TO: Mike Wildgen, City Manager
CC: Dave Corliss, Assistant City Manager/Director of Legal Services
Debbie Van Saun, Assistant City Manager
Brad Hoff, Management Assistant
FROM: Frank S. Reeb, Administrative Services Director/City Clerk
DATE: January 14, 2003
RE: BrewHawk Update
___________________________________________________________________________________
On September 9, 2003, the City Commission approved the drinking establishment license for the BrewHawk, 733 Massachusetts, subject to the condition of a staff review of the establishment’s first three state liquor excise tax returns. I’ve reviewed these returns and, as shown in the table below, the returns indicate alcohol sales for the September through November period at 43.7% and nonalcohol sales of 56.3% of total gross receipts.
Month Alcohol Non Alcohol Total Gross Receipts
Sales Sales
September $6,441.68 (53.6%) $5,579.76 (46.4%) $12,021.44
October $13,387.50 (45.8%) $15,871.92 (54.2%) $29,259.42
**November $9,712.16 (36.8%) $16,685.92 (63.2%) $26,398.08
Totals $29,543.34 (43.7%) $38,135.60 (56.3%) $67,678.94
** Note: The November return has not yet been filed with the Department of Revenue although a copy was provided to us as requested. Although that return was due on December 26, 2003, according to the owner, it has not yet been filed because he does not have the money to pay the tax.
As for the liquor excise tax returns in general, it’s important to note that monthly food sales are not stated on the return; however, monthly nonalcohol sales can be determined. Based on my basic understanding of the BrewHawk’s total sales, including several phone conversations with the owner, a high percentage of the nonalcohol sales are likely food sales. This is likely because the BrewHawk does not have a cover charge and they apparently do not sell merchandise (T-shirts, hats, etc.) However, if only 5% of the nonalcohol sales come from a source other than the sale of food, total food sales would be slightly less than 55% for the three-month period (a similar result would occur if the alcohol sales increased by a like amount). Therefore, an analysis of more detailed records is necessary in order to definitely determine the business has met the 55% food sales requirement. The owner did tell me a portion of the September gross receipts included some cigarette sales so there are some nonfood, nonalcohol sales included in the total gross receipts; however, the specific amount cannot be determined from the liquor excise tax returns.
As far as follow up options, because nonalcohol sales are so close to the 55% food sales requirement, the Commission may want to consider extending the license condition for another three months (or some additional period of time). A second option is requiring the establishment to prove actual monthly food sales from September 2003 through November or December sales based on records that the establishment is already required to maintain for state purposes (e.g., liquor purchase invoices, sales invoices/receipts, etc.). A third option could include a combination of the first two. That is, extend the condition for an additional three months but rather than requiring the business to submit only retail liquor excise tax returns for the period, also require that the business prove specific monthly food sales for that period of time.
When considering possible follow up options, it should be noted the BrewHawk was not open for lunch from about Thanksgiving through roughly last week. I noticed during a midday walk downtown earlier this week that the BrewHawk is now back open for lunch.
A copy of the September 9, 2003 City Commission meeting minutes regarding the BrewHawk’s drinking establishment license is attached. If you have any questions, please let me know.