (BE). On its own it authorizes no alcohol sales; it changes the rules that apply to the permit it sits on.

The four permits and where the rules live

The certificate is created separately for each permit it can attach to, in nearly identical sections of the Alcoholic Beverage Code:

Primary permit or license Code section
Mixed Beverage Permit (MB) <a href="https://statutes.capitol.texas.gov/Docs/AL/htm/AL.28.htm">Section 28.18</a>
Wine and Malt Beverage Retailer's Permit (BG) Section 25.13
Private Club Registration Permit (N) Section 32.23
Retail Dealer's On-Premise License (BE) Section 69.16

Each section measures the business at its “location”: the permit’s designated address, including every area at that address where alcohol may be sold or delivered for immediate consumption, even if other businesses occupy some of those areas.

Two ways to qualify

Since January 1, 2022, when Senate Bill 911 took effect, each of those sections offers two routes to the certificate:

  1. The business is a restaurant. Section 1.04(29) defines a restaurant as a business that operates its own permanent food service facility with commercial cooking equipment on its premises and prepares and offers to sell multiple entrees for consumption on or off the premises.
  2. Alcohol is 60 percent or less of receipts. TABC finds that alcohol receipts at the location are 60 percent or less of the location’s total receipts.

Either way, one requirement stays: the certificate may not be issued unless the location has permanent food service facilities for preparing and serving multiple entrees there. TABC may exempt concessionaires in public entertainment venues, such as stadiums and convention centers, from these requirements.

The shorthand “SB 911 removed the 60 percent rule” overstates the change. The 60 percent test still exists. What changed is that a business meeting the restaurant definition no longer depends on it, so a restaurant with a full kitchen and a real menu can hold an FB even if its alcohol sales run above 60 percent.

What TABC’s rule adds

TABC’s Rule 33.5 (16 Texas Administrative Code Section 33.5) fills in the working definitions:

  • Entree means a course of a meal, which can include an appetizer, small plate, main dish, or dessert.
  • Food service means cooking, preparing, or assembling food at the location. Commercially pre-packaged items bought elsewhere that need no cooking or assembly do not count.
  • Hours for food and for alcohol must be the same, except that food may be sold before or after legal alcohol hours.
  • Hotels with separate restaurants, lounges, or bars need food service facilities for each licensed premises.

The rule also sets the records a certificate holder keeps: separate totals for alcohol, food, and all other sales at the location; purchase invoices by category; and complimentary drinks recorded as if sold, with their dollar value added to alcohol sales when TABC computes the percentage. Records are kept for four years and produced on request, and failing to provide requested documentation is prima facie evidence of non-compliance. For a business using the 60 percent route, TABC considers the gross receipts of all businesses sharing the location, and the certificate holder is responsible for producing their food, alcohol, and other sales records in an audit.

TABC can look beyond the numbers. The rule lets it review advertising, the prominence of food on the menu compared with alcohol, the business name, and the number of transactions that include food.

How the certificate is lost

An FB expires when the primary permit or license expires. TABC may cancel it, or deny its renewal, if the holder stops meeting the qualification or facilities requirements or the rule. If TABC finds the holder knowingly operated under an FB without complying, it may also cancel or refuse to renew the primary permit. After a cancellation or denied renewal, the business may not apply for a new certificate until the day after the first anniversary of that action.

One consequence is heavier for some mixed beverage permittees. Where mixed beverages became legal through the local option ballot issue allowing “mixed beverages in restaurants by food and beverage certificate holders only,” Section 28.18(e) cancels the mixed beverage permit by operation of law if the FB is canceled or not renewed.

Why businesses hold one

Depending on the primary permit, an FB also changes obligations beyond qualification: to-go and delivery sales of alcohol with food, the posting of the 51% firearms sign, and the conduct surety bond. Each of those consequences has its own rules and conditions. The starting question is qualification: which of the two routes the business meets, and whether its kitchen, menu, and records will still meet it at renewal.

This article is general information about Texas alcoholic beverage law, not legal advice, and reading it does not create an attorney-client relationship. Statutes and TABC rules change; confirm current requirements with the Texas Alcoholic Beverage Commission, the relevant city or county, or a licensed Texas attorney before acting.

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