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.