Herald Journal - Enterprise Dispatch - Delano Herald Journal
Howard Lake liquor store records losses for third year

September 14, 2009

By Jennifer Gallus
Staff Writer

HOWARD LAKE, MN - The Howard Lake Municipal Liquor Store recorded a third year of losses, prompting the Howard Lake City Council to schedule a public hearing to discuss the future of the liquor store.

Prior to the past few years, the liquor store made “a lot of money,” according to City Administrator Kelly Hinnenkamp.

“One year, we made $100,000. In 2004, it made $83,442 in profit, which is the year the council approved an improvement bond of $380,000 over 10 years,” Hinnenkamp said.

The off-sale side of the business was gutted, and the on-sale side was expanded. Because of the remodeling in 2005, the liquor store experienced decreased revenues that year.

“We were closed, but we rebounded,” Hinnenkamp said.

A few contributing factors were cited for the losses in the last couple of years, according to Hinnenkamp, including the smoking ban in the fall of 2007, the opening of the liquor store in Cokato in the fall of 2007, which is said to have taken a large chunk of business away from the store, and the decline in the economy.

The net loss for 2008 was $78,135. That number includes depreciation of $26,789 and a bond payment of $48,860.

“If you take out those two numbers, the operation of the store is close to breaking even,” Hinnenkamp said.

The last bond payment for the store will be made in 2015.

The liquor store recorded gross revenue of $735,892 in 2008. In 2007, gross revenue was $820,353, and in 2006 it was $928,957, Hinnenkamp reported.

The net loss for 2007 was $65,409 and the net loss for 2006 was $17,727.

“Each of those years, we had about $25,000 in depreciation and a similar bond payment (around $48,000),” Hinnenkamp said. “And you can see that 2007 is when we really started to take a hit.”

“Our sales are increasing, but our cost of sales are going up too, so it’s a balancing act, and the profit margin isn’t as high,” Hinnenkamp said.

“Our bar is slow,” Liquor Store Manager Aaron DeMarais said, “but everybody’s bar is slow for obvious reasons. People are getting laid off or hours cut. People just don’t have the extra money right now. It’s the same aches everyone else is feeling.”

“Our off-sale sales are actually up, and ahead of last year’s pace,” DeMarais added. “It will turn. It’s not a forever thing. Times are tough – we’re running a marathon, not a 100-yard dash.”

The city is projecting sales revenues to be higher this year than 2007 and 2008.

“We haven’t seen an increase in sales since 2006,” Hinnenkamp said. “We’re experimenting with new promotions. Things are looking better, and not getting worse.”

The public hearing regarding the future of the liquor store and possible future changes is set for Tuesday, Oct. 20 at 7 p.m.


 

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