STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS )

REGULATION, DIVISION OF ) ALCOHOLIC BEVERAGES AND TOBACCO, )

)

Petitioner, )

)

vs. ) CASE NO. 84-1595

)

1. G. P. INC., t/a )

   THEE DOLL HOUSE BEACH, )

   )

   Respondent. )

   )

   
   

   RECOMMENDED ORDER

   
   

   This case was heard on July 26, 1984, by R. L. Caleen, Jr., hearing officer with the Division of Administrative Hearings, in Cocoa Beach, Florida.

   
   

   APPEARANCES

   
   

   For Petitioner: Louisa E. Hargrett, Esquire

   Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301

   
   

   For Respondent: Richard L. Wilson, Esquire

   1212 East Ridgewood Street Orlando, Florida 32803

   
   

   By a Notice to Show Cause dated March 15, 1984, the Division of Alcoholic Beverages and Tobacco ("DABT"), seeks to impose a civil penalty against G. G. P. Inc., t/a Thee Doll House Beach ("respondent") or discipline its alcoholic beverage license for alleged violations of the Beverage Law. Specifically, DABT charges respondent with failing to derive at least 51 percent of its gross revenue from the sale of food and nonalcoholic beverages, contrary to Rule 7A- 3.15(b), Florida Administrative Code, and Section 561.20(3), Florida Statutes (1983).

   
   

   Respondent disputed the charges and requested a hearing. DABT then referred this case to the Division of Administrative Hearings for assignment of a hearing officer.

   
   

   At hearing, the parties stipulated that respondent holds the beverage license specified in the Notice to Show Cause and that, during the period in question, it derived less than 51 percent of its gross revenue from the sale of food and nonalcoholic beverages at Thee Doll House Beach. DABT presented the testimony of Claire A. Gambao, and offered one exhibit in evidence. Respondent presented the testimony of John Smith and Mitchell Peter.

   No transcript of hearing has been filed. The parties filed proposed Findings of Fact and Conclusions of Law by August 6, 1984. Their proposed findings, insofar as they are incorporated herein, are adopted; otherwise they are rejected as unsupported by the evidence or as irrelevant or unnecessary to resolution of the issue presented.

   
   

   Based on the evidence adduced at hearing, the following facts are determined:

   
   

   FINDINGS OF FACT

   
   

   1. In December, 1982, DABT issued an alcoholic beverage license (Lic. no. 15-1163, Series 4-COP SRX) under its SRX classification to respondent to operate a restaurant with liquor sales on the premises. The restaurant was known as "Thee Doll House Beach," at 199 East Cocoa Beach Causeway, in Cocoa Beach, Florida. A requirement of the license was that revenue from sales of alcoholic beverages equal or exceed 51 percent of gross sales.

      
      

   2. Respondent opened "Thee Doll House Beach" for business in January, 1983. The business operated as a buffet restaurant, with a fixed-price, "all- you-can-eat" menu. Meals consisted of a hot entree, chosen from baked ham, roast beef and turkey; a selection of four or five hot vegetables; a large salad bar; two soups; and a desert tray, with pies, pastries and cakes.

      
      

   3. The business also offered alcoholic beverages for sale in the restaurant and at a bar. A "Las Vegas-style" show was presented nightly at eight o'clock, although the restaurant opened at noon.

      
      

   4. The first month's (January 1983) sales of food only reached 40.6 percent of gross sales, and subsequent efforts of the respondent to reach 51 percent were never successful. The initial price of a buffet meal was $4.95 per person, which attracted a sizeable number of patrons, many of them senior citizens. However, the respondent found that due to the extensive food menu and the cost of preparation and service, it was losing money on each meal sold.

      
      

   5. So it increased its meal price to $5.95, which resulted in a drastic drop in business, apparently due to the inability of senior citizens to pay the higher price. It was in this particular group that the most noticeable decrease in attendance occurred.

      
      

   6. The respondent took various steps to increase its food sales. "Early- bird" specials were introduced at a lower price; extensive newspaper, radio and television advertising was utilized to promote the buffet. Nevertheless, at the end of 1983, the business had shown an overall food sales of only 31 percent. Monthly percentage figures are as follows:

      
      

      DATE	FOOD/NON-ALCOHOLIC BEVERAGE PERCENTAGE	ALCOHOLIC PERCENTAGE
      January 1983	40.5	59.5
      February 1983	27.1	72.9
      March 1983	37.3	62.7
      April 1983	33.5	66.5
      May 1983	31.9	68.1
      June 1983	29.1	70.9
      July 1983	27.5	72.5
      August 1983	23.9	76.1

      September 1983	24.1	75.9
      October 1983	23.4	76.6
      November 1983	23.6	76.4
      December 1983	23.3	76.7

      
      

      The respondent's problems were compounded by the fact that it was operating in a difficult, if not depressed market, where financial conditions had limited the discretionary income available to restaurant-going consumers. Other restaurants in the area were having to cut back operations or terminate business altogether.

      
      

   7. During the year in question, the respondent held itself out to be a restaurant, not a lounge, and its primary emphasis in advertising, in its internal business operation and in its physical layout, emphasized food sales as opposed to liquor sales.

      
      

   8. During the time period in question the price of a meal at Thee Doll House Beach was significantly below its fair market value. The respondent attempted to increase its food sales by lowering prices, which, in turn, decreased the percentage of gross food sales. According to the evidence, a reasonable price for the menu offered, based on a comparison with other restaurants in Central Florida, would have been $8-$10. Using those price figures, the percentage of food sales to gross revenues at Thee Doll House Beach would have exceeded 60 percent.

      
      

      CONCLUSIONS OF LAW

      
      

   9. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding. 120.57(1), Fla.Stat. (1983).

      
      

   10. DABT is empowered to suspend or revoke a beverage license, or impose a civil penalty, for a violation of Chapter 561, Florida Statutes, and implementing rules. See, Sections 561.29(1)(a), (b) and (e), Fla.Stat. (1983).

       
       

   11. A special restaurant beverage license, such as the one in the instant case, is an exception to the quota limitations which otherwise apply to the issuance of beverage licenses in Florida. In order to qualify and maintain such a license, Section 561.20(2)(a)3, requires that the restaurant derive at least

       51 percent of its gross revenue from the sale of food and nonalcoholic beverages. Rule 7A-3.15, Florida Administrative Code, reiterates this requirement.

       
       

   12. The special restaurant license was never intended to be a "subterfuge for the operation of a bar or cocktail lounge with only incidental sales of food." Department of Business Regulation v. Huddle, 342 So.2d 140 (Fla. 1st DCA 1977). The 51 percent requirement is established to ensure that only a "bona fide substantial restaurant operation primarily engaged in the service of food and nonalcoholic beverages" holds such a license. Id. at 142.

       
       

   13. Respondent has failed to comply with the statutory requirements which apply to special restaurant licenses, and is no longer qualified to hold such a license. The evidence of record does not, however, support a conclusion that Thee Doll House Beach restaurant was intended to be a subterfuge for the operation of a bar or cocktail lounge, with only incidental food sales. Respondent asks for the opportunity to surrender its beverage license for cancellation by DABT, contending that if DABT revokes its license, it will be forever disqualified from obtaining another beverage license, regardless of its lack of culpability. But see, Wash and Dry Vending Co. v. Department of

Business Regulation, 429 So.2d 790 (Fla. 3d DCA 1983); The Village Zoo, Inc. v. Division of Alcoholic Beverages and Tobacco, 450 So.2d 920 (Fla. 4th DCA 1984). Since respondent is willing to surrender its license for cancellation, revocation of its license is not justified by the facts of this case, which indicate a simple failure of a new business to achieve its objectives, not culpable conduct by a licensee. Accordingly, pursuant to Section 561.29(5), DABT should revoke respondent's license, but vacate the imposition of revocation if respondent surrenders its license for cancellation within 10 days of entry of DABT's final order.

RECOMMENDATION

Based on the foregoing, it is RECOMMENDED:

That respondent's beverage license be revoked but that such action be vacated if respondent surrenders its license for cancellation within 10 days of entry of DABT's final order.

DONE and ORDERED this 15th day of August, 1984, in Tallahassee, Florida.

R. L. CALEEN, JR. Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904)488-9675

Filed with the Clerk of the Division of Administrative Hearings this 15th day of August, 1984.

COPIES FURNISHED:

Louisa E. Hargrett, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301

Richard L. Wilson, Esquire 1212 East Ridgewood Street Orlando, Florida 32803

Gary Rutledge, Secretary Department of Business

Regulation

The Johns Building

725 South Bronough Street Tallahassee, Florida 32301

Howard M. Rasmussen, Director Department of Business

Regulation

Division of Alcoholic Beverages and Tobacco

The Johns Building

725 South Bronough Street Tallahassee, Florida 32301

Docket for Case No: 84-001595

Orders for Case No: 84-001595