In a recent edition of Restaurant Startup & Growth, a national publication, an article focused on the pros and cons of allowing bartenders to offer the occasional free drink to its patrons.
Restaurants and bars have always struggled with the tendency of its employee bartenders to provide free drinks to friends or to others for generating greater tips. While such “freebees” may be considered employee theft or graft by some barrooms owners, other establishments have come to view the practice as a modern business strategy used to garner customer loyalty.
Indeed, providing a “regular” with one “on the house” has evolved in modern commerce, now allowing the assignment of the “regular’s” name to the bar’s point of sale computer software program so that the “freebees” can be tracked and accounted for. Other establishments have even developed policies whereby the bartender is given a nightly budget to give away free drinks provided that the bartender keeps track of those drinks and pays for all those given away beyond their budget.
In Massachusetts, however, providing a patron with a drink can land the bar or restaurant owner in hot water with the Massachusetts Alcoholic Beverage Control Commission, since 204 CMR 4.03(1)(a) expressly prohibits a liquor licensee from offering or providing free drinks to its patrons. Sanctions issued by the ABCC for a single violation of 204 CMR 4.03(1)(a) have ranged from a three day suspension to a two week suspension, as the practice of providing a free drink – depending upon the circumstances – may also qualify as a “Happy Hour” violation or a price discrimination violation.
Should an establishment in Massachusetts be found to have purposefully established a system or policy whereby free drinks are provided to their regular customers on a regular basis, that establishment might be facing a sanction far more severe than a two week loss of its liquor license. Bar and restaurant owners should therefore be very wary of allowing an age old “wink and nod” practice to become a formal policy whereby free drinks are provided and tracked to generate customer loyalty.