Should movie theaters be allowed to serve beer and wine in the presence of minors?

On January 30^th, 2012, Seattle’s King 5 News reported that a Seattle, Washington movie theater that has been serving beer and wine for the last seven years may soon need to change its business model.

Central Cinema, located in Seattle’s Capitol Hill neighborhood, serves beer and wine to customers over the age of 21. The theater even hosts cartoon happy hours, during which children watch cartoons while their parents enjoy a glass of wine or beer. Patrons may order food as well. Central’s owner only recently became aware that the business was breaking a 2010 law.

The King 5 News article states that the 2010 law allows theaters like Central Cinema to serve beer and wine, but only as long as there are no minors present. The owner of the theater, Kevin Spitzer, says that the theater has been an “all ages place” since it opened close to seven years ago, and that he wasn’t aware of the 2010 law until he applied for an enhanced liquor license that would allow him to sell cocktails in addition to beer and wine. Spitzer has successfully renewed his license since 2010, and the oversight was not detected until he applied for the enhancement.

Spitzer and other theater owners are looking to the state’s lawmakers to change the law. A proposed bill would allow the theaters to continue serving beer and wine while minors are present, so long as there are measures in place to keep alcohol out of their hands. The bill defines “minor control plans” as  “…written, dated, and signed plan[s] submitted to the board by an applicant or licensee for the entire theater premises, or a room or area therein, that shows where and when minors are permitted and the control measures used to prevent minors from obtaining alcohol, prohibit minors when drinking alcohol predominates, and minimize minors' exposure to a drinking environment.”

A representative of the Washington State Liquor Board, Brian Smith, commented that the problem with the proposed bill is enforcement. He said, "Imagine a movie theater, a dark movie theater, can you go in there and be able to check ID's without being disruptive? No, you can't really do that very easily."

Many of the public comments to the King 5 News article indicate that some members of the public don’t see the difference between theaters like Central Cinema and restaurants that serve alcohol in the presence of minors. Other comments show concern that the presence of alcohol in movie theaters will lead to disorderly conduct. User “emptynestr” characterized the difference between the two as disastrous, calling movie theaters like Central “…a recipe for untold disasters...stalking, preying on innocent girls, to name a couple.” Other comments suggested that theaters like Central should be strictly 21 and over.

California’s El Cerrito is also home to a movie theater that serves beer and wine to its 21 and over clientele. The theater has a license issued by California’s Department of Alcoholic Beverage Control for the sale of beer and wine on the premises as an “eating place.” In addition to wine and locally brewed beers, the theater serves pizza, sandwiches, and salads.

Despite the similarities between Central Cinema in Seattle, Washington and Rialto Cinemas in El Cerrito, California, the two states take different approaches to alcohol regulation. While California is a license state, Washington is a control state. In California, the California Department of Alcoholic Beverage Control issues licenses for the manufacture and sale of alcohol to all individuals and businesses in the distribution channel. In Washington, however, the Washington State Liquor Control Board is the only authorized wholesaler of and operator of liquor stores, and the sole governmental body responsible for issuing retail licenses to bars for the sale of beer, wine, and spirits for on-site consumption.

Following the repeal of Prohibition, the control states contended that eliminating or limiting the role of the private enterprise in the liquor market was the best way to ensure the health and safety of the public. Despite a seemingly more “temperate” reputation, most control states, like Washington, are now hybrid states (monopolizing wholesale liquor sales and licensing retail liquor sales). If the Washington legislature decides to pass the proposed bill, it might not be long before both license and control states are serving alcohol in movie theaters- an idea that may have horrified the supporters of the temperance movement.

Starbucks: the bar?

Starbucks (NASDAQ: SBUX) recently announced plans to begin selling wine and beer in four to six of its Seattle-region stores. Starbucks has plans to later expand to Southern California, Atlanta, and Chicago. Beers will sell for $5 and a glass of wine will sell for $7 to $9. The transition for Starbucks from coffee and juice to wine and beer seems as thought it will be relatively simple. Starbucks already has a loyal customer base and adequate indoor seating at most locations. The interiors, however, will undergo some changes. Starbucks will make use of community tables and local art to make the space inviting for evening customers looking to unwind after work.

Clarice Turner, Starbucks' senior vice president for U.S. operations, explains the rationale behind the transition into wine and beer sales.

As our customers transition from work to home, many are looking for a warm and inviting place to unwind and connect with the people they care about. At select stores where it is relevant for the neighborhood, we are focused on creating an atmosphere where our customers can relax with a friend, a small bite to eat and a cup of coffee or glass of wine.

Some critics argue that Starbucks should just focus on what they do best: serving coffee. Others think it makes sense for Starbucks to move into this market. Given Starbucks broad appeal, it seems like a logical evolution of the brand. Current sales are concentrated in the morning hours (70% of Starbucks' sales occur before 2pm). By moving into wine and beer sales, Starbucks can grow its afternoon and evening business.

What will these changes mean for local bars located near a Starbucks that is serving beer and wine? For beer and wine-serving tenants in the same complex, Starbucks could draw some business away. Starbucks' prices are very competitive and they already have strong brand recognition. These factors could easily sway customers to choose Starbucks over local bars who cannot afford to charge only $5 for a pint of Rogue Ale.

In states with a local option for alcohol sales (meaning the local jurisdictions can vote to restrict the time and place of alcohol sales), there are often limitations as to how many establishments within a complex or city/county can have a liquor license. With Starbucks' now obtaining liquor licenses, it may be harder for local bars to move into these locations.

Starbucks isn't the only chain moving into this market. Sonic and Burger King are also exploring beer and wine sales as a way to expand their current market share. Burger King now has "Whopper Bars" where customers can order a beer along with their burger. Locations include Miami, New York City, and Las Vegas. Sonic plans to sell bottled and draught beer and wine in two South Florida locations. These fast-food chains may need more capital investments than Starbucks, however, to get their locations ready to serve beer and wine. Sonic, with mostly outdoor seating and in-car service, will definitely be making some upgrades before alcohol can be served.

So why is Florida so popular for these new fast-food bars? Perhaps it's because Florida is not an alcoholic beverage control state. Alcoholic beverage control states are states that have a wholesale and/or retail monopoly on some or all forms of alcoholic beverages. In Florida, as a non-control state, the state does not have a monopoly on retail sales of liquor, including wine and beer. Only a liquor license is required in order for an establishment to serve alcohol on a regular basis. This would be easily obtained by large fast-food chains where over 51% of their total sales is from food. Starbucks, however, will need to up their food sales to reach this threshold as required by many non-control states.