Municipal liquor stores continue to add revenue to area cities' coffers. They have become an integral part of the yearly budget allowing for additional revenue to cities.
The Minnesota Auditor's Office recently released a report comparing city-owned liquor store operations for 2008. Many stores included profits, including Park Rapids, Nevis and Menahga locally, while a few are struggling with losses.
Our area has been fortunate. Park Rapids, which has an off-sale only operation, had a net profit of $263,786 in 2008. It transferred $213,017 to the general budget.
Menahga, with on- and off-sale, had a net profit of $55,860 and transferred $50,000 to other city funds.
Nevis, with on- and off-sale, had a net profit of $31,845 with $45,023 transferred to other city funds.
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Akeley also has an on- and off-sale operation. It had a net profit of $23,664 and transferred $26,906 to other city funds.
Nevis and Akeley have taken additional money out of liquor store reserves for transfer to other city funds and this should be watched closely. It's good to keep a healthy reserve for emergencies.
But overall, these cities have benefited greatly from their city-owned liquor store operations that have been well-run.
Across the state, the combined net profit of all municipal liquor operations totaled $20.44 million in 2008, according to the report. This represents a decrease of $2.0 million, or 8.9 percent, from the amount generated in 2007. Among on-sale operations, net profits totaled $1.9 million in 2008, which was a decrease of $913,333, or 31.9 percent, from 2007. Total net profits for off-sale operations totaled $18.5 million in 2008, which was a decrease of $1.1 million, or 5.6 percent, from 2007.
Off-sale liquor stores have been much more profitable than on-sale operations.
Over the past five years, net profits have increased 9.9 percent. Among off-sale stores, there was a 23.5 percent increase in net profits, while on-sale stores showed a decrease of 46.3 percent, according to the auditor's report. The off-sale operations have less overhead costs, which could be the reason for the difference.
While our area's municipal liquor stores have been a great revenue source in the past, cities need to keep a close eye on the operations and make sure they continue to run a profitable business.
Those with both on- and off-sale operations might want to look closely at on-sale operations. If that side isn't making much money compared to off-sale, it might be time to discontinue on-sale and focus on the more profitable aspect of the liquor store business.
