Monticello council’s decision on selective Sunday liquor relied heavily on store manager’s input

Before Monticello City Council members voted 3-2 Monday night to take a highly selective approach to Sunday liquor, they reviewed background in a staff report and presentation made by Liquor Store Manager Randall Johnsen.

That staff report included information about operational concerns, likely competitive responses, quality of life considerations, and potential revenue based on sale levels, the city stated in a news release issued Tuesday.

Of particular concern were the increased costs of opening the store on Sundays with unknown revenue to offset those costs, particularly once the novelty of Sunday sales wears off.

If revenue does not cover costs, profits returned to the city for community investment would be diminished, the news release stated.

Based on this information, staff’s recommendation was to open for limited Sundays in 2017.

City leaders approved a motion Monday night to change the Hi-Way Liquors store schedule to allow Sunday sales only on Dec. 24 and Dec. 31 this year for hours allowed by a recent change in state law.

Voting for the change in liquor store hours were Councilmembers Jim Davidson, Bill Fair, and Lloyd Hilgart. Voting against the motion were Mayor Brian Stumpf and Councilmember Charlotte Gabler.

Finance Director Wayne Oberg and Johnsen provided background about the proposed changes in the following council memo.

Recently passed legislation allows cities to permit liquor stores to open on Sunday from the hours of 11 a.m. to 6 p.m. The first Sunday a store can be open is July 2.

Hi-Way Liquors is currently open all holidays except Thanksgiving and Christmas and those falling on Sunday.

Days and hours of operations are annually set by the Monticello City Council in December and modified by action as needed.

Prior to the law’s passage, Sunday opening was discussed by the city council on Feb. 13 during the annual liquor store presentation.

At an April 19 meeting, the city’s personnel committee directed staff to be present at a May 17 meeting to discuss Sunday opening,

Johnsen clearly laid out his case for staying with the current schedule of operations, which excludes Sunday sales.

Without a clear consensus, the personnel committee directed staff to bring the item to Council for consideration Monday night.

Customer behavior is somewhat fickle when viewed from an individual perspective, Oberg and Johnsen stated in their background memo.

Sunday opening would reduce stocking-up purchases, decreasing efficient per hour sales on Friday and Saturday and possibly lower total consumption.

Some stocking-up by travelers leaving for the weekend likely occurs before Friday noon as indicated by higher per transaction amounts, Oberg and Johnsen stated.

Returning travelers, who are somewhat weather dependent, would need to arrive back by 6 p.m. to take advantage of Sunday opening.

The prospect of a Sunday shift could make it harder to recruit and retain employees who value weekend family or personal time, Oberg and Johnsen added.

Additional part-time employees would be needed to keep hours per part-time employee under 30 hours per week.

Other area municipal liquor stores have indicated they will probably open on Sundays. Currently, grocery and convenience stores can sell 3.2 percent beer and wine coolers.

Craft breweries can sell growlers on Sunday under current law. Growlers are jug-like containers filled with beer sold as off-sale (consumed off the premises).

A municipal liquor store open on Sunday could reduce the volume sold at local breweries. Additionally, the liquor store sells craft beers in bottles and cans.

“The state law changed,” Oberg said Monday night. “We put a proposal together that we [staff] feel is the best for the city of Monticello.”

Oberg said that the following staff alternatives were listed in order of preference:

•Motion to adopt changes to the liquor store schedule to allow Sunday sales on Dec. 24 and Dec. 31 of 2017 for hours allowed by statute;

•Motion to adopt changes to the liquor store schedule to allow Sunday sales from Memorial Day through Labor Day and on Dec. 24 and Dec. 31 for hours allowed by statute;

•Motion to adopt changes to the liquor store schedule to allow Sunday sales for the remainder of the year for hours allowed by statute;

•Motion to deny changes to the liquor store schedule.

“Right now, the only two Sundays that we feel are worthwhile to be open are Dec. 24 and Dec. 31,” Oberg told the council. “Both of those are high-volume days, especially Dec. 31, which is New Year’s Eve. We recognize that this is a policy issue, and if you say differently, we’ll adhere to that.”

Prior to Johnsen’s comments about Sunday liquor, Mayor Brian Stumpf confirmed the city’s personnel committee had met to discuss the issue.

“I don’t think we really walked away with a consensus of what to do,” Stumpf said. “We did discuss it at that level, and we did hear from Randall. I would like the remainder of the council to hear what he has to say and listen to his experience and knowledge about Sunday liquor sales.”

Johnsen said he did make an effort to reach out to council members who weren’t on the personnel committee prior to Monday night’s meeting.

“Everyone took me up on that,” Johnsen said. “Thank you for being a thoughtful council, and taking this matter to heart.”

Most of the competing liquor stores in the area are jumping on board with Sunday liquor because it’s available to them, Johnsen said.

“They aren’t giving us much reason why,” he added. “They are saying, ‘Well, you pretty much have to, don’t you, so you can compete.’ I believe that’s wrong.”

Johnsen said the system worked “fantastically” before state legislators got involved and approved Sunday sales. He also cited news media influence.

“I believe the story was not a constituent or citizen-driven issue,” he said. “It was a news story in the metro area that was flamed or border communities that would lose a little liquor business on Sundays to Wisconsin, Dakotas, and Iowa. I think everything else fed off that fire. I don’t believe the proof is in the pudding that Sundays would be an additional revenue producer.”

According to Johnsen, sales the city would receive on a Sunday would be taken from purchases made on Saturday and Monday.

“It’s not a matter of opening another day and having people come in and just start shopping because they can,” he said. “People have a purpose in mind when they are shopping for liquor.”

Johnsen did admit there will be a sales push at first with Sunday liquor. “We all saw what happened with Surdyk’s in downtown Minneapolis,” he said. “They decided to buck the law and they opened up right away on a Sunday. They had a great day. That novelty does not carry through, however.”

According to Johnsen, what he’s read in liquor trade publications is that some stores that didn’t decide to go with Sunday sales did see a small decrease in revenue, but after an adjustment period, sales returned to where they were before.

“Basically, the six days of sales did fall into a seven day period, but what you are seeing when you spread those sales across the floor is that your service gets spread across the floor also,” Johnsen said, adding that the Hi-Way Liquors is managed by himself, one other manager and operates with three full-time employees.

“We can schedule for prime hours and heavy traffic to make sure we have the best service available and the most qualified people on the floor at the time that we need them,” Johnsen said. “Now, you are taking that day off that we all enjoyed and scheduling it. You do deplete your service. We would have to add additional staff. Are you going to get more revenue while incurring more cost with labor, utilities and the like?”

Johnsen said he gave Oberg lots of numbers and reports, as well as data to determine the importance of holiday weekends as revenue generators.

“One of the proposals before you was to be open Sundays from Memorial Day to Labor Day,” Johnsen said. “I can understand that, looking at it’s vacation and summer time. When we actually look at the numbers, and we don’t have Sunday sales to look at, but we have, when I came out here, and I’ve been out here about 8 1/2 years, one of the first things that the city council did when I got here was to close on the holiday Mondays.”

Johnsen said when that decision was reversed, Hi-Way Liquor sales figures showed a shortage of 200-some sales transactions and a few thousands dollars when compared to a normal sales Monday.

“We opened the doors, it’s now part of the culture for us, but it’s never proven to be a great revenue driver,” Johnsen said. “It’s more customer convenience.”
According to Johnsen, nationally, about 36 percent to 40 percent of U.S. citizens claim they don’t drink alcohol.

“So, right away, about half of your constituency has no skin in the game. They don’t get liquor at all. The people who do? Well, they have become accustomed to shopping the way that they shop.”

Johnsen said his recommendation to the city council was basically shaped by his personal and professional reasons. “When I look at Monticello, and all of the things that I’ve heard, and I hammer on this a lot because I hear this a lot, is that we are a lovely little community, a real hard-working town. We have industry, we have citizens, housing, schools, and the hospital. Do we need to add this to a family community? We have a vision of being a nice community. Is part of that vision supplying seven days of liquor sales? I don’t think so. I don’t see where that falls in.”

According to Johnsen, Hi-Way Liquors already generates a lot of revenue for the city of Monticello.

“We are handing you more money [with a single liquor operation] than three stores in Edina,” Johnsen told the council. “We are handing you more money than most metro stores. We watch our bottom line, and we want to give you all the profits we can give you, and we do a good job of doing it. I don’t want to risk that. I can make more money on Christmas Eve and New Year’s Eve than all the Sundays combined in a year. I guarantee you that. I think it’s important to focus on that.”

According to Johnsen, remaining closed on Sundays would not take anything away from the citizens of Monticello.

“We can offer them the convenience of certain days, and knowing that as a council, you are considering this,” he said. “The first thing I want to do after July 2 and Sunday sales open in the rest of the state is to start tracking and looking at our Saturday sales and our Monday sales to immediately see if we are losing foot traffic. We have about five months to actually look at the big picture and determine if we lost ground to Big Lake or Buffalo. If that happens, you will be the first ones to hear if this is a huge, hot-button topic among citizens. I’ve been here 8 1/2 years, and I have only heard about three comments about us not being open on Sundays. I have not heard a firestorm of comments about being open on Sundays.”

Johnsen said he could support Sunday sales on Dec. 24 and Dec. 31, but plenty of follow-up study of sales figures in the coming months regarding the effect of other cities around Monticello adopting Sunday hours.

“Consider this,” Johnsen told the council. “As a family friendly community, we put alcohol on the street six days a week, 13 hours a day. I think it’s enough for citizens to plan and make their purchases. If they do run out on a Sunday, then could pick up a growler at a brewpub or take a 3-mile drive to a liquor store that’s open. I don’t think we are going to lose their business the rest of the week.”

At the start of council discussion Monday night, Stumpf said Monticello could not compare itself with larger metro cities unless liquor sales would be allowed in local grocery stores.

“That’s what’s going to be the telltale for municipal liquor stores and Mom-and-Pop liquor stores,” Stumpf said. “We don’t have that.”

Johnsen replied, “This [change in law] was set up to create a lot of hype for a July 2 opening date so state legislators could pat themselves on the back and say, ‘Look at all the revenue that’s being created.’ The novelty will wear off. They’ve set it up to be very attractive. I don’t think you are going to see the revenue rolling in like they are say it will.”

Stumpf said that the city needed to be all-in or all-out when it came to making a decision on Sunday sales. “I don’t think you pick and choose what might be a good Sunday,” he said. “You [Johnsen] have told me that your values tell you that Sundays should be totally closed. Then that’s what it should be.”

Fair was the next council member to comment during Monday night’s discussion.

“I’m not in favor of Sunday liquor myself, but I do see the value of the specific Sunday’s noted by staff,” Fair said. “On those holidays, when you are having families visit and things do get hectic, you do wish it was available when it falls on a weekend. I think we would be missing the boat on those specific Sundays, but I don’t think we need every Sunday.”

Hilgart said he talked to Johnsen a few months ago about Sunday sales. “I don’t have a problem with cherry-picking a couple of Sundays, but my only concern would be that given the fact that the other 50 Sundays of the year we are closed, we have to make sure to let people know we are open,” Hilgart said.

Johnsen replied, “We could combat that by picking Sundays a year in advance and lay it out in the city schedule. We can advertise via email, Facebook, and the city’s website, the electronic message board outside the store.”

Stumpf then asked, “When does it become values over money?”

Davidson said he had no problem with being open on Dec. 24 and Dec. 31. “I would piggyback on the mayor’s comment. My big concern is with December, going into next year,” he said. “But, we don’t want to work to stand on values and then six months later have to open back up. We have to be careful of what we stand on and what we sell and market. We may have to eat crow if this becomes a financial detriment. I don’t think it will. Randall has a great history, and shown our city some great product in his store. I’m going to put my trust there.”

Gabler said she would support a three-month trial period for Sunday sales.

“I’d like to see Memorial Day to Labor Day, because that’s the most common timeframe that everybody is out doing things and would make a run to the liquor store,” she said. “It’s the weather that kind of drives it. I would like to try that as a test period to give us some numbers. We do want to stay with our values, but we need to balance things. It’s only for two months this year.”

Oberg said that as far as getting the word out regarding Sunday sales on Dec. 24 and Dec. 31, the city could insert notices into its mailed utility bills.

“We could notify everybody around Dec 15. It won’t be a problem getting the word out,” Oberg said.

Hilgart said his concern with picking two or three months out of the year to conduct Sunday sales would be the same as asking Wright County to provide law enforcement services on a spot basis.

“We just can’t ask for four hours extra in the summer months, because they might have staffing issues,” he said. “If we are going to be open for three months straight in the summer, you will need to add personnel. When you are done, you’ll need to cut personnel. I don’t know if that works logistically.”

Fair made a motion to limit the city’s Sunday liquor sales for the rest of 2017 to Dec. 24 and Dec. 31. His motion also included an instruction to Johnsen and Oberg to collect sales data until the end of the year. Davidson seconded Fair’s motion.
Fair, Davidson, and Hilgart then voted in favor of the motion to adopt changes to the liquor store schedule to allow Sunday sales on Dec. 24 and Dec. 31 only for hours allowed by statute. Stumpf and Gabler voted against the motion as presented.

Contact Tim Hennagir at [email protected]