WEST CONCORD — The West Concord City Council is still having trouble deciding what to do about its struggling municipal liquor store, despite an auditor's report that the store is a financial drag on the city.
The West Concord Municipal Liquor Store has not turned a profit in the last two years. Last year, in an effort to turn the financial tide, the city eliminated the liquor store manager position and called for a reevaluation of the functionality and profitability of the store.
Minnesota state law requires a city to conduct a public hearing whenever a municipal liquor store loses money in two of the last three years. The West Concord City Council held its public hearing on Nov. 17, and community members expressed concern for its future. The council decided to wait until the end of the first quarter of 2016, and base any action concerning the store on an outside auditor's report.
On Thursday, the city council and a few community members met to hear the results.
The compilation report was put together by Burkhardt & Burkhardt, an accounting company that focuses on income tax preparation and organizational auditing. The information was supplied by the West Concord City Council. The report evaluated the revenue and expenses of the first three months of 2016 and compared the figures to those of 2015.
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The report found that in the first three months of 2016, the store had turned a small profit. The report credited the positive numbers to reduced operating expenses, mainly from the elimination of the liquor store manager position. However, the store still faces a large deficit that has accumulated during the past years, taking away funds from other city operations and functions.
The report also found that inventory turnover, or the amount of times that materials in the store sold out and had to be restocked throughout the year had consistently gone down since 2013, meaning that either the total sales of the liquor store is consistently decreasing or the amount of inventory being offered is consistently increasing.
The report also compared the West Concord Municipal Liquor Store to other municipal liquor stores around Southeast Minnesota. Of the liquor stores that were both on-sale and off-sale (a store with a bar), West Concord's expenses took up the highest percentage of the revenue that it accumulates through annual sales.
Greg Burkhardt, a co-owner of Burkhardt & Burkhardt, presented the report to the city council. He said that the liquor store could be seen as a financial drag on the town of West Concord, taking funds away from other city organizations and functions. However, he said that he has seen other towns keep their municipal liquor stores even though they doesn't turn a profit, simply because they are seen as a resource.
Burkhardt said that municipal liquor stores are designed to operate at a profit and then the profit is used to support other city functions.
"Here it's kind of going in the reverse direction," Burkhardt said. "It's going to be up to the council and really the community at large to decide if they are comfortable where they are."
Although the liquor store saw a small profit in the first three months of 2016, Burkhardt said that does not necessarily mean that the profits will continue. He explained that it is difficult to determine much from the limited amount of information given, and that further analysis is necessary to determine what can be done to continue to be profitable.
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"We pull for them, but there’s really only so much you can do, just because of some of the limitations with being a municipality," Burkhardt said.
West Concord Mayor Jeffrey McCool said that the results of the compilation report came as no surprise to him or the city council. Despite previous reports that a decision on the future of the store would be made once the audit results were in, McCool said that there are no set plans to make such a decision.
"If the city chooses to move forward and keep the liquor store as is, it's just going to take some time to readjust and figure out new ways to make it profitable," McCool said.
