Alcohol, Utah Style

What is a State supposed to do with its biggest cash cow? If you or I had a private business, which had a monopoly on its’ customers, and this business was dropping 39.46% to the bottom line, we would have Wall Street investors clamoring for a piece of the action. And that 39.46% is not just hundreds of dollars, no; it represents $144,903,967!!! Yes, you read it correctly: 144 MILLION dollars of PROFIT. (OK, round it up to145 Million. What is 96$ thousand among friends?)

Utah is very proud of the fact that “drinkers” pay for the school lunch programs, to the tune of $38,343,822 in FY 2014. And that is all well and good; well, we will let it go as such for now, anyway.

Utah has a drinking problem; it is known as the Division of Alcoholic Beverage Control. DABC controls all alcohol within the state’s borders, from how many clubs, restaurants and bars have liquor licenses to what products are available on the shelf for consumer purchase. In Utah, restaurants, clubs, and bars purchase alcohol from the State at retail (the same price you and I pay) and then mark it up when they sell it to the consumer. A $38 bottle of wine becomes a $60 bottle of wine at the restaurant.

Now, just so you don’t think DABC is uncontrolled, let me advise you that it is in fact very controlled, by the Utah State government. A state government that cut $500,000 out of the operating budget for the DABC in 2015.

Out here in the real world, if you or I had a business that was dropping almost 40% to the bottom line, would we cut its operating budget? Hell, no, we would be trying to increase sales!

Would we be happy with an employee turnover rate of 75%? No, we would try to keep employees, not repeatedly go through the expense of training new ones over and over again.

In this mythical business, would we turn a deaf ear to our customers when they complain about stock-outs and long waiting lines? I doubt it.

Would we tell our largest customers, sorry, we don’t have all of your order at this location; you need to drive across town to pick up the rest of it? No, we wouldn’t. We would demand our supplier fix their logistics problem.

Would we tell our store managers they had to run two or three stores instead of focusing on one? Really? That would not be in the business’s best interest, would it?

If we went to the annual stockholders’ meeting, and this was the situation, we would be ready to fire the CEO/Director and electing a new board of officers. But this is Utah, and we don’t get that choice.

Utah’s Governor, Gary Herbert, in a news conference two months back, declared everything was fine at DABC, except for a “few” disgruntled employees. Now, after numerous op-ed pieces and “letters to the editor,” the governor, or at least his office, is changing its tune. The governor’s office announced they are undertaking a review of DABC, and hiring an out-of-state consultant to see what can be done to “improve” DABC.

I have no idea how much we, as taxpayers, are paying for this consultant. But, Governor Herbert, here is some free advice.

First, put all of the employees at the state-owned liquor stores on as full time employees, with benefits. A turnover rate of 75%, coupled with the fact that these state employees are only considered part time, and therefore not eligible for benefits, should have you concerned. As any retailer can tell you, happy employees directly correspond to happier customers.

Second, address your inventory problems. When you have a monopoly, it is easy to say, “Too bad” when you are out of stock. But say “too bad” often enough, and the customers will go to Idaho, Wyoming, Nevada, and Colorado instead of visiting your store. Your large customers-the restaurants, clubs and bars-should not have to drive across town to fill their orders. The data from your cash registers can help you plan for the “busy seasons,” like Thanksgiving, Christmas, New Year’s Day, and the 4^th of July. Be sure you have enough inventory, and employees, ready for those huge volume days.

Third, take care of your customers, your profit-makers, also known as consumers. Be sure the cash registers are fully staffed during your busy times. Remember the grocery chain that said “if three people are waiting in line, we will open another register?” Have staff trained in wines, liquor, and beer, so they can answer questions customers may have about the products. Instead of having a neon sign light up when DABC outlets are closed, think like a retailer (which you are) and have a neon sign that says “open.”

Fourth, have one manager and two assistant managers assigned to each store. Empower them to make the schedules needed to serve the customers, and to modify the orders to insure there are no stock-out conditions.

Lastly, change the make-up of the Liquor Commission to include members of the hospitality community, and community members at large. The majority of the members should have experience in alcohol use and consumption!

Governor Herbert, I hope these suggestions can help you improve the image of the DABC with your customers and your employees. Feel free to use them, you can even claim them as your own ideas if you so desire.

One last thought, Governor, lower all your prices by 10%! That would really go a long way to making customers happy.

R. M. Hartman

As always, your comments are welcome.

Data from 79^th annual report, DABC FY 2014. http://abc.utah.gov/about/documents/79th_annual.pdf retrieved July 8 2014.