Call it an occupational hazard, but I spend quite a bit of time at bars and restaurants. I am an attorney focused on serving the alcohol and beverage industry, so it’s my job to be aware of potential violations of industry regulations.
The bar is basically my second office.
And while the details of specific incidents that I am involved in as an attorney are protected by the sacred attorney-client privilege, I am able to share a few interesting stories from my seat at the bar.
Case #1: Menu Slotting
After some pleasantries, a sales rep said to a bar manager, “why did you take my signature drink off the cocktail list?” The manager, understanding his concern, described the updated, seasonal menu and the wintery-ness of the rep’s cocktail. To this, the rep asked, “what do I have to do to get back on the menu?” The manager shrugged his shoulders. The sales rep said if his cocktail returned to the menu he would come in and buy one case worth of the brand per month for the season. In agreement, the rep ordered a round for those of us at the bar.
The problem? Paying a slotting fee in exchange for menu placement is illegal.
Case #2: Gifts
A brand ambassador parked in front of a high volume restaurant during lunch. Holding a case of very expensive whisky, about $200 per bottle, she kicked her car door closed. I saw at least six additional cases in her backseat. She walked right toward the manager who was doing some paperwork at the end of the bar. She pulled out a bottle of the whisky and handed it to the manager. Seeing it, he smiled. Curious, I walked a bit closer. She said, “thank you for the great quarter, it was an awesome program, we looked great and as promised these are for your top servers.” The case was left and with that the sales rep was off, presumably, to the next account with another case from her backseat.
The problem? Providing a gift to the retailer in exchange for running a staff incentive program (e.g. whoever sells the most during the quarter gets a free bottle) is illegal.
Case #3: Backbar Slotting
“Dude, do you know what they paid for that,” said a bartender to his friend at the bar. “They paid $100,000,” he added. The “that” he was referring to? Bottles of one brand being displayed across every shelf above the bar like wallpaper. Walking in, the brand looked like the only product the bar sold. The next week I went back to the same bar and a different brand was showcased.
The problem? Paying a slotting fee for preferential shelf placement is illegal.
Case #4: Unreasonable Tips
Thanks to the friendly brand ambassador seated next to me, I tried cocktails created with her brand. After explaining the attributes of her brand to those around us at the bar, she asked for her bill. The bill for the several drinks she purchased for patrons was about $150. She added a tip of $500, signed the receipt, and left.
The problem? Providing an impermissible thing of value, including unreasonable tips (e.g. cash), to a retailer or bartender is illegal.
But perhaps the craziest part of any of these situations is how frequently they occur in the industry. Willing to take your chances? Be aware that your license may be suspended or revoked and you may also face fines that range well into the hundreds of thousands of dollars.
That risk seems a bit crazy … but that’s just me.