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Fire Bar Fights for Deannexation from Crystal Lake

The bar would like to be annexed into Lake in the Hills and would like later operating hours, an outdoor patio and video gaming at its facility.

The following information was submitted by the Nino Hermes, the owner of the Fire Bar & Grill, 435 Angela Lane in Crystal Lake. 

Several weeks ago, Fire Bar submitted a letter to the City of Crystal Lake requesting the deannexation of our property from Crystal Lake and the annexation of our property into Lake-in-the-Hills. We feel that Lake-in-the-Hills and its regulatory board offer a greater opportunity for our business to thrive and expand.

Fire bar & Grill is located on the border of Crystal Lake and Lake-in-the-Hills. Our main competitor is Moretti’s in Lake-in-the-Hills; which is located less than a mile away. In has been difficult to compete with Moretti’s for three reasons:

1.      Lake-in-the-Hills granted Moretti’s a 4 AM liquor license - a license that extends their operating time 2-3 hours beyond ours. Crystal Lake’s Mayor Shepley, who also serves as the city’s liquor commissioner, refused to hear our petition to extend our operating hours. The mayor promptly dismissed our request without considering our reasons for, or conveying his reasons against our petition.

2.      Lake-in-the-Hills granted Moretti’s an outdoor seating area; an appealing option for those patrons seeking to enjoy the summer weather while having lunch or dinner. The summer months are our slowest months of the year; our request for an outdoor seating area was meant to bring additional revenue to months that we operate just above, and at times, in the red. Crystal Lake’s Board considered our petition for an outdoor patio but attached the following conditions:

  • The outdoor patio must not exceed 10 tables.
  • An equal amount of tables must be removed from inside the restaurant.
  • The patio must be closed at 10 PM.
  • Unrelated landscaping would be required for other areas of the property.
  • The umbrellas, patio furniture and fixtures cannot be branded with our vendor’s logos or signage.
  • A six month probationary period would be placed on the patio without an expressed set of guidelines that must be met in order to lift the probationary period.

Building an outdoor patio would require hiring an architect, submitting the plans for review, permit fees, relocating our original entrance, building retaining walls, purchasing outdoor tables, chairs, umbrellas and fixtures,  landscaping costs and various other costs associated with the project. Our initial estimates ranged from $23-25,000. We could not justify the investment based on the restrictions placed on the patio and the uncertainty of the open-ended probationary period. After consideration, we withdrew our petition.

3. Most importantly, Lake-in-the-Hills also allows video gaming; a competitive advantage that we cannot match. Crystal Lake has thus far refused to lift their ban on video gaming even after all of the reasons against it have proven to be groundless. Aside from Lake-in-the-Hills; Algonquin, Woodstock and Cary have all decided to allow video gaming. There has not been a rise crime, police call rates, foreclosures or suicides.

According to the “2010 Operations Report” by the National Restaurant Association, the average net profit margin of full-service restaurants was between 1.8-3.5%. In the same report, the average profit margin of limited-service restaurants was 6%. According to the Illinois Gaming Board’s September 2013 Report, Moretti’s generated $10,667.00 of profit from video gaming in September alone. Even if our profit margin were at the high end of 6%, we would need to generate an additional $177,783.00 in gross sales in order to make $10,667.00 in additional net profit. 

In other words, we’d need to double our sales in order to compete with Moretti’s. We do not have the capacity, or the clientele to generate that much in sales. Moretti’s can use their additional revenue to keep their prices down, bring in better entertainment, upgrade their equipment, remodel, and offer more competitive pay and/or benefits. Moretti’s could also use their additional revenue to grow or to balance the months that they operate in the red. 

During one of our council meetings, Crystal Lake’s Board asked that we provide proof that we were losing customers to bars/restaurants in other municipalities. They wanted to isolate lost opportunity from lost business. It’s a false premise to believe that our only complaint against Crystal Lake’s ban on video gaming is the loss of customers to competitors in bordering municipalities. The bar business is cyclical in nature, many events factor into bar’s yearend gross sales. Did the Chicago Blackhawks win the Stanley Cup in a given year? Did the Chicago Bears make it deep into the playoffs? Just these two sporting teams can vary sales by tens of thousands each year. It would be very difficult to prove lost business with variables that are beyond your control.

 

The bottom line of business is net profit. Net profit determines a business’ viability. Net profit is what’s used to grow, employ and expand. Net profit is what we stand to lose from the Video Gaming Ban in Crystal Lake. Without video gaming, we cannot compete with Moretti’s or any other bar or restaurant in the surrounding municipalities that allow video gaming. This is the main reason we asked for the deannexation.

Where do we go from here?

If, as expected, Crystal Lake refuses to comply with our request for deannexation, we will be forced to relocate Fire Bar to a community that is more sensitive to our business. Many surrounding municipalities, as well as developers, have offered generous incentives for us to move our business to their cities. With only two years remaining on our lease, and a city that insists on legislating their morality over the needs of local businesses, we are regretfully, but fully prepared to start the relocation process.

John Borson May 14, 2014 at 11:11 AM
I have to agree with you there "Bob". I'm on the road at 3am every Saturday. Nothing but squads in the area. And taxis. Lots of taxis. Which is good. The food was pretty good also. Until they started focusing all their attention on bar revenue. Then the quality suffered.
Johnathan Blackmore May 14, 2014 at 11:18 PM
CL was quick to annex in a few acres to build a For dealer that never happened but they clear cut the land and now it looks like crap
Rossi46 May 16, 2014 at 03:40 PM
Jeff, no offense, but your comments make no sense at all. Moretti’s was used as an example, being that it’s Fire Bar’s closest competitor. The broader problem and complaint has to do with Crystal Lake’s refusal to lift its ban on video gambling, after all of the surrounding municipalities (including Lake-in-the-Hills, Algonquin, Cary and Woodstock) had approved it. This does put Fire Bar, as well as all other Crystal Lake bars and restaurants at a competitive disadvantage. Many other bars and restaurants in Crystal Lake support lifting the ban as well (including Georgio’s and the Cottage, who addressed the city board with Fire Bar). The numbers don’t lie…if the average bar and restaurant operate at a 10% profit margin (that’s being generous), they would need to generate $50,000 in sales in order to profit $5,000. A bar in a bordering municipality that profits $5,000 from video gambling revenues doesn’t have to generate a single dollar in additional sales. Fire Bar has been in business for 7 years, I believe video gambling was legalized statewide in 2012 (5 years after Fire Bar opened). Had the ownership of Fire Bar (and any other bar/restaurant that opened prior to 2012) have known that video gambling would be legalized and Crystal Lake would be imposing a ban, I’m sure that they would have chosen a different city. Had Fire Bar opened knowing that video gambling was legal but still chose to locate in Crystal Lake, then you’d be right. I don’t see your point in Moretti’s having several locations; all of them however, are family Italian restaurant except for the Lake-in-the-Hills location which is also a night club. Moretti’s is also owned by the Ala Carte Corporation, the same company that owned and operated the now bankrupt Crystals nightclub in Crystal Lake and Alumni Club in Schaumburg. One can also argue that Moretti’s is responsible for the majority of DUI’s issued in Lake-in-the-Hills, as well as having the most fights. I think 4 AM liquor licenses are a detriment to the area and would be against any bar being issued one, including Fire Bar. I don’t see an outdoor patio as being a problem. All of the arguments against video gambling have so far been proven unfounded; there has been no rise in suicides, foreclosure rates and crime attributed to video gambling. As far as Fire Bar not “making it”, I think it’s safe to say that Fire Bar, after 7 years in business, is still one of the busiest bars in Crystal Lake. It would be a shame to see any business go (including Fire Bar), sales taxes are what keep property taxes low (I laugh when I say this since Crystal Lake is home to some of the highest real estate taxes in the state). During the last board meeting (when Fire Bar, Georgio’s and the Cottage argued for lifting the video gaming ban) one council member stated on record “we don’t need the revenues”…two months later, property taxes were raised. Route 14 is a ghost town; I don’t see how any potential bars or restaurants could consider Crystal Lake when they could stand to lose potential revenue. Some might not care about video gambling, but any smart business owner would be a fool not to consider it.
Rossi46 May 16, 2014 at 04:18 PM
Just Another Observer, are you talking about Illinois State Statue (65 ILCS 5/7-1-13) (from Ch. 24, par. 7-1-13)? I don't see how this applies here. This will be a matter for the courts to decide since Crystal Lake will not allow the property to be annexed out without a fight. They stand to lose too much property and sales tax revenue. I think it was more of an effort to bring attention to Crystal Lake's ban on video gambling. I don't see Fire Bar choosing to fight Crystal Lake over annexation instead of concentrating their time and money on relocating to another location. I will say that the property is contiguous to Lake-in-the-Hills. Directly across Randall Rd is Lake-in-the-Hills, Randall Rd divides Crystal Lake from Lake-in-the-Hills. In another article, the mayor said annexation would be illegal since the property does not border any other municipality. Either he's ignorant and doesn't know what constitutes the borders of his own city or he lied. The owners of the property are also on record saying that they will request the annexation...they also own the 5.2 acres of land adjacent to that property.
Denise Majko May 20, 2014 at 01:08 PM
Should Fire Bar decide to leave CL, they might consider moving into the vacated Applebee's restaurant on Randall Rd. in Lake in the Hills.

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