Numbers you won't see in the PLCB Annual Report
A look at some State Store numbers that are always missing in the PLCB's annual report.
1.) The average amount of non-tax revenue returned to the state per unit (single bottle or box) of wine or liquor - 73 cents
2.) Not counting the actual cost of the item, what PA spends to put one item on the shelf - $3.06
3.) What PA spends to put an item on the shelf, including the average cost of the item - $11.40
4.) What it costs with taxes to put one average item on the shelf - $15.21
5.) Average rental cost per store (2015) - $1432 a week
6.) Industry average profit margin 8.1%; PLCB 2015 profit margin 6%
7.) PLCB Effective markup, not counting any taxes - 45.36%
8.) U.S. state and federal government workers average benefits as percentage of salary - 36.4%.
PLCB benefits as percentage of salary - 85-104% (as stated by Board members during the Appropriations hearings in the Senate).
9.) Percent of sales actually checked for proof of age - under 2%
10.) Retail Wine Specialists as a percentage of workers: 1.7%
11.) Retail Wine Specialist as a percentage of TotalWine employees - ~20%
The Proof
1. - $80M returned to General Fund plus $25M for BLCE plus $5M alcohol Awareness plus $1.7M for Drug & Alcohol programs divided by 153.5 million unit sales We are told "Modernization" will increase profits by $180M At 73 cents a bottle...well, you do the math. (Keep in mind that the $80 million is a very flexible number, mostly representing what the Legislature requires from the PLCB, whether it's actually "profit" or not.)
2. - Operating Expenses (minus the cost of wine and spirits) of $470M, divided by units sold. The lower this number, the more efficient the organization is. It has never gone down for the PLCB.
3. - Operating Expenses $1.751B divided by units sold 153.5M. Since the PLCB doesn't negotiate prices on the majority of items, this cost is higher than it should be too.
4, - Gross sales ($2,335B) divided by total units sold. $3.81 for every bottle or box sold is the average sales and Johnstown Flood Tax; more expensive bottles can be much more.
5. - Rental expense for all operating leases $44.9M divided by 603 stores. Of course, this cost will increase as the PLCB tries to move into higher traffic areas.
6. - IBISWorld, May 2013, Operating Income divided by Sales Net of Taxes. With increased pension costs, workers comp, salary, and benefits increasing, this won't improve any time soon.
7. - COGS divided by gross profit. The 30% markup you hear about is only one of the many fees and adjustments made to the price. This fat markup of 45.36% still wasn't going to be enough to cover increasing operating costs, according to August Hehemann, the PLCB's Director of Finance, who last year advised the Board to raise it 5% more. The Board, for once in tune to the politics of privatization, decided against that.
8. - US Dept Of Labor - Bureau of Labor Statistics, 2016 PA Senate Appropriations hearing. Nice gig if you can get it, but does it provide any benefit to the consumer?
9. - 1.3M cardings divided by 65.5M transactions You have slightly better than 98% chance of not being carded (that's a 0.0% chance at private stores like Wegmans), and since the State Stores are never checked by police for underage compliance...how effective are they?
10. - 4654 (3/15/2016) divided by 81 (www.pennwatch) There appears to be no Spirits Specialists in the PLCB.
11. - 5000 employees and 800 Wine Specialists (Total Wine wiki ). Look at it this way: the PLCB has ONE retail wine specialist for every 7.4 stores, Total has SIX at each store.
Item 9. The LCB takes carding for minors very seriously for obvious liability reasons. However, once an employee cards an individual a number of times an establishes their age are they required to card that person every time they come into the store to make a purchase? In some cases, yes, if they suspect, for various reasons, they are buying for other underage individuals. Alcohol sales is one of the most repetitious forms of retailing there is because of the various levels of alcohol use,abuse and addiction that exists among the customer base. It is the elephant in the room that no one talks about. Except for special events, weekends or major Holidays you typically see the same customers over and over and over again. You don`t really have to check their identification every time they make a purchase.Its the same core group of customers that makes up for a significant amount of the retail sales throughout the week, month and year.
ReplyDeleteYou're justifying not carding people. Right? Is that what you're doing? You're telling me that this agency that is supposed to be primarily about "control" of alcohol is, for reasons of convenience, okay with not requiring proof of age for every purchase of wine and liquor? When a grocery store has a 100% carding policy? That's lame.
ReplyDeleteAnd speaking of lame: "Alcohol sales is one of the most repetitious forms of retailing there is because of the various levels of alcohol use, abuse and addiction that exists among the customer base." Really? Let's call bullshit on that right now. I go to the grocery store three times a week. That's pretty repetitive. People buy gas every week, people regularly go to the drug store. Come to think of it, most retail is repetitive. But the typical PLCB employee is sure that anyone who's in the store more than twice a month is a drunk. "Chronic alcohol users" is the term they use for "regular customers."
I can't wait to be rid of this self-righteous pile of hypocrisy. The only way the Pennsylvania Liquor Control Board "controls" sales of alcohol is by annoying the hell out of people.
one thing about item 9 - was not mention by anonymous was the wine orders ship to the stores and the customer pics up you have to do a 931 on it to check they are old enough to get the order. So the percentage is even lower. anonymous two
ReplyDeleteAnd some stores do it for transfers, returns and exchanges too lowering the total even more.
ReplyDeleteThe PLCB's latest public meeting minutes (released today) have some good news. The PLCB is planning a new store in Renovo, finally. Also a new store is coming to 1515 Locust Street in Philadelphia. This is also really good news because Center City is ridiculously underserved by state stores despite the huge population and heavy traffic in that neck of the woods.
ReplyDeleteThe meeting minutes also mention "excessive false alarm activation" as being a problem at the store at 180 West Girard in North Philly. Is this a common problem at PLCB stores? Also do we know what might be causing the false alarm activations? I know PLCB stores need really good security systems, but don't know what would cause them to activate in error.
Perhaps we at the blog provided some impetus for the Renovo store. It has only been 5 years after all. The PLCB - moving at the speed of business. 1930's business.
ReplyDeleteWatch the performance of the store. With the cost of the labor contracts and other expenses they will not be profitable so it will be a money pit. That said the people of Renovo will be better served. Now if product was sold in grocery and other stores everybody benefits.
ReplyDeleteYeah, I covered that in this post: http://noplcb.blogspot.com/2016/04/more-plcb-convenience.html
ReplyDelete