Residents debate fate of liquor store
A state-required public hearing to discuss the fate of the city-owned Osakis Liquor Store drew many questions about its profitability but most of those who commented want to keep the store going.
About 75 people attended the hour-long meeting on Thursday, Aug. 30 and more than 20 spoke, some of them twice.
The council didn't take action at the hearing. The purpose was to gather ideas and feedback from local residents.
Here are some highlights:
Darrin Hensley said no one wants to see the liquor store close but added, "The tree is dead. You can't keep watering it." He said management was the problem.
Another resident suggested that like any business, the liquor store is going through some peaks and valleys. He said the city should give it a little time, adding it's a great place to buy liquor and socialize.
A few residents wanted more information about the financials, such as a more detailed breakdown of expenses and revenue, and indirect costs, such as maintenance.
A woman asked if the council was still considering an idea to build a restaurant and offices in the liquor store. Council members explained that they couldn't build a full restaurant because of the cost. The store would just sell smaller items such as drummies and deep-fried appetizers.
Another resident also expressed concern about adding food service, saying it would compete with all the good eateries in Osakis.
Paul Hartmann gave some financial information. He said the store had gross sales of $700,000 in 2016-2017. Expenses totaled about $330,000 a year and $210,000 was for payroll. He said the liquor store, like other small liquor stores that are struggling financially, has too high of a payroll and not enough profit. He said the only viable solution is to reduce payroll by 20 percent and increase gross profit by 5 percent.
Ken Hayes said he enjoys going to the liquor store for bargo, meat raffles and other events. He's worried that shutting down the store would send the wrong message about the town.
Brian Sorenson said that closing the liquor store would take away an amenity that helps draw tourists. He said the council should try to change a few things to keep it going.
Terry Hetland wanted to know the financial breakdown of the liquor store salaries and wages. Emerson said that's public information that's available at City Hall.
Linda Hayes urged the council not to shut the liquor store down. She said that sometimes you have to invest money to make money.
Tony VanAcker asked which part of the liquor store — the on-sale or the off-sale — is making more money. City Clerk Angela Jacobson said the on-sale business carries the off-sale, which is showing a loss.
Tommy Weller said that he hasn't heard any good solutions yet for making the liquor store profitable. He said it's a business that's bleeding and needs to get fixed. He suggested improving the management and having better oversight. He also suggested expanding the off-sale liquor part and negotiating better wholesale prices so the store could drop its prices and be more competitive.
Council member Justin Dahlheimer said the council has been exploring many possible solutions in the last year and half and has analyzed the financials, searching for the best return on investment. The council has also asked for feedback from management and the Minnesota Municipal Beverage Association, he said, but the council doesn't have a strategy yet.
Council member Jerry Olson said that the council has looked at adding a limited food menu and a volleyball court, and is working with beer companies on sign promotions. He urged residents to give the council suggestions.
"This is a community effort," Olson said. "If you've got ideas, we sure as hell want to hear about them."
Later, Hensley took issue with Olson's comments that the council was open to ideas. He said he told the council a year and a half ago to consider going to off-sale only but no one researched it. "What have you done, Jerry?" he asked. "You can't tell me you looked into it."
Olson said that not all ideas are feasible. Hensley said the council was not looking at the whole picture.
Council member Jim Snyder said the council did discuss Hensley's idea to put a curtain in between the on and off sale part of the store to give customers more privacy. He said the council looked at a number of issues that could be hurting the liquor store business, from the economy to out-of-date phone books. "But we can't put our finger on exactly what the problem is," Snyder said.
Snyder credited the liquor store management's efforts to try things like live music, bean bag
tournaments and bargo.
Matt Kruse, owner of Knights Pub and Grub, said he'd hate to see the liquor store close and suggested reducing off-sale prices to make them more competitive with stores in the Twin Cities or at Walmart. He added that law enforcement could also help by not parking in front of the bars and scaring customers away.
One resident suggested leasing the liquor store rather than putting more money into it. He didn't think the city should be competing with other businesses in town.
Olson disagreed. He said the liquor store belongs to everyone in Osakis and that the municipal store was here before the other businesses.
Another resident asked the council to consider what would happen to other jobs at the liquor store — the pull-tab operator and the cleaning person — if the store closed. "It affects more than the liquor store," she said.
At the end of the public hearing, each council member shared their thoughts:
Randy Anderson: In the last 10 years, the liquor store has allowed the city to transfer, on average, $52,000 per year to the general fund to help keep taxes down. He said the council should give it another chance. He added the council is open to any ideas from the public.
Jim Snyder: From the hearing, it appears the general consensus is that residents would like to see the liquor store continue. The council should try different approaches, such as volleyball and food options, to build stronger revenue.
Mayor Emerson: The council should continue taking a "real hard look at things," as it has been doing and find something that works.
Justin Dahlheimer: The liquor store has created wealth in the community. The council made the right decision by allowing more bar-restaurants to open, even if it resulted in lower liquor store profits, because it has strengthened the city's tax base. He favors an expansion of the off-sale part of the business. The city must also solve the problem of dipping into the liquor store funds to help balance the general fund because right now, the liquor's reserves of about $200,000 would be gone in 10 years.
Jerry Olson: He thanked everyone for coming to the meeting and encouraged residents to continue to give feedback. "If you see a good idea out there, come and see me," he said. "Together, we can do it."