Edina seeks consulting help for city liquor stores

Edina is hiring a business consultant to try to make its municipal liquor stores top-shelf — and more profitable.

The move comes as the state auditor’s office reported that municipal liquor stores across Minnesota saw profits decline more than 25% in 2022 compared to 2021, and well down from record high profits in 2020.

State Auditor Julie Blaha said it’s too soon to tell if that drop is a correction from the heights of at-home liquor consumption during the pandemic, or if the downward trend will continue. But in Edina, officials are already raising concerns about the profitability of liquor stores, especially as costs rise.

Josh Furbish, Edina’s general manager of liquor operations, said municipal liquor stores’ profits are hurt by higher costs for inventory and higher pay for staff.

Since COVID-19, Furbish said, Edina’s liquor stores employ only about 40 people, down from 60 before the pandemic. But staff today are more likely to be working full-time, he said, and have more experience and training. For example, certified sommeliers work at Edina liquor outlets, he said.

He hopes experienced, skilled staff will differentiate Edina’s stores from other places to buy alcohol in the west metro.

“The investment we’re making back in our team is centered around being able to retain people,” Furbish said. “We want to make sure people understand what the career path looks like here.”

The consulting contract comes almost a decade after Edina convened a task force to figure out how to make city liquor stores more profitable. The group recommended advertising on social media, improving customer service and adding to the stores’ selection. Some of the goals of the new contract are similar, such as figuring out how Edina liquor stores can stay on top of new products. Furbish said he also wants to see staff “elevate the customer experience.”

“We’re certainly at a point of change,” he said.

City-owned liquor stores are a quirk of Minnesota, a product of the way Prohibition was undone here. Cities with a population under 10,000 were allowed to establish municipal liquor stores, and Blaha said they got to stay in the liquor business even as their populations grew. Most municipal liquor stores are in Greater Minnesota, according to the auditor’s report, but metro-area shops tend to make more money.

Edina liquor stores are still profitable, but Blaha noted that Minnesota state law requires a public hearing if municipal liquor stores lose money for two years in a three-year period. Cities and towns can then talk with residents about how to change, or if profit is even the goal.

“This really transparent process helps cull out underperformers that aren’t serving the community the way they need to,” Blaha said.

In Edina, for example, municipal liquor exists to fund city parks — transferring more than $1 million to the city in 2022, the most recent data available.

But Blaha said in small cities and towns, a municipal liquor store might exist because no private liquor stores will open in a sparsely populated area, and some municipal outlets sell liquor for on-site drinking — providing a social space in a place that might otherwise have few.