Mixed-Drink Sales Vital To Restaurant Bottom Lines

Source: Little Rock and North Little Rock tax receipts

Each year, Arkansas Business brings you lists of the top-selling restaurants in Little Rock and North Little Rock. Those lists, however, are of necessity incomplete and come short of reporting the actual amount of revenue the cities’ restaurants bring in. Let me explain.

In Little Rock, the Advertising & Promotion Commission last year kept up with more than 800 establishments serving prepared food. In North Little Rock, the Visitors Bureau reported on more than 300 establishments in 2013.

The revenue figures are based on local-option taxes paid to the cities’ advertising and promotion or convention and visitors agencies — sometimes called the hotel-motel-restaurant or HMR taxes. Unlike regular sales taxes, the HMR taxes paid by individual establishments are subject to the Arkansas Freedom of Information Act, so we can and do report restaurant-specific sales.

The HMR tax, however, is not applied to alcoholic beverages, so the public isn’t entitled by law to know how much revenue those bring in (and any restaurateur will tell you that the sale of alcoholic beverages can produce a lot of revenue). That’s why the lists, though generally accurate, don’t reflect the total revenue generated by restaurants that sell alcoholic beverages.

However … some cities have levied local taxes on alcohol sales at restaurants. Jonesboro is one of them; it collects a 5 percent tax. And some cities — Little Rock and North Little Rock, for example — collect a “mixed-drink supplemental tax” sales at restaurants. That rate is 10 percent for both Little Rock and North Little Rock.

The city of North Little Rock, bless its municipal heart, regularly reports how much it collects in mixed-drink taxes. Little Rock doesn’t. You’ve got to ask for the specific restaurants because with 800 prepared-food establishments, that’s just a lot to keep up with. So we asked for the top 15 or so restaurants by food sales, and the chart below shows what we found.

A few not-startling observations: Sports bar Fox & Hound depends on its mixed-drink sales, people don’t visit Verizon Arena for the food, and Warren Stephens’ investment in Chuy’s, reported in these pages in March, probably was smart.