State store in near-empty mall is No. 1



Can you guess which Western Pennsylvania liquor store made the most money last year? The Premium Collection store at The Waterworks? Or the sparkling new store on Penn Circle South?

   
Video

On our "Monopoly Money" video page, click the "Day Two" button to go along on a visit to Pennsylvania's most profitable state store.

   

Nope. It's Store 6316, a clean but otherwise nondescript location in the back parking lot of the all-but-abandoned Washington Mall in Washington County, where discounted liquor has an estimated 200-300 restaurant and bar owners driving in from other counties to take advantage of the deals.

Each time someone from Allegheny County makes a purchase -- and the Pittsburgh restaurant and bar owners who come always buy in bulk -- the county loses out on its 1 percent sales tax.

Next question: Can you guess which store is the biggest money loser in all of Pennsylvania?

With a statewide network of 623 stores, you'd probably think the biggest losses might be in remote locales such as Snow Shoe, Centre County, or Marienville in Forest County, stores that lose money but remain open primarily as a service to people in rural areas.

You'd be wrong.

The biggest money loser last year was the store on Liberty Avenue between Ninth and 10th avenues in Downtown Pittsburgh, where expenses exceeded sales by more than $85,000 last fiscal year and more than $67,000 the year before. The McKees Rocks store lost the second most statewide last year, $54,696.

In fact, nearly 10 percent of the state's stores last fiscal year showed a loss -- a surprising figure for a monopoly enterprise.

"I would say most of the stores [that are not profitable] are in remote, rural locations," said Patrick J. Stapleton, chairman of the Pennsylvania Liquor Control Board. The board keeps those stores operating, he added, because "we have a responsibility and duty to serve all the people in the commonwealth." Past practice has been to make sure no one has to drive more than about 10 miles to find a state liquor store.

But the Ninth and Liberty store is neither remote nor rural. In fact, there are two other liquor stores within about a half-mile of its front door: one at 529 Liberty Ave. and the other at Oxford Centre. Mr. Stapleton said stores sometimes start losing money after a lease is signed, but the PLCB still has to honor the multi-year agreement.

"When the lease comes up, we'll certainly look at it," said CEO Joe Conti.

At the other end of the profit spectrum is the Washington Mall store, where restaurant owners and regular customers flocked to the tune of nearly $10.4 million in sales, resulting in a tidy $1.6 million profit -- fifth best in the state.

The store is one of seven designated "outlet" stores PLCB has set up to prevent buyers from going to neighboring states -- and to perhaps entice a few out-of-state buyers.

What they offer is a bargain in slightly different packaging: Where a 750 milliliter of vodka might sell for $19.99 in Downtown Pittsburgh, the same product in a one-liter bottle might sell for $20.99. So the buyer gets 25 percent more liquor by paying only $1 extra. One restaurateur estimated that can mean an extra $25 to $30 per bottle in revenue.

Michael Passalacqua, third generation owner of Angelo's restaurant in Washington, Pa., knows how fortunate he is. From his store, it's less than four miles to the Washington Mall store, where he typically will pick up close to $2,000 of liquor on his weekly run.

"The border stores really saved the day for a lot of us, but it's unfair for the rest of the state," he said.

Before Washington Mall became an outlet store, he said, the closest outlet store for him was in Hermitage, Mercer County. He drove up there once, and purchased two weeks' worth of liquor to make the trip worthwhile -- and "it absolutely destroyed my cash flow for two weeks."

Mr. Stapleton said they're looking at reverting the seven outlet stores -- the Washington Mall and Hermitage stores are the only ones in Western Pennsylvania -- to regular retail stores. "Instead of being outlet stores, they've become licensee stores," he said.

The board wants to establish a network of "licensee service centers" for restaurant and bar owners using the eight existing wholesale stores and adding four to six others later. These generally will be located in industrial locations, with cheaper rents, that Mr. Conti said would be more convenient for liquor license holders.

"We are determined to work with our licensees more," Mr. Conti said. "Vendors will be able to meet them there, they can look at products there and get licensing advice."


Steve Twedt can be reached at stwedt@post-gazette.com or 412-263-1963. First Published January 28, 2008 5:00 AM


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