NASHVILLE -- After years of lax enforcement, the Tennessee Alcoholic Beverage Commission is beginning to crack down on bars and nightclubs that have liquor-by-the-drink licenses as restaurants but in reality offer little to no food to patrons.
"We are under the microscope of some members of the Tennessee General Assembly who have expressed the desire and concern that the commission act on food service audits," ABC Chairman John A. Jones said last week as the panel voted to suspend the license of Nashville's Buckwild Saloon on Second Avenue for 90 days.
"I'm going to be the first guy thrown under the bus," the establishment's visibly shaken owner, Eddie Eanes, complained to commissioners.
Buckwild is not the first business to be hit in the crackdown. In February, the commission took similar action against a Nashville club named Trax.
The ABC's actions are the result of pressure from state legislators furious that Davidson County Chancellor Claudia Bonnyman struck down their 2009 law letting handgun-carry permit holders bring guns into places serving alcohol.
After hearing testimony that a number of bars and nightclubs had not met restaurant-licensure requirements for years, Chancellor Bonnyman said the bill was unconstitutionally vague because handgun-permit holders wouldn't know if an establishment met the food service requirement.
Handgun-carry proponents are trying to pass another version of the bill that will meet constitutional muster.
But while so far unsuccessful, their efforts are helping shoot holes in Tennessee's 1967 liquor-by-the-drink law.
Tennessee's "whole scheme of selling alcohol was predicated on the idea that at least 50 percent of your sales must come from food," said Nashville attorney David Randolph Smith, who successfully challenged last year's gun law.
The law does not recognize bars and nightclubs. If these establishments wish to sell liquor and wine, they must obtain licenses as restaurants where they are presumed to meet specific standards.
Mr. Smith presented to the chancellor cases involving dozens of "restaurants" he said did not meet the law's requirement.
But on closer examination, Tennessee's liquor-by-the-drink statute says nothing about a 50 percent food-sales requirement.
It does state an establishment can be eligible for a state-issued liquor license as a restaurant "if the serving of meals is the principal business conducted" and is open a specified number of days a week.
ABC policy states if a restaurant derives 50 percent or more of its sales from food, there is a self-evident but rebutable presumption that it is operating as a full-service restaurant.
But ABC Director Danielle Elks also said in an interview that under a 1983 decision by ABC's then-board, "if it's less than 50 percent then we'll look at other factors" that can and often do result in licensure.
The list includes whether the business is advertised as a place where meals are served, whether it maintains adequate kitchen equipment, a 75-person seating capacity and "sufficient" employees to prepare and serve "suitable" food.
A former ABC deputy director, Dan Haskell, an attorney whose clients include the Tennessee Hospitality Association, verified the interpretation.
That can lead to situations where the ABC reissues liquor licenses to businesses where just 26 percent of sales are food -- even if their other gross revenue includes 25 percent liquor sales, 25 percent beer sales and 24 percent other revenue such as caps, T-shirts or cover charges. Beer with alcoholic content of less than 5 percent is not considered alcohol under state liquor by the drink laws.
"It's conceivable under that scenario that (26 percent) would be considered the service of food," Ms. Elks said.
In Mr. Eanes' case, testimony showed Buckwild had food sales of less than 5 percent during a several-month period in 2007 and again in 2009.
In practice, the ABC has relicensed any number of establishments with food sales in the single digits, as evidenced by the agency's dealing with Buckwild. Ms. Elks said the agency has taken steps to revoke licenses of several establishments in recent years. In most cases, businesses turned in their licenses.
ABC Chairman Jones said the agency has considered whether businesses are trying to make "good faith efforts to try to sell food.
"These establishments can't force their patrons to buy food or to want to eat," Mr. Jones said. "But if they're offering decent food and they're making it a sincere effort to make it available ... they need to get some credit as opposed to others who do not."
However, with critical statements about inaction made by the likes of House State and Local Government Committee Chairman Curry Todd, R-Collierville, sponsor of the gun permit bill, the agency must act, Mr. Jones said.
He said state legislators should clarify the law.
"The monkey ought to be on the Legislature's back," he said.
The House Calendar and Rules Committee on Tuesday will consider legislation allowing Tennessee handgun permit holders to bring their weapons into any establishment licensed as a restaurant to sell alcohol provided the permit holder does not drink and the business does not post signs banning guns.
Rep. Todd has introduced legislation that would set up a dual permitting process that would recognize bars. But the bill was taken off notice in the Senate and Rep. Todd hasn't moved it in the budget subcommittee.
In hopes of curing problems with the handgun bill, Rep. Todd this year is pushing a version that would allow permit holders to enter any establishment with a liquor license, dispensing with definitions of restaurants. Permit holders would not be allowed to drink, and businesses could post signs banning guns.
But last week in the House Finance Committee, Rep. Harry Tindell, D-Knoxville, offered a successful amendment that confused most members. To keep guns out of bars and nightclubs, the amendment recognizes many are being licensed despite having food sales of less than 50 percent.
So his amendment states any establishment having less than 50 percent sales of food must post signs banning guns. Rep. Tindell said he is well aware of the ABC's regulations. He said he hopes Rep. Todd pushes the bill.