Knoxville pizzeria owner advocates for reduced liquor taxes to save local restaurants

During the recent Tennessee Alcoholic Beverage Commission (TACIR) meeting on June 29, 2023, significant discussions centered around the challenges facing the restaurant industry, particularly regarding taxation and regulatory burdens. Brian Struts, a Knoxville pizzeria owner, highlighted the pressing need for policy changes to support local restaurants, which are vital to the state's economy and cultural identity.

Struts presented compelling data showing that while the restaurant industry has seen revenue increases, profit margins have drastically declined. He noted that from 2019 to late 2022, food costs rose by 22%, labor costs by 18%, and utility costs by 12%. To merely break even in 2022, a restaurant would need to increase its sales by 13% compared to 2019. This stark reality underscores the financial strain on restaurant owners, who often rely on alcohol sales to maintain profitability.

Struts emphasized the importance of restaurants in shaping community culture and tourism, arguing that the current high liquor by the drink tax—15%, the highest in the nation—exacerbates financial difficulties. He urged the commission to consider the implications of such taxes on the survival of independent restaurants, which he believes are essential to the identity of Tennessee cities.

Russell Thomas, director of the Tennessee Alcoholic Beverage Commission, echoed the importance of a healthy hospitality industry, noting that it is the largest sector they regulate. He reported that despite the pandemic's impact, the alcohol industry has rebounded, with significant increases in sales and the number of licensed businesses. However, he acknowledged the need for ongoing discussions about regulatory practices and the potential for tax reform.

The meeting concluded with a call for further examination of the current tax structure and its effects on compliance and business sustainability. As the commission moves forward, the discussions from this meeting may pave the way for critical policy changes aimed at supporting Tennessee's vital restaurant sector.