Verndale's municipal liquor store at Bullseye has target on its back
The Verndale City Council didn't vote yet to close the Verndale off-sale liquor location adjacent to Bullseye Bar and Grill, but the exasperated looks and testy exchanges of council members Monday night made it clear the decision is not far off.
"We're not making any money," Councilman Bruce Koppenhaver said. "We haven't made any money since we moved out there."
The city still maintains off-sale liquor at its downtown location, but when the Bullseye opened, the council saw an opportunity to get a coveted location on U.S. Highway 10. Not only has the new location failed to bring in profits, it's running a deficit and burning through the liquor fund's cash.
"You've got about three months left and you're going to be out of money," Koppenhaver said.
He said original projections were that the new location would have to bring in $400,000 in annual sales at a profit margin of 20 percent to break even. Koppenhaver said last year, there were $209,000 in sales with $282,000 in expenses, for a deficit of $73,000.
"That's the difference we have to make up to break even," Koppenhaver said. "Given that, how do you save it?"
New council member Jim Runyan, appointed Monday night, asked if there were ways to cut expenses, such as getting better deals from distributors so the 20 percent mark-up would be possible. Currently, the store is making a profit margin under 10 percent.
Liquor store manager Linda Forcier said the municipal stores don't buy in enough bulk to get the best discounts. She said marking up the prices would only push customers to other locations, like the Wadena municipal liquor store.
Bullseye co-owner Alan Werk was in attendance and was asked for his thoughts. He said the Bullseye could be part of the solution and would be willing to talk about lowering the $1,200 monthly rent, but other changes would be necessary.
At $1,200 a month, the annual rent is only $14,400, so even free rent wouldn't close the $73,000 shortfall.
The $73,000 figure is one Koppenhaver kept reminding the council of as it debated ideas to save money. While some of the proposals might help, such as assigning less of the city clerk's salary to the store, cutting hours, raising prices and asking for vendor discounts, the sum of those ideas never approached the $73,000, which Koppenhaver reminded everyone was just so the store would reach break-even.
Forcier said she can't be confident the store would ever reach the $400,000 sales level.
"You have to have the customers," she said. "The customers are not coming through the door. Four-hundred-thousand dollars a year -- that's a lot of money."
While no formal vote was held, the council directed Forcier to come up with a plan for winding down the Bullseye location, such as selling off inventory, dealing with the lease, and talking to employees.
While the council pointed out the sales have been improving at the location, no one was optimistic they would improve quickly enough.
"I don't see any way it can keep going the way it is," Councilman Louie Randall said. "There is no way."
Werk said after the meeting that the Bullseye is doing OK financially aside from the liquor store issues. He said he expects the restaurant and bar to be fine despite the potential loss of the on-site liquor store, though he expressed hope something could be worked out.