03-30-1978 Council Minutes - Laserfiche WebLink

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i J , REGULAR MEETING OF THE ORONO COUNCIL, iSARCH 30, 1978 Page 44 4de reviewed projected cost to convert basernent, LIQUOR STORE REPORT $10, 000; cost to remodel store $60 , 000, for a total (Continued) o� $70 , 000, which does not include additional cost for inventories, increase in payroll, insurance, etc. We reviewed and projected an increase in sales of aPproximately 250 or an additional $95, 700 in sales for a total gross sales of 5478 , 400. Gross profit of 28. 16 o and a net profit of 8. 35 0. [4e used a ten year depreciation factor for the remodeling cost. Projected as a total annual expense projection. As of December 31, 1978 , $40, 000 is invested from the liquor fund, with $11, 000 cash on hand, and in light of a projected $70, 000 capital outlay cost and a $20, 000 inventory increase, it is obvious that we could not recover additional costs from the liquor fund itself and we would have to look elsewhere for additional funds. �ae also have to keep in mind that we are budgeting through our revenue forecasts $35, 000 per year for transfers to the general fund. Needless to say, �ahen reviewing operation projections, the liquor fund will not have the increase in net income needed for handling the increased cost in inventories, repayment of loans (principal and interest) and continue to transfer funds to the general fund. There is no question that the long-range net profit projection would have to increase substantially before an expansion in the liquor operation could be considered a sound business investment. Again, we held several r�eetings with staff and Dick Keaveny, owner of the present building. ��e adjusted our projected costs, or projected sales and requested the owner to pay for all structural costs to be quoted as a r.►onthly rent based upon a five-year lease. We would still have to assume some remodeling costs for the retail and storage . areas. After reviewing this arrangerient, the revised yearly costs adjusted downward approximately $2, 500 but the net profit did not change appreciatively to cause any optomistic outlook on increasing our present revenues. In view of the declining trend in net profits in the liquor business and the obvious cash require- ment to put this package together, while considering available floor space, parking space, traffic patterns, and the cost of money today, I recommend we not expand our liquor operation at this tir�e and continue to rionitor the operation as it exists in its present location. I feel that based upon our experience with the liquor operation and an apparent declining net profit with gross sales tending to increase, (Continued)