Minneapolis proposal would relax liquor rules on restaurants

The next time you sidle up to a bar in ­Minneapolis to savor some craft beers, ­consider ordering a hamburger. Or two.

Behind the scenes, restaurant owners outside downtown are walking a tightrope to accommodate a city rule that requires them to make at least 60 percent of their revenue from food. The 30-year-old ordinance was intended to keep serious drinking out of the neighborhoods, but the popularity of high-end beers and other factors have made ­compliance nearly impossible at some establishments — particularly in Uptown.

At the Lyndale Tap House, owners have offered free tacos, nudged up food prices and aggressively pushed brunch offerings in a bid to increase food sales. They were found out of compliance last year, along with several nearby weekend hot spots.

"It starts throwing your liquor-food percentages off really quickly, when you're talking about somebody that's out for the night drinking," said owner Gene Suh.

Those businesses may soon get a break. Two City Council members are pushing for a change that would allow them to increase alcohol sales to 50 percent of total revenue. The proposal may simultaneously relax special residential-area wine licenses that require patrons to eat to buy a drink.

"Downtown you can have unlimited alcohol sales," said Council Member Gary Schiff, who is running for mayor. "And in the neighborhood, we want to achieve a balance. And 50/50 still achieves a balance."

The proposal's coauthor, Council Member Meg Tuthill, foresees some resistance from neighborhood groups. "Some of the neighborhoods might not be real happy," said Tuthill, who represents Uptown. "But it's not going to really change what's going on. Because already [restaurants] are not meeting it."

Tuthill said Friday she has been meeting with colleagues and staff about the proposal. It could be introduced next month.

'Magic number'

The so-called 60-40 requirements apply to about 100 businesses in the city. They are generally outside of downtown and within 500 feet of a residential property. Some businesses have licenses that are grandfathered out of the restriction. Most establishments report figures annually, giving them a year to try to ­augment sales.

Twelve have been found out of compliance since January 2012, including Uptown venues Bar Louie, Stella's Fish Cafe, Old Chicago, moto-i, Bulldog, Cafeteria and Cause Spirits and Soundbar. City licensing staffers work with non-compliant businesses to increase food sales, long before taking harsher action such as downgrading licenses or denying renewal.

"I think that there are places that are operating in Minneapolis right now that aren't meeting the 60-40 that are not creating a problem for their neighbors or for livability or anything like that," said Grant Wilson, the city's head of business licensing. "So, if it's occurring and people are able to successfully operate, maybe 60-40 isn't the magic number."

Former Council Member Tony Scallon, an original author of the 1983 ordinance, said it was crafted in response to restaurants that wanted to sell liquor in the neighborhoods following repeal of the city's liquor patrol limits — which restricted licenses to certain sectors of Minneapolis. Back then, restrictions were needed to prevent the spread of more notorious liquor joints like those at the "Hub of Hell" on 26th Avenue and 26th Street south.

"There used to be about four bars where people would come in and just drink all night. … the guy would cash his check and then drink part of his ­family's income," Scallon recalled. "That is gone."

Craft beers can be costly

Tastes have since become more sophisticated. Republic, a new restaurant in Calhoun Square with a sister location in Seven Corners, has 56 taps and only sells craft beers. The prices range from $4 for Boulder Mojo Nitro I.P.A. to $9 for a St. Bernardus Abt 12 Quadrupel Belgian. Burgers, ­meanwhile, cost between $8 and $11. Co-owner Matty O'Reilly estimates that about 60 percent of their revenues now come from alcohol five months after opening, though food sales are increasing.

"If everyone ordered happy-hour tacos and two beers, we're at 70-30," said O'Reilly, referring to the alcohol to food ratio. "And I think we're doing a good job of trying to be a restaurant first."

Across the river in St. Paul, restaurants outside of downtown may have fewer worries. Robert Humphrey, a spokesman for the city's Department of Safety and Inspections, said those businesses with liquor licenses — rather than a beer and wine license — must serve food. But there is no percentage requirement.

Kim Bartmann, a local restaurateur whose businesses include Barbette, Bryant Lake Bowl and Pat's Tap, which recently had a compliance problem, said the current ordinance is flawed because it forces some business owners to raise food prices or lower alcohol prices. Reducing the percentage requirement is a step in the right direction, she says, but the city should also revisit the whole approach.

"It's too simplistic," Bartmann said. "I think we need to have a more complex conversation about what do we want the city of Minneapolis to be. What are neighborhood places?"

Eric Roper • 612-673-1732