Eden Prairie may double size of one of its 3 liquor stores

The city is considering moving a store to a bigger, more visible -- and more expensive -- location.

By LAURIE BLAKE, Star Tribune

August 22, 2009 — 8:19pm

Business is brisk at Eden Prairie's three municipal liquor stores -- they consistently rank in the top five for sales statewide and bring in about $1 million a year to help pay for city road and building improvements.

The question facing the City Council on Sept. 1 is whether to try to increase sales at its smallest and least profitable store by spending $400,000 to move it to a larger, more visible location.

City Manager Scott Neal says the store should be more profitable and recommends moving it from its current site in the Prairie View Shopping Center off Hwy. 5 and Prairie Center Drive to a larger space with better parking in the same shopping center, next to Rainbow Foods.

"We are demanding more, not accepting less, from this store," Neal told City Council members last week.

But Mayor Phil Young and Council Members Brad Aho and Jon Duckstad questioned his advice.

They say the space that's available -- the former Snyder's Drug Store -- is bigger than needed. At more than 9,000 square feet, it's more than double the space of the current store. And they were not convinced that spending roughly $400,000 to outfit it as a liquor store as well as paying more in rent would pay off in greater sales.

Aho said he favors a somewhat bigger store at a better location. But "to spend $400,000 on top of a more expensive lease, I am having a hard time seeing that we are going to come out ahead on that."

Said Young: "We are taking a store that, no matter what we have done to it, has lagged in terms of sales. What I am not going to do is double the size of the laggard store without a good reason for doing it."

Council Member Ron Case argued that Young, Aho and Duckstad are "analyzing a good deal to death" and "ignoring all the advice we are paying for."

Said Case: "We have an operation that is running really well, and we are getting recommendations from the experts who say let's do this to make it run better.

"If we miss the opportunity, I think we are hurting our taxpayers," Case said.

Last year, the Prairie View store -- the smallest of the city's three liquor stores at 4,248 square feet -- grossed $2.7 million compared with $5 million and $3 million at the city's other two stores, which are located next to Cub Foods in the Eden Prairie Center mall area and next to Kowalski's Market at Hwy. 5 and Eden Prairie Road.

"It's cramped and confined. It does not have the same pleasing environment as your other stores. Your customers notice that," said Jim McComb of the McComb Group Ltd., which did a liquor store market analysis for the city.

McComb estimates a larger store would have 10 to 15 percent higher sales largely as a result of having more space to sell wine. Eden Prairie has affluent residents, McComb said. "Those are key wine consumers."

While the larger space is bigger than needed, it would not all have to be put to use. Chief Finance Officer Sue Kotchevar said the larger site's annual lease expense would total $175,000 a year, compared with $130,000 at the current location. The proposed lease is for 10 years.

Before the Sept. 1 decision, Young, Aho and Duckstad asked the city staff to try to get a better price on the existing space, as well as to explore the possibility for a seven-year lease and look for other possible locations.

Neal said the city will need more liquor store revenue because the city's other sources of revenue used for capital improvements, including interest income, are declining. He told council members, "I really regret we haven't been more convincing ... because I really do believe in this proposal, and I think it's the right thing to do for the council and for the city."

Laurie Blake • 612-673-1711