For decades, a Virginia restaurant with a full bar had to hit the same number no matter what kind of place it was: 45% of gross sales from food, no more than 55% from mixed drinks. A 30-seat cocktail lounge and a 200-seat steakhouse played by the identical rule, checked once a year on a form called the MBAR — the Mixed Beverage Annual Review.
As of July 1, 2026, that one-size-fits-all ratio is gone. House Bill 975, sponsored by then-Delegate (now state Senator) Elizabeth Bennett-Parker and signed by Governor Spanberger, replaces it with a three-tier system keyed to how much food a restaurant actually sells in a month. It's the first version of this reform to survive years of General Assembly debate, and it changes how a lot of Virginia restaurants and bars need to track their own sales.
The old rule, and why it frustrated owners
Virginia's mixed beverage license lets a restaurant serve spirits-based cocktails, not just beer and wine. In exchange, the state has always required the establishment to prove it's primarily a restaurant, not a bar with a kitchen attached. The mechanism was a flat ratio: at least 45% of gross sales had to come from food and non-alcoholic beverages, and total monthly food sales had to be at least 2,000 of that in "meals with substantial entrees."
The complaint from owners was simple: a busy craft-cocktail restaurant doing 4,500 in food a month could pass easily. The rule measured a percentage, not the underlying question regulators actually cared about — is this place primarily serving food. Falling short wasn't a minor paperwork issue either: missing the ratio, filing the MBAR late, or reporting inaccurate numbers can trigger civil penalties and, in repeated or serious cases, suspension or revocation of the license itself.
What HB 975 actually changes
The new law keeps the MBAR reporting mechanism but replaces the single 45% threshold with three tiers, based on a restaurant's average monthly food sales:
- $48,000 or more in monthly food sales — no food-to-beverage ratio applies at all. High-volume restaurants are exempt from the calculation entirely.
- 48,000 in monthly food sales — the ratio drops to 30% (down from 45%).
- 25,000 in monthly food sales — the ratio stays at 45%, except for smaller venues: any restaurant in this tier with fewer than 30 table seats and an occupancy permit under 60 people also gets the reduced 30% threshold.
There's one more wrinkle for smaller places: any restaurant holding a mixed beverage license must now have at least as many seats at tables as it has seats at the counter or bar — a seating-mix requirement that didn't exist before.
The Virginia ABC Authority is required to track compliance data and the law's effect on consumption, and report findings back to the General Assembly by November 1, 2027 — so this tiered structure is being watched, not just enacted and forgotten.
Why this is a bookkeeping problem, not just a licensing one
The ratio was never self-reporting in spirit — it's built entirely on numbers a restaurant already has in its point-of-sale system, but it only works if those numbers are captured correctly. A few things matter more under the new tiered system than they did under the old flat one:
Your tier is a moving target, not a fixed classification. Under the old rule, you either cleared 45% or you didn't — a single number to watch. Now, your required ratio depends on which food-sales tier you land in for the review period, and a restaurant hovering near 48,000 in monthly food sales can cross a tier boundary and change its own required ratio mid-year. That means the food-sales total itself needs to be tracked monthly, not just reconciled once a year when the MBAR is due.
Food and alcohol sales need to be cleanly separated at the ledger level. Virginia ABC's rules exclude certain revenue — cocktails-to-go, for instance, don't count toward the food side of the ratio — so a POS category that lumps "beverage" sales together without distinguishing to-go cocktails from dine-in drinks can misstate your ratio in either direction. If your chart of accounts (or your POS export) doesn't mirror the ABC's categories precisely, you're reconciling by hand at review time, which is exactly when errors creep in.
Two-year records still apply. Beverage invoices — wine, beer, and liquor purchases with date, quantity, and supplier — must be retained for two years and be available for inspection, alongside daily records of food and alcohol sales and prices charged. None of that changed with HB 975; it's just now paired with a tier calculation that makes accurate monthly totals more consequential than before.
For an owner near a tier boundary, this is genuinely worth planning around. A restaurant doing 24,000 — moving it into the 45% tier and putting it out of compliance overnight, even though nothing about its bar program changed. Tracking food sales as its own monitored metric, not just a line that feeds into an annual filing, is the difference between catching that shift early and finding out at MBAR time.
Keeping the numbers straight
This is a good example of why plain-text, version-controlled bookkeeping is worth the setup time for a small business with regulatory reporting obligations like this one. When food sales, alcohol sales, and to-go cocktail sales are separate accounts in your ledger — not just categories buried in a POS report — you can query your actual food-sales run rate for any trailing 30-day window at any time, instead of waiting for an annual reconciliation to discover which tier you're in. Beancount.io gives you exactly that: plain-text accounting you can query, audit, and diff like code, so a restaurant's food-to-beverage split is always a command away rather than a spreadsheet exercise. Get started for free and see why owners who need to prove a number to a regulator like clean, auditable books.