The Roxy Cafe starts filling up around 11:30pm on weekend nights, when VCU students come in from the cold to light-up cigarettes and chat about the start of the second semester. Maybe they’re drawn to the anonymity of the place; the faint smell of stale beer, the nondescript promotional posters hanging on the wall and the flat screen TV playing ESPN.

The bartender seems to know most people by name and takes a few orders for sandwiches and mozzarella sticks. Most everybody else prefers PBR drafts or Jägerbombs. In fact, most of the people who walk through the door of the cozy East Main Street hangout are interested in alcohol. They want to come out for drinks, they want to hang out at a bar.

Which is sort of a problem, because in Virginia, there are no bars. You may think you’ve been to a bar—the kind of dive where you wouldn’t dare order a bowl of chili or a taco salad—but according to the state of Virginia, there are only restaurants that serve alcohol. No bars. And technically, there are no such things as nightclubs or strip joints either.

Last year Roxy was fined $1,000 by the Virginia Department of Alcoholic Beverage Control for not being enough of a restaurant. At the end of every year, restaurants must file a mixed beverage annual report that details alcohol sales and shows the ratio of food to liquor. ABC stipulates that each restaurant must sell enough food and soda to account for at least 45 percent of liquor and non-liquor sales, beer and wine excluded. In 2005, food and soda at Roxy was only 43 percent.

Roxy manager Antonio Badalamenti says the ‘45 percent rule’ is ridiculous and old fashioned, although he has tried to meet it this year by adding more food options to the menu. Industry insiders say as long as a “bar” claims it met the quota in its compulsory yearly report, ABC is content. “Usually the only people who get caught are the ones who truthfully report they’re not meeting the threshold,“ said Tom Lisk, an attorney with LeClair Ryan who lobbies for the restaurant industry and provides counsel for restaurants in ABC hearings. “It’s the secret that’s not really a secret.“

No Richmond-area restaurants lost their liquor licenses for a failure to meet the 45 percent rule in the last two years. But about a dozen have been fined and forced to go dry for a week or two, including former Grace Street punk haven Nanci Raygun, Lucky Lounge, Beefeater’s Bar and Grill, Bahama Joe’s and Roxy Cafe.

Anybody who’s ever waited in a crowded pub to pay $5 for a drink knows there’s a lot of money in the bar business. Upwards of 60 percent of each dollar spent on booze during night-time hours can be straight profit. Labor costs are at their lowest from 10:00pm until 2:00am when bartenders are paid around $2.00 an hour and higher paid staff like chefs have long since clocked out.

Richmond bar hoppers back in 1995 might remember a spring dinnertime raid on a dozen Shockoe Bottom night spots. But ABC’s strategy seems less combative now. The agency prefers leveraging fines to staging dramatic invasions, as long as “bars” attempt to follow the rules.

The shift in tactics doesn’t necessarily mean the agency’s gone soft. The kindler, gentler makeover is more likely due to a staffing shortage.

“ABC used to go so far as to audit receipts for food vendors to make sure they’re above the limit, but they no longer have the manpower to do that,“ Lisk said. Each agent monitors between 175 and 200 restaurants. Occasionally they go undercover to make sure a restaurant is serving food. One agent pinched Bahama Joe’s on Staples Mill Road when he went in and tried to order food. He was told the kitchen was closed.

Robert O’Neil, the chief hearing officer for ABC, said each restaurant must prove to the board that they will be able to meet the quota in order to obtain a mixed-beverage license. O’Neil estimated that out of roughly 1,300 cases ABC reviewed last year, only 50 dealt with the 45 percent rule. The others dealt with a slew of issues, like underage drinking. Most establishments report their sales truthfully, industry insiders say.

One way to run a bar operation that might not meet the food ration is to connect it to a restaurant, offsetting the liquor sales from the bar with the food and soda sales from the restaurant.

Mike Byrne owns Richbrau, which includes a bar, a restaurant and a brewery. Like many owners of restaurant/bar combinations, Byrne is a fan of the 45 percent rule. “It helps keep Virginia from looking like Maryland, with a bar on every corner,“ he said. “To operate a restaurant, to put in a kitchen and serve meals, it’s then a privilege to serve alcohol. It keeps the place more reputable. If you take away the law, there’s going to be more absentee owners who try to pack in cash in a short amount of time.“

He also said the law needs stricter enforcement. “To some restaurants, it’s not being enforced. And what is it—a place for people to get intoxicated.“ Byrne said those who comply are at a disadvantage from those who fudge the numbers because they invested in kitchen equipment and cooking staff.

Restaurant owners, managers and bartenders from around the state said the law is easy to flout. A bartender who worked in the Fan and spoke on the condition that his name and the name of his employer are not disclosed, said he regularly rang up mixed drinks as one soda and one liquor sale, reducing the liquor sales and increasing soda sales.

Even those who acknowledge not meeting the quota can stay in business for years while exhausting the appeals process. “It’s a shell game for those who truthfully report and miss it,“ Lisk said. “They know they have three years. Then they pack up and start a new shell corporation.“

Lisk said it works like this: “After opening they try to sell as much liquor as possible. When 12 months go by and they have a hearing for not meeting the 45 percent rule, they ask for a few more months to prove they’ve changed the menu. Or maybe they blame street construction out front for slowing business.“

“After another year on probation, they wait a few more months until the second year-end report is due, and if they’re still not selling enough food, there’s another hearing, and a few months later, the license is revoked.“

The Virginia ABC was created in 1934 after Prohibition was repealed. Until the mid 1960’s, restaurants could not serve liquor. Over the years, certain rules have been amended or repealed by the General Assembly. The ‘45-rule’ used to include beer and wine, but legislators softened the requirements around 1993 at the request of Virginia-Beach-area restaurants. ABC still sells spirits stronger than 40 proof at its 312 stores, and still prohibits restaurants from advertising the therapeutic effect of booze. They also prohibit restaurants from advertising “happy hour,“ which must end by 9:00.

More recently, the ‘45 rule’ is having the unintended consequence of squeezing restaurants that sell high-end drinks. Dave Albo, a state delegate from Springfield who formerly chaired the ABC subcommittee, said some bar patrons pay $8 for Belvedere instead of $3 for generic vodka. “The problem is, even though the food to liquor ratio at a place may not change according to volume, the price of drinks has gone up. It’s an artificial formula.“

Badalamenti said that’s becoming a problem at Roxy. “We sell a Grey Goose Vodka for $7 a drink. Chicken fingers only cost $6. And people don’t order a few baskets of chicken fingers like they do drinks.“

Badalamenti wants the law stricken from the books. So does Chris Savvides, owner of the Black Angus restaurant in Virginia Beach, who called the law “illogical.“ “It’s an arbitrary thing. You can go into a 7-Eleven and buy beer without getting food. Yet for restaurants, you have to have food tied to the sale of liquor,“ he said.

“Restaurants account for less than 20 percent of the beer and liquor and wine consumed. What about the other 80 percent, why aren’t they regulated?“

Savvides, who also chairs the trade association’s ABC subcommittee, said the ‘45 percent rule’ forces “bars” to heavily discount food. That adds competition to his steak restaurant. “They have to give it away almost at cost, and I’ve got to make my expenses. I sell prime rib for $20 and some bar down the street sells it for $8.95.“

Further change is unlikely, restaurant owners say, because there is not a consensus on how the rule should be amended, and legislators are hesitant to make changes absent unanimity.

Over at Roxy, Badalamenti said he’s confident the 2006 year-end report will pass because he improved the menu and said the food is more popular. But he’d still prefer not to worry so much about food sales.

Until the law is changed, even the seediest, smokiest dive in Richmond will sell chili. And some poor sap will order it.