How Businesses Can Reduce Obvious Intoxication and Increase Cut-offs, Part 2
Gregg Hanour
(Insight in the “Drunk, Drunker, and High-Risk Drunkenness” series)
Recap of Prior Insight
- You can encourage your city’s alcohol businesses to adopt new approaches designed to decrease obvious intoxication and improve timely service cut-offs. For a successful rollout, however, owners and managers must first clearly understand both how these new approaches benefit their business and what those approaches involve.
- The 42-page Best Practices for Nightlife Establishments booklet is the operator’s roadmap to more profitability and fewer calls for service.
- When businesses replace legacy practices with best practices, your public safety expenses decrease and community safety increases.
Short on time? Skip to the recap below!
How to replace legacy practices with best practices
Systemic problems in any business often stem from two root causes:
- A lack of best practices, or
- A lack of monitoring to ensure those practices are followed.
The same challenges exist for ABC-licensed businesses. Alcohol-related incidents and compliance issues are common. Yet, owners and managers have had limited access to practical, field-tested risk management strategies (best practices). Effective preventative policies and procedures are missing from traditional hospitality management curricula. My Advanced Bar Management Workshop was designed to bridge this knowledge gap, though its current availability is limited.
The 42-page Best Practices for Nightlife Establishments booklet solves the problem by making these practices accessible to all.
What’s in the booklet?
Full-color pages that take the guesswork out of operating responsibly.
- Six helpful pages explaining how obviously intoxicated customers put the ABC license at risk and quietly drain profits
- Three pages in the Appendix devoted to insurance and lawsuit basics
- One crucial page featuring the “relative crash risk” chart and seven reasons why cutting off customers at the first signs of obvious intoxication benefits the business
- One eye-opening page highlighting the substantial financial gains from eliminating industry-wide overpouring of spirits, a practice that also reduces profit, tips, and increases customer risk
- Two pages of best practices for reducing intoxication and increasing cut-offs (introduced in our previous Insight, “How businesses can . . . Part 1”)
- A thought-provoking, powerful appendix, "A Culture Around Doing the Right Thing," which is about creating an ethical workplace culture. Fraud experts note that 80% of employees are influenced by workplace culture to act either ethically or unethically. In the alcohol industry, moral behavior carries particularly high stakes. Staff must not steal cash sales or give away drinks; remain calm with difficult customers; check IDs reliably; and, critically, cut off obviously intoxicated customers, including off-duty staff. When management consistently cuts off intoxicated customers, they model the expectations they want staff to uphold. This strengthens the ethical culture that is essential to a safe, profitable business.
- An easy-to-follow table in the appendix showing the math on how cutting off drunk customers reduces customer churn and improves sales
Customer churn: an overlooked cost of overservice
All businesses experience churn, i.e., lost customers. In the hospitality industry, churn is uniquely amplified because customers often visit in groups. And one bad experience can ripple across entire social circles.
While churn can result from many factors (moving away, aging out, service issues, competition), alcohol-driven negative experiences are a leading, but under-recognized, cause.
Guests may leave permanently after:
- Arguments started by a drunk customer
- A fight
- Witnessing an ugly confrontation
Importantly:
- 45% of customers share negative experiences on social media
- One negative review can drive away 30 customers
The Best Practices for Nightlife Establishments booklet explains how cutting off intoxicated customers impacts churn—and how dramatically this reduces profit. For example:
Improved sales by cutting off drunk customers
Consider a business that decides to enforce a cut-off policy and that policy results in five more obviously intoxicated customers being cut off per day:
If open 365 days:
- $1,820 additional cut-offs annually
- $13,650 loss in immediate drink profit
- ($10 drink with a 25% pour cost = $7.50 drink profit lost)
- ($7.50 profit per drink × 1,820 = $13,650)
Now consider the cost of not cutting them off:
If just 1 in 20 intoxicated customers who were not cut off drives away one regular customer who visited monthly for three drinks:
- 91 customers lost annually (1,820 ÷ 20)
- $24,570 in lost annual profit
- (91 customers × 36 drinks × $7.50 = $24,570)
The net gain from enforcing cut-offs:
- +$10,920 annual profit increase
- +$21,840 profit increase if each lost customer takes just one friend with them.
Albeit some of those cut-off customers would have purchased more than one more alcoholic drink, the above calculation is conservative. Research shows one negative experience can ripple outward far beyond one or two customers, especially when groups make nightlife decisions collectively.
The true financial benefit of cutting off intoxicated customers is significantly higher.
Additional benefits of cutting off obviously intoxicated customers
Businesses that enforce responsible alcohol practices see improvements across every major risk category:
1. Fewer general liability claims
Most liability claims originate from drunk customers. Each claim:
- Costs the business its deductible.
- Raises premiums and deductibles for years.
2. Fewer Workers’ Compensation claims
Many staff injuries involve intoxicated patrons, especially in late-night businesses.
- Claims raise the business’s Experience Mod (higher Mod = higher premiums).
- In California, a single major claim can trigger a “shock factor” that dramatically increases costs for several years.
3. Fewer credit card walkouts and chargebacks
Most are caused by intoxicated customers who should have been cut off.
4. Less damage to property
Both inside the business and in the surrounding areas.
5. Far fewer calls for service
Intoxicated customers are the leading trigger for police and other first responders. Repeated calls can result in the business being deemed a disorderly house, drawing increased scrutiny or penalties.
In my Advanced Bar Management workshop, I discuss these numbers and their implications in depth—often producing “lightbulb moments” for participants.
The Best Practices for Nightlife Establishments booklet captures the most critical insights from that training and our combined decades of experience in hospitality management and alcohol regulation.
It’s never been easier to help your alcohol establishments do better.
Next in this series
Our final Insight in the “Drunk, Drunker, and High-Risk Drunkenness” series:
- Press Release from Governor Newsom (imagined)
FINAL RECAP
- All businesses and organizations have churn, i.e., lost customers. Alcohol businesses often lose customers because of unfortunate experiences fueled by a drunk customer.
- The Best Practices for Nightlife Establishments booklet shows alcohol business owners how drunk customers who are not cut off can result in lost customers and reduced profit.
- The benefits from cutting off drunks far exceed the financial gain resulting from reduced customer churn. These benefits include:
- Fewer general liability insurance claims. Almost all claims are caused by obviously intoxicated customers; claims that cost the business the amount of their deductible and often result in higher premiums and deductible expenses for five years.
- Fewer Workers’ Compensation claims. These claims often involve injured staff from altercations with drunk customers. Claims increase a business’s Experience Mod. The higher the Experience Mod, the greater the risk to the insurance company, and the business pays more in the form of a surcharge on its premium.
- In California, a single large claim can trigger a “shock factor” calculation, resulting in a sudden and severe increase in payments for several years.
- Fewer credit card walkouts and chargebacks, most often generated by obviously intoxicated customers.
- Less damage to the business and surrounding properties.
- Far fewer calls for service. It’s typically the obviously intoxicated customers who generate these calls, which can trigger state and local authorities to take action against a business for being a disorderly house (§ 25601 CA Business & Professions Code).
That's the decision . . .
In our last blog we discussed how the overconsumption of alcohol is the enemy, not the moderate consumption of alcohol. Moderate Drinkers are Safer Multiple research studies have shown that people who consume alcohol and keep their BAC to below .06% are safer. “There is agreement in the scientific community about what defines ‘moderate drinking.’ Also, moderate drinking means limiting how fast you drink and, as a result, keeping your blood alcohol concentration (BAC) below .055.” (Source: Hester) In general, those who drink excessively are more aggressive and also get injured more seriously than those who drink moderately or not at all. Moderate drinkers do not appear to be at significantly higher risk of injury than nondrinkers. (Source: Scott and Dedel) The Higher the BAC, the Greater the Risk of Harm Alcohol follows a dose-response curve— higher BAC leads to higher risk across all major harms, including crashes, injuries, and violence. Harm rises exponentially as demonstrated by this chart from National Highway Traffic Safety Administration on the risk of crashing at given BAC levels.
The Root Cause: Overconsumption of Alcohol T he main purpose of CUP conditions for your on-sale alcohol businesses is to lessen any negative impacts and ensure the operation is in harmony with your community Most problems caused by your bars and restaurants are the direct result of the overconsumption of alcohol—including altercations, nuisance complaints from neighbors, and vehicle crashes. Cities that have calculated the net effect of alcohol businesses on their general fund have discovered a minimum net loss of $1 million dollars—caused mainly by calls for service due to violence and medical problems from overservice. The insurance industry says that 90% of insurance claims at bars and restaurants are the direct result of the overconsumption of alcohol. My experience as an operator and consultant to the hospitality industry suggest that 90% of the time, calls for service are due to one or more customers having consumed too much alcohol. Studies confirm the relationship between higher levels of intoxication and violence. Using Logic to Choose an Action to Solve the Problems Since the goal of writing conditions of approval is to lessen problem . . . And since most problems stem from the overconsumption of alcohol . . . Shouldn’t the conditions aim to lessen overconsumption? In fact, shouldn’t a major focus of your entire approval process—from approving, conditioning, and onboarding—be to message best practices to lessen overconsumption? In reducing the overconsumption of alcohol, all stakeholders benefit: Public safety is improved from less violence and fewer DUI tragedies. City public safety expenses are reduced. Business profits are protected from insurance claims and lawsuits. There are many ways planners and law enforcement can reduce overconsumption in newly-approved on-sale alcohol businesses. In reducing overconsumption, your city saves money—lots of money. This isn’t just our opinion. A Study to Bank On According to this study, for every $1 a city spends to reduce intoxication, it saves $260 (Levy & Miller)
Most city leaders assume their bars and restaurants pay for themselves. The numbers say otherwise—and closing the gap starts with rethinking two common assumptions.
Most city leaders assume their bars and restaurants pay for themselves. The numbers say otherwise — and closing the gap starts with rethinking two common assumptions.
I’ve been known to get a little obsessed with reaching goals — whether it’s catching a trophy brown trout over 10 pounds or hitting a Pick 6 for more than $50,000. Did I accomplish those goals? You’ll find out at the end. Another goal of mine is far more important and challenging: changing how California cities approve, condition, and onboard new on-sale alcohol businesses (restaurants, bars, clubs, and similar establishments). That's why I teamed with retired ABC District Administrator Lauren Tyson to design our upcoming workshop on best practices for conditional use permits (CUPs) and entertainment permits. The current process sucks. Yes, I sometimes use technical language. Who’s Behind This? I’ve spent years training hospitality operators, planners, and law enforcement on exactly this problem, and wrote a book on the topic, A Business Approach to Reducing DUI, along the way. Link to Gregg’s bio Lauren wrote the book on it — literally. As a former ABC District Administrator and author of Perils of Selling Alcohol: A Guide for Bar Owners Facing Legal Trouble, she’s seen exactly what puts ABC-licensed businesses at risk, and what actually protects them and the public. Link to Lauren’s bio How Do I Know the Current Process Isn’t Working? Let Me Count the Ways Personal experience. I went through the process twice — once in Costa Mesa and once in Irvine. In both cases, very smart, dedicated planners, working with law enforcement, created extensive conditions of approval. One business had 32 separate conditions. Both businesses followed every condition, yet both were still public nuisances for years. Working with applicants. Lauren and I have helped dozens of applicants successfully navigate their city’s CUP application process. Yet the operating conditions cities impose rarely (read never) have a meaningful impact on reducing violence or problems. Reviewing city policies statewide. We’ve collected CUP conditions and operating requirements from 35 cities across California, including several known for leading the way in responsible ordinance writing. The reality? A business can follow every specific condition of approval and still become a public nuisance. Training professionals. We’ve conducted in-person workshops for planners and law enforcement on this topic. Presenting at conferences. Together and separately, we’ve presented on these issues at professional conferences. Academic research. While writing my first book, A Business Approach to Reducing DUI, I researched the topic extensively, including contacting five of the leading urban planning universities to review their curriculum. Working directly with operators. I’ve trained over a thousand hospitality owners and managers. I understand their concerns, their daily realities, and why too many close. Revising how cities approve, condition, and onboard new businesses doesn’t just protect city resources and public safety — it also guides businesses toward practices that improve their profitability. The Bottom Line When cities use best practices to approve, condition, and onboard new on-sale alcohol businesses, the outcome looks very different. Applicants who complete the CUP process and open for business will hear consistent messaging — from planners, planning commissioners, code enforcement, and law enforcement — about the operational practices that significantly reduce violence and problems. Applicants will receive meaningful conditions of approval that, when followed, actually reduce risk for all stakeholders. Applicants will experience impactful communication with code enforcement and law enforcement that keeps the operator focused on practices that protect both the business and the community. That’s what effective onboarding looks like. We hope you’ll join us for our upcoming Zoom workshop. And if you twist my arm, I might even share a few brown trout fishing tips. Yes, I did catch that trophy brown — a 17-pound, 7-ounce beauty. I also hit that big Pick 6. If you ask how to hit a $50,000 Pick 6 at the racetrack, my advice is simple: Start with a $100,000 bankroll. WORKSHOP Conditional Use Permits, Entertainment Permits, and On-Sale Alcohol Oversight 📅 Date: Wednesday, October 28, 2026 🕐 Time: 10:00 a.m. – 12 Noon Pacific Time (2 Hours) 📍 Location: Live via Zoom ✅ POST Certification pending | APA Certified 2.0 CM COST -$330 per attendee; or -$990 flat rate per city (up to 10 attendees from your city) Learn more Register for the workshop WHO SHOULD ATTEND This workshop is designed for professionals responsible for reviewing, approving, or monitoring alcohol licenses, including: • City planning officials • Law enforcement personnel • Code enforcement officers • Planning commissioners Everyone involved in approving, conditioning, or onboarding new ABC on-sale licensed businesses must deliver a consistent, informed message at every step of the process — this workshop ensures they can. We offer a significantly reduced tuition for a group because the gains from this workshop grow exponentially when every department is trained together.
Alcohol Best Practices is pleased to announce a new Zoom workshop for public officials and law enforcement professionals involved in alcohol license oversight. Conditional Use Permits, Entertainment Permits, and On-Sale Alcohol Oversight 📅 Date: Wednesday, October 28, 2026 🕐 Time: 10:00 a.m. to 12:00 Noon,Pacific (2 Hours) 📍 Location: Live via Zoom (link emailed upon registration) ✅ POST Certification pending | APA Certified 2.0 CM COST -$330 per attendee -$990 flat rate per city (up to 10 attendees) Learn more Register for Workshop WHO SHOULD ATTEND This workshop is designed for professionals responsible for reviewing, approving, or monitoring alcohol licenses, including: • City planning officials • Law enforcement personnel • Code enforcement officers • Planning commissioners Everyone involved in approving, conditioning, or monitoring new ABC on-sale licensed businesses must deliver a consistent, informed message at every step of the process — this workshop ensures they can. WHY THIS WORKSHOP IS NEEDED After analyzing dozens of Conditional Use Permits (CUPs) from cities across California, we identified critical gaps in how cities handle new alcohol license approvals: Existing CUP processes lack essential messaging to applicants Legacy approval conditions miss the most impactful requirements Newly approved businesses receive little to no meaningful onboarding Until now, there has been no training resource for best practices in approving, conditioning, or monitoring new ABC on-sale licensed businesses. Contracting with us to revise your city's approval and onboarding process is a significant investment. This workshop offers a cost-effective alternative, equipping your team with proven strategies that: ✔ Reduce violence, DUIs and nuisance complaints ✔ Lower public safety expenses and calls for service ✔ Improve the profitability, performance, and professionalism of licensed businesses We look forward to seeing you there. Learn More Register for Workshop
(Insight in the “Drunk, Drunker, and High-Risk Drunkenness” series)
(Insight in the “Drunk, Drunker, and High-Risk Drunkenness” series)
(Insight in the “Drunk, Drunker, and High-Risk Drunkenness” series)
