Washington State Auctions off 167 Liquor Stores

Washington State Liquor Stores - grey gooseThe voters in Washington State banded together on a ballot initiative, which passed in November  of last year, privatizing the liquor sales in Washington.  So what does the Washington State Liquor Control Board do?  Well hold an online auction of its 167 Stores of coarse.

Washington is the first state since Prohibition to privatize its state-run liquor retail, purchasing and distribution system, which began in the 1930s.

This is a very unique auction  and one of the first of its kind.  This initative was really pushed through by Costco, based out of Issaquah, who donated the majority of financial support .

Key Details

  • The Rights. Successful bidders will reserve exclusive rights to apply for a liquor license at the current location within its current footprint.
  • Minimum Bid. The minimum bid is $1,000 per store.
  • Individual store or all-system bid. Two auctions will run simultaneously. Individual store rights are being auctioned as well an opportunity to purchase all store rights in a single all-system bid. The state is charged by law with seeking “maximum reasonable value” for the store rights. Following the auction period, the WSLCB will determine whether to select the individual store bids or a single all-system bid.
  • Relocations. Any successful bidder will need to secure a lease with property landlord. If a successful bidder is unable to reach a lease agreement with the landlord, they may re-sell their right to another individual or request an alternate location through the licensing process.
  • Inventory. Inventory will be available for optional purchase at a fixed-rate option based on the ending inventory at each location as of May 31, 2012

 Auction Details

The state will accept bids through April 20, with staggered time deadlines, and winners will be announced on May 1.

The Washington State Liquor Control Board has the details of the auction of state liquor stores online like www.mulberrymax.com and the full specs here at http://www.publicsurplus.com/sms/washingtonliq,wa/browse/home

 

image above is courtesy of Grey Goose my favorite booze.

 

Leave us your thoughts and comment below.

4 replies
  1. Scott Cook
    Scott Cook says:

    Buyer Beware!
    I-1183 provides that 17% of all sales revenues from packaged spirits will be paid to the State of Washington ( and the legislature has the right to raise that going forward, you think they might?). Since the margin on liquor is 34-35%, that is half of your gross profits. That makes it impossible to make a profit, or even service debt or pay yourself. Your simply taking over the administration of these stores for the state and they will collect all the net profit. In fact, you’ll be operating at a loss. Anyone who has ever run a small business will recognize that from these numbers. Costco, Safeway, etc… can mabybe make it on a 17.5 – 18% margin on liquor sales because they already have the infrastructure in place. You as a bidder will be investing at least $250 to 300K up front and can no way operate on that margin. You’ll go broke. To say the state is being greedy would be an understatement, operating like the mob would be a more apt description.

    Here is an easy example:

    Gross sales:                  $1,000,000
    Gross Profit:                  $350,000
    State’s 17% Cut:                         $170,000
    State B&O (.0471%):                  $4,710
    Retail and Reseller License:        $286

    State’s total share:                     $174,996
    Overhead (Labor, Rent, etc..)      $175,000

    Left over for you (Net Profit)         $4

    Yep, four dollars to pay yourself and service your debt. You can find all of these numbers in the databook section of the state’s own website, except for the 17%, they don’t currently pay that, only the new owners will. In fact, they are spending a lot more than half of their gross profits on labor and rent, but 50% is typical in a well run private business.

    Reply
    • Anton Stetner
      Anton Stetner says:

       wow Scott, to be honest I had not read that much into the bill.  I personally was just a consumer who wanted to be able to buy his booze where ever he wanted instead of something run by the state that was wasting money. 

      Your statements make a clear case for why this would be really hard for small biz to compete and this is really unfortunate.  I am a small business owner myself and I believe the economy survives and thrives because of us.  I would like to see a more equitable playing field of the likes were a small biz could compete with the walmart and costco, name your major brand, etc. 

      Thanks for the insight.  Any thoughts on how to help the little guy out?

      Reply
      • Scott Cook
        Scott Cook says:

        There is no way around this problem for the small business owner. You cannot have half your gross profits taken from you and survive. That is the half you use to service debt, re-invest in the business and hopefully pay yourself a little something in the way of profits. Maybe, and its a big maybe, some of the high volume stores will be able to scratch out a profit on sheer volume, but their volume is not going to be what it is currently at that location because the state currently has a monopoly. The new owners have to compete with Costco, Safeway, Fred Meyer, WalMart, etc…

        I’ve been looking into this and combing over all of the state’s numbers for the particular store I was interested in and thinking that even with a loss of a 35% of the current volume, you could still make an ok living, then I saw the information on the I-1183 transition page about this additional 17% of gross sales straight to the state and thought, that’s got to be a misprint but no, I looked it up in the full text of I-1183 and there it is, just do a search on the word seventeen and you’ll see for yourself.
        http://www.sos.wa.gov/elections/initiatives/text/i1183.pdf

        I just hope to get the word out anyway I can because I’m so afraid people are going to do just what I was about to do, put everything into winning this bid and lose everything, their retirement, their house, everything, when they get hit with their first bill for this on Oct 1st. Anyone who does not already have the infrastructure in place so that they are just adding this product to their shelves will be devastated by this confiscation of profits.

        Reply
        • Anton Stetner
          Anton Stetner says:

          Wow, it is amazing that both such a huge portion of the profits has to go back to the state and this was part of the initiative.  You can see why Costco was the largest contributor to this initiative, their business model allows them to compete and almost no one else.  Thanks again for the input.

          Reply

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