For most restaurants, booze is a money maker with higher profit margins than food.
But smaller establishments — including Michelin-recognized restaurants in Houston
— are saving thousands of dollars by opting out of a liquor license, relying on BYOB.
Customers also save when they are allowed to bring their own alcohol to dinner. It’s
a win-win situation for foodies in 2025, especially when many consumers are pulling
back on spending.
Restaurants have historically embraced BYOB in a recession, according to a study by
professor Chris Taylor at the University of Houston’s hospitality school. Although
a recession hasn't been formally declared, consumers have shown signs of bracing for
one, leading them to spend less money at restaurants, according to the Texas Restaurant
Association.
BYOB can be a strong marketing strategy for high-end restaurants, the study says,
partly because it gets customers in the door. BYOB could, too, encourage diners to
spend more on food, and gives them control of beverage costs. Those restaurants are
appealing to spending-shy customers despite having high food prices. Emmanuel Chavez
and Megan Maul, the owners of Tatemó, originally wanted to open with a liquor license
in 2022, but the now-acclaimed Houston tasting-menu restaurant shares a wall with
a church. So they scuttled those plans to offer BYOB instead.
The early days of Tatemó — before the Houston Chronicle named it the city's No. 1
restaurant and before it garnered a Michelin star — were tough, as the couple funded
the business themselves, transitioning from the farmers market to a brick-and-mortar.
Not getting a liquor license was a blessing in disguise, Maul said, because of the
high costs associated with it.
“We get a lot of good feedback on (BYOB)," Maul said. "The meal itself is not inexpensive
... I think it sort of helps people in a sense, so they can have that flexibility
of choosing their own adventure."
A liquor license, which most restaurateurs hire an attorney to assist in obtaining, is $5,300 to start and then $2,650 every two years to renew in Texas. And unlike a beer and wine license, there is a tax of 6.7% on sales of mixed beverages (distilled spirits, beer, ale and wine) paid to the state.
Jason Kosmas, the beverage director for all the Uchi restaurants, has been navigating
the process of adding liquor to Uchi in Houston, which has long been a beer-and-wine-only
restaurant. This has entailed retrofitting its bar with the equipment and space to
make cocktails, costing upward of $20,000 for two wells, ice boxes, storage, glass
chillers, dump sinks, glass rinsers and a large cube ice machine. The first order
of spirits came with a hefty price, including Japanese whiskies costing up to $300.
Aside from the high dollar amount, staff training is necessary before the launch June
17.
"There's a financial burden that comes with having a full liquor license," Kosmas
said. "The decision to (add liquor) is 100% about the guest experience."
Kosmas said the Uchiko in Austin, which recently switched to liquor, is seeing more
sales — so despite the high up-front costs, they are glad to be serving liquor. Having
a liquor license is a long-term game, he said. Most take that gamble because it’s
even riskier to open only with food, which has become much more pricey in today’s
economic climate.
“I don't know how a restaurant can survive these days without creating a revenue stream
from alcohol sales," UH's Taylor said. "Food costs have gotten so expensive, and it's
harder and harder to get staffing and everything else; plates are more expensive,
flatware is more expensive, and leases are more expensive."
Food menu prices can only be so high or restaurants will drive customers away, so
sometimes they're barely breaking even. Cocktails, however, have a very high-profit
margin, according to Taylor. And a bottle of wine can be sold for three times its
price.
Part of why Tatemó does not rely on alcohol sales is that it’s a small restaurant
with 18 seats. It has the luxury of having pre-paid meals for each reservation made,
so it can easily account for the exact food quantity it will need — no wasted food.
Bill Floyd, who owns PortaVino, takes a different approach.
PortaVino is known for selling wine at, or below, retail prices — and for being BYOB. Establishments with a beer and wine license can also be BYOB if they choose. He is focused on volume, therefore selling a high amount of wine at low prices.
“BYOB is not an extremely popular model in Houston,” Floyd said. "I think it's because
on the surface it appears that you can't make any money; in the last couple of years
with inflation, it's hard as hell to make any money off of food, so restaurants try
to make up the difference with cocktails and the wine."
Still, some high-end restaurant owners are noticing that people are willing to spend
on fine dining, despite going out less. It means restaurants like Tatemó and Hidden
Omakase are dining destinations where customers are being trained to abide by BYOB.
Professor Taylor's study explored consumer attitudes toward BYOB, finding that most
people weren't keen on paying a corkage fee. A corkage fee is the cost set by a restaurant
when a customer brings in their own alcohol. At Tatemó and Hidden Omakase, the corkage
fee is $20 for the first bottle. When a restaurant already offers wine, they often
charge a higher corkage fee to discourage BYOB.
Like Tatemó, Hidden Omakase is small, so BYOB works best for its business model. Hidden
Omakase is already a place where customers often are celebrating a birthday or anniversary,
and chef Marco Juarez has found people are thrilled to be able to bring in a bottle
of something sentimental.
However, there's still a learning curve. Juarez said a handful of people every day
don't know the restaurant is BYOB, despite being alerted when they make a reservation.
A hostess will suggest they stop by the nearby Conservatory if they want to pick up
a bottle of wine.
“We could be making more sales if we had alcohol, but it can be a risky thing because
we are smaller," Juarez said. "It’s more of a preference on what you’re willing to
risk."
These restaurants could be the blueprint for future restaurants hoping to stay open
in a time when many are closing.