When Cedarvale Lanes Vice President Gregg Zafft learned last December that his business was in violation of the city’s liquor license ordinances and could have its license revoked, he was deeply concerned.
“It’s scary, I’ve been here for 20 years, and without a liquor license, I don’t believe we would survive,” said Zafft, who also serves as the kitchen manager at —a bowling alley, restaurant and bar located off Cedar Grove Parkway in Eagan.
Cedarvale Lanes is one of three Eagan businesses that fell afoul of city’s so-called “50 percent rule” last year. Under Eagan City Code, sit-down and casual restaurants in Eagan must make at least 50 percent of their gross revenues from food sales to hold an on-sale liquor license. If food receipts fall below that margin, the business could risk losing its license.
But that rule may soon be eliminated, thanks to a series of proposed ordinance revisions heard last week at an Eagan City Council meeting. If approved, the revisions would strike the 50 percent rule from the books and revamp the way Eagan officials define food service businesses in the community.
An “Arbitrary” Requirement
The problems started late last year, when city officials found that Cedarvale, the and in Eagan were not meeting the 50 percent threshold for food sales as mandated by the ordinance.
Liquor sales accounted for roughly 56 percent of Cedarvale’s receipts, roughly 67 percent of Cooper’s receipts and more than 80 percent of Valley Lounge’s gross revenue, according to information provided by the city.
The plight of the three businesses caught the attention of Eagan's City Councilors. Rather than penalize the restaurants, the council decided in 2011 to issue all three conditional liquor licenses to allow them to operate while city staff reviewed Eagan’s own ordinances.
City staff evaluated two chapters of Eagan’s city code and presented a set of potential rule modifications to the council on March 13. Among the options: Remove the 50 percent rule, change the required percentage of food sales, or create an additional fee for restaurants that serve a higher percentage of alcohol.
At the meeting, several Eagan City Councilors, including Paul Bakken, voiced support for the removal of the rule. Bakken called the 50 percent rule an “arbitrary” and unnecessary requirement that could harm local restaurants.
The city, Bakken added, has other, more effective means to address any alcohol-related problems at local establishments.
“The problems that do exist aren’t addressed by that standard,” Bakken said. “I just think that the business climate is such that it doesn’t really need regulation because responsible business owners are going to have some kind of food available, that’s just a good business model.”
While Mayor Mike Maguire believes that businesses with on-sale liquor licenses should serve food as a way to combat the effects of alcohol on a person, he too believes the city should take a hands-off approach and allow restaurants to self-regulate.
“The inclination of the council is to trust we have responsible business owners that will do what’s good for them and their businesses,” Maguire said.
Redefining City Code
The council may vote whether to eliminate the 50 percent rule as early as May, according to City Clerk Christina Scipioni.
But that revision would likely come as part of a larger package of restaurant-related code updates, according to both Scipioni and City Planner Mike Ridley. Eagan only has two restaurant categories—“traditional” and casual—in its current zoning ordinances. To reflect changes in the restaurant industry, Ridley recommended the city revise its definitions to four categories: full service, casual, fast food and delivery or carry out.
Zafft, who attended the meeting last week, said he was happy with the direction the council took regarding the 50 percent rule. If the city decides to leave the standard in place, Cedarvale Lanes would have to consider raising food prices or take measures to limit its alcohol sales, he said.
Other cities, including Burnsville and Apple Valley, do not have a percentage sales rule in place, according to documents provided by the city.
Even if the rule is removed from the books, Cedarvale has no plans to increase its alcohol sales, Zafft said. For the last 10 years, the restaurant’s food revenue has been growing part of the business, and the bowling alley has no plans to change its formula if Eagan's standards change, Zafft said.
“We’re a family center,” Zafft said. “What we did [for food sales] back then in a year, we now do in two weeks, but we still don’t meet the 50/50 rule.”
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