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Bemidji City Council not interested in third liquor store

The Bemidji City Council this week decided to not now pursue opening a third liquor store.

No official vote was taken during Monday night's work session, but the consensus of the six present councilors (Barb Meuers was absent) was that the city's two current liquor stores are sufficient.

The city's has two liquor stores - Discount Liquor on the north end of town and Lakeview Liquor on the south side.

The city opted last year not to replace Dan Bahr, the former liquor store superintendent, when he retired in 2009. He had worked for more than 40 years with the city's liquors stores.

The senior liquor clerks at each liquor store - Don Baumgartner at Discount Liquor and Kevin Fenner at Lakeview Liquor - both had about 30 years experience themselves, so they were put in charge of daily operations.

Meanwhile, Ron Eischens, the city's finance director, provided general overall direction.

Apparently, the arrangement is working well.

"This structure has worked due to dedicated and experienced staff," Eischens wrote in a memo to the council.

The arrangement saves the city about $75,000 a year, ne noted.

In 2009, the city's liquor sales increased by $360,000 or 8 percent, Eischens reported.

Net income increased to $481,000, or 9.8 percent.

Eischens noted that some of the increase could be attributed to the pipeline activity and the pipeliners who were in town working on the project.

A third store?

Staff began looking into the possibility of establishing a third liquor store that could have been located south of town in a section of the Cenex store along U.S. Highway 71 south.

The city had considered leasing 650 feet, with room to expand, for about $1,000 a month, Eischens said.

"When this opportunity was initially presented, I was enthusiastic about it," Eischens said. "However, my excitement dimmed once financial requirements were analyzed."

The third store would require at least 1.5 part-time clerks at a rate of $12 an hour for 13 hours a day and inventory would not likely be able to be stored at the location due to the available square footage, he noted.

With the equipment costs - $8,000 for cash register setup, $13,000 for a walk-in beer cooler, $4,000 in shelving and more - the location would need to generate $676,000 in sales to break even, Eischens reported.

And that money would have to come from new liquor sales, not sales that would be transferred from the existing two stores.

"According to the Minnesota Municipal Beverage Association, once sales reach $600 over square foot, you can no longer keep up with demand or product selection," he wrote.

The city's current stores have sales of $400 per square foot, he noted.

The MMMBA recommended the city improve operations at the current locations.

City Manager John Chattin agreed with Eischens that a third store was not a great option right now.

"This is not the time to take the risk of establishing a third store," Chattin wrote. "All the knowledgeable operators and consultants we have contacted suggest that this is a bad idea."

The council ultimately agreed.