116 3rd St SE
Cedar Rapids, Iowa 52401
Customers wanting a cocktail to wash down their delivery order can order it alongside food in third-party apps like DoorDash, Grubhub, Uber Eats and CHOMP under a new Iowa law.
But even though the law takes effect July 1, it may take some time for restaurants and delivery services to start offering alcoholic beverages to their delivery service.
“It’s a bit of a mixed bag for restaurants and bars,” said Jessica Dunker, president and chief executive officer of the Iowa Restaurant Association. Restaurant owners “are hesitant at the moment in large part because of the relationship with third-party delivery services — it’s a precarious relationship.”
With delivery apps offering convenience customers want, Dunker calls it a “necessary evil” that sucks up restaurant profits and diminishes quality control.
House File 766, signed May 10 by Gov. Kim Reynolds, allows restaurants and grocery stores to deliver alcohol through third parties with a signed agreement between them, filed with the Iowa Alcoholic Beverages Division. House File 384, signed June 8 by Reynolds, clarified the definition and role of cocktails and mixed drinks within Class C liquor licenses.
“We sent out communication last week to all licensees with a summary of the new laws and a link to the third-party form,” said Jake Holmes, executive officer for the Alcoholic Beverages Division. “With this law change it’s important that these third-party entities understand proper alcohol sales practices to ensure that they are not delivering alcohol to minors or intoxicated individuals.”
A summary of the new laws for retailers can be found at abd.iowa.gov/education/new-laws.
Dunker said that restaurants were concerned about losing their liquor licenses should deliverers fail to properly verify the age of recipients. If something were to go wrong, she said, the blame would fall on restaurants.
“The delivery service doesn’t have the liquor license that the restaurant does,” she said. “That would put liquor licenses of restaurants on the line for underage deliveries.”
Though the change to the law was driven by the grocery store industry wanting to use services like Instacart, she said the Iowa Restaurant Association is satisfied with the regulation requiring a contract between restaurants and delivery services to protect restaurants.
“We’re still getting used to cocktails to go,” she said. “People didn’t understand our fears on this at first, not wanting (another line of revenue.)”
With third-party apps that have become popular with diners, orders placed for food technically are purchased from the service, not the restaurant itself. The service then purchases the order from the restaurant and delivers it.
With alcohol, orders placed through services would instead go directly to restaurants. Restaurants will know who is ordering alcohol, and liability to properly verify the identity and age of the recipient shifts to the delivery service.
Dunker said technology, implemented in some apps in states where alcohol delivery already is legal, should solve the issue of age verification without disruption to the consumer experience.
Since the rise of use with those apps during the pandemic, restaurants unaware of who was placing third-party orders gave way for concern.
“(Delivery services will) go and grab our menus off websites an stick it on an app, and the consumer assumes they have a relationship with us,” Dunker said. “Lots of mobile apps have no relationship with us.”
Delivery services surveyed by The Gazette, including DoorDash, Uber Eats, Grubhub and CHOMP Delivery were unsure when they would start delivering alcohol.
“We’re confident that one day we will start service, but we’re still reviewing all of it,” said Bobby Kellman, spokesman for Uber Technologies, which operates Uber Eats. “The state is going to roll out the permitting process in the next few days. We will probably know then.” Uber Eats currently delivers alcohol in other states where it’s permitted.
“This law will give Iowa’s restaurants an important tool to generate revenue and orders and we are happy to implement it ASAP,” said Grant Klinzman, spokesman for Grubhub. “The technology will be similar to what we have used in other places. The most important initial step is driver education about how to facilitate the orders and verify age.”
The delay in implementing the logistics could frustrate consumers eager to exercise the new freedom.
“It’s not like on July 1 every single mobile app will be able to instantly deliver alcohol,” Dunker said. “That will to some extent frustrate consumers. There are public safety steps that have to take place.”
But if restaurants and bars are willing to adapt their business models, she said it could help them out of the pandemic’s slump.
“Consumers want this, so we've got to figure out how to do this profitably, and we will,” she said.
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