On July 15, 2024, Governor Josh Shapiro signed legislation that amends Pennsylvania’s liquor code, specifically the duration of happy hours and the discounting of alcoholic beverages. These changes to the liquor code originated from House Bill No. 829 and Senate Bill No. 688. Below, we provide analysis of the changes and their potential implications for your business.

Current Happy Hour Restriction under Section 406 of the Liquor Code:

• Happy Hour Duration: Previously, the holder of a retail license could hold happy hours for up to four consecutive or non-consecutive hours per day and up to fourteen hours per week.
• Discount Restrictions: Discounts on alcoholic beverages could not be given between midnight and the legal closing time.
• Notice Requirement: Notice of all happy hours had to be visibly posted on the licensed premises seven days prior to the happy hour.
• Compliance: Licensees had to comply with Liquor Code Regulation 13.102 regarding discount pricing practices.
• Exemptions: Pre-arranged catered events and daily specials on specific types of alcoholic beverages, provided the price does not change during the offering, and discounts to mug club members were exempt from the four-hour per day or fourteen-hour per week limit.

Amendments to Section 406 of the Liquor Code:

• Extended Happy Hour Duration: The allowable happy hour duration has been expanded from fourteen hours per week to twenty-four hours per week. Happy hours still can be held for up to four consecutive or non-consecutive hours per day.
• Food and Alcohol Combination Discounts: The amended text allows for discounts on food and alcoholic beverage combinations. However, these combinations are limited to no more than two specials on any given day.
• Discount Restrictions: The prohibition on discounts between midnight and the legal closing time remains unchanged.
• Notice Requirement: The requirement to post notice of all happy hours seven days in advance remains unchanged.
• Compliance: The need to comply with Liquor Code Regulation 13.102 remains. The key prohibited practices in Regulation 13.102 include:
  • Selling or serving more than one drink for the price of one.
  • Selling or serving an increased volume of a drink without a proportionate price increase.
  • Selling or serving unlimited drinks for a set price.
  • Changing the price of alcoholic beverages within a happy hour period.
• Exemptions: Pre-arranged catered events and daily specials on specific types of alcoholic beverages, provided the price does not change during the offering, and mug club member discounts continue to apply.

Impact on Your Business:

The recent amendments to Pennsylvania’s liquor code provide new opportunities for restaurants and bars. Increasing the allowable happy hour duration from fourteen to twenty-four hours per week gives your business greater flexibility in scheduling happy hours. This could attract more customers during different times of the day and week, thereby increasing foot traffic and sales. Additionally, the new ability to offer discounts on food and alcoholic beverage combinations opens new promotional opportunities. By creating enticing food and drink specials, you can appeal to a broader audience and potentially boost both food and alcohol sales.

However, it’s important to continue adhering to the specific notice and timing requirements. All happy hours must still be visibly posted seven days in advance, and no discounts are allowed between midnight and the legal closing time. Despite the increased flexibility, compliance remains crucial to avoid penalties.

With the limitation to two food and drink combination specials per day, strategic planning will be essential. Carefully selecting the most appealing and profitable combinations can help maximize their impact and draw in customers.

Action Steps:

To take full advantage of these regulatory changes, start by reviewing and adjusting your current happy hour schedules. Consider extending them to utilize the new twenty-four hour weekly limit. Develop attractive food and alcohol combination specials, keeping in mind the limit of two per day.

Update your compliance protocols to reflect the new regulations and ensure your staff is fully aware of the changes. Maintaining clear records of happy hour notices and discount practices is crucial for staying compliant.