Helena business owners reveal facts
Pub Date: 1/1/2003
Anyone who's made it through sixth grade science will probably remember the basic premise of the scientific method. You make an observation, formulate a tentative hypothesis, test the hypothesis through experiments or further observations, and then modify the hypothesis in light of your results.
When hypothesis and observation are in accordance, you form and state a conclusion, then submit it to the rest of the world for testing.
Dr. Robert Shepard, a Helena physician who surely understands the procedure better than most, delivered a rather confident hypothesis in the May 5 edition of Helena's daily Independent Record.
Shepard was addressing the economic impact of the then pending Ordinance 2911, a ballot initiative which, June 4, 2002, temporarily put an end to smoking in all public buildings and work places including restaurants, taverns and casinos.
He remarked: "The hypothesis is that (when a smoke ban is enacted) 'My tips are going to go down and that business will go down.' If you look at the data, there are tons of studies which show that business doesn't go down. People continue to come in and frequent those establishments despite their inability to smoke there. I understand the fear, but the reality is that that isn't what's going to happen. There's a lot of information that would suggest that the exact opposite is true."
The conclusion?
Better rethink that hypothesis, Doc.
Gambling revenues
Gambling revenue reports from the Gambling Control Division (GCD) showed gaming revenue fell during the period by over $800,000. The numbers were eagerly awaited by both 2911's supporters and detractors as they provided the first formal measurements of the economic effects of 2911.
Liquor Sales
Another indicator of the effects of 2911 were liquor sales, which operators said were moving in the same direction as gaming revenues: down a steep pitch.
"What was remarkable was the shift in our market share of beer sold on-premise from the Helena city limits to the surrounding area," said Trevor MacDonald, owner of Sandy Mac's Distributing, an outfit which carries approximately 55 to 65 percent of all on-premise beer business in the city.
From January through June 2002, Helena carried a market share versus the rest of the county of 56.2 percent. July through October 2002, post-2911, the share was down to 49.7 percent.
With the exception of Boulder which showed a slight decrease, every other jurisdiction in Sandy Mac's market showed clear growth in the post-2911 July through October period. Sales in the valley shot up 5.8 percent from an 11 percent market share January through June to a 13.6 percent market share July through October. Outside the city, the trend was the same in East Helena, Montana City, Townsend and Lincoln, MacDonald reported.
"It is obvious to me the smoking ban had an adverse affect on beer sales to the Helena accounts," he said.
Though not armed with specific figures, Don Meyer, manager of the M-T Glass Liquor Store in Helena, said he'd noticed similar patterns in his businesses sales.
"they're down," he said definitively. "I can only go by bar owners and our walk-in trade, but they're down, believe me, all the way around."
Did he attribute the decline to 2911?
"I'm sure it was the smoking (ban) from what I saw," he said. "You take a bar like Haps which before the ban was always packed, then there was nothing. I don't know what else it was besides the smoking (ban).
"Between the ban and traffic construction, they had pretty much put the screws in."
Owners
While figures from the GCD and elsewhere provided a fragment of the picture of the economic impact of 2911, a simple visit to a neighborhood restaurant, tavern or casino provided a measure of the real-life impact on individual businesses and people.
We asked Laura Fix, for instance, how things were going at her nightclub, the 6,500 square-foot Fat Boy and Charlies, on Custer Avenue along one of Helena's main commercial drags.
"We were down 27 percent in June compared with last year," she said. "In July, we were down 35 percent'; in August, 50 percent. That's just sales."
On a Friday night in late September, prime-time for a tavern, Fix explained, her enormous nightclub played host to just a single patron.
"Before the ban, I think we would've had 60 going on 100 people," she said. At that time, "On a Friday night, we had just one. The effects of this ban were worse than we ever imagined."
Dax Cetraro, a partner in several family-owned Helena establishments, said the situation at his family's establishments was equally grim.
"I noticed when the ban first came in, people's visits got shorter," he explained. "Then, I saw people stopped coming in so often. We just lost a lot of our customers outright. They weren't coming back at all."
Cetraro said gaming revenues for September at the Rialto, a tavern and casino, were off 72 percent from the year before.
At another Cetraro business, Village Inn Pizza, gaming revenues were down 23 to 24 percent. Though Cetraro conceded food sales had not shown any marked declines, he quickly added, "They hadn't gone up, either."
Across town at Nickel's Gaming Parlor, owner Robert Gilbert said his revenues were down 60 percent. If things continued in that vein, he said, he didn't "know what was going to happen."
"I got a home equity loan a long time ago and I'd been using that money to stay afloat. How long I could do that was unclear," he said.
Gilbert said on top of his declining revenues, those assets he'd already invested in liquor license, real estate, ventilation equipment were losing value.
"I still owed money on my liquor license and I'd bet, at that point, I owed more than it was probably worth."
Gilbert said his bank had similar ideas, informing him that when it came time to renew his loan, they would have to "re-evaluate the asset (value) of my license. I may have had to come up with some cash to levy it out."
If he couldn't come up with the cash and was driven out of business, Gilbert said, he'd have had to default on his loan, a possibility he described as "unreal."
Gilbert was fast to point out that banks and casinos weren't the only businesses affected by 2911.
"In a bar, you have to buy beer from a local distributor. Our Budweiser account was running $500 a week at this time last year," he said at the time. Because of the smoking ban, it was "more like $100 to $300. We hadn't been ordering from the liquor store like we used to either."
Sandy Jones, manager of the Best Bet casino, estimated her establishment had lost roughly 50 percent of its patrons. The holdouts, she said, "are staying for a shorter amount of time, spending less money, and just, in general, telling us they're not happy."
Jones also pointed to the problems 2911 was making for her staff.
"Three employees quit because the business wasn't here. There were no tips. Sometimes, it was hardly worth coming in."
Jones continued, "I'm was in a position where I was having to consider laying people off. We were trying to hold on because customers might adjust to the fact they can't smoke and come back, but if they didn't , and things continued like they were, we were going to have to let people go. we'd done everything else we knew how."
Source: Extra, a special supplement to The Montana Tavern Times, Dec., 2002, published monthly by Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701.