Alcohol sales have been on the rise over the past few years, a trend accelerated by the pandemic. As bars and restaurants closed for lockdowns, sales of alcohol for consumption “off-premises” saw steady increases.
Despite the increases in off-premises buying, it wasn’t a big year for wine shop grand openings.
Our data show new beer, wine shop and liquor store openings declined over the three-year period of 2019 to 2021, with a steep drop off between 2020 and 2021, as you’d expect. And yet.
Kevin Kenny and Michele Fitzpatrick became “pandemic entrepreneurs” when they opened Chicago’s Door 24 wine shop in May 2021. The shop specializes in small-production wines and showcases wineries led by women and people of color.
Search for data on companies like Door 24 – or your neighborhood shop – with Enigma's Console.
Kevin believes the challenging pandemic environment forced him and Michele to think differently from the start and stay agile.
“We offered online ordering with curbside pickup right from the beginning because we had to,” he says. “Otherwise, I don’t know that I would have even thought about it. It’s been a great option. When Covid gets worse, the online and curbside orders start picking back up.”
Illinois liquor laws mean the shop can only ship within state limits, and Kevin says in-state shipments get a small amount of traction. “I do ship a little bit to places like Springfield [Illinois’ capital], because they don’t get this kind of wine down there. But it gets expensive to ship, because of the packaging and needing to verify age at the time of delivery.”
Confidence and predictable revenues
Annual card revenues for these types of stores nationally increased nearly 18% from 2019 to 2020, with a nearly flat change between 2020 and 2021, according to our data.
The average total for a customer’s shopping trip also increased. From 2019 to 2021, transaction amounts at shops nationally grew 16%.
Stability with store revenues has been important for planning Door 24’s inventory. When shelves are fully stocked, inventory adds up to about $45,000 in wine.
The balance of revenues and expenses at the start of the new year can be especially tough, with net-30 terms from the holiday season coming due and revenues dipping with Chicago winter weather. “Working capital would be really helpful in January to offset the giant bill that comes due from stockpiling inventory for the holiday season,” Kevin says.
One way Kevin and Michele can pre-program monthly revenue – and like to pilot new wines – is with their wine club.
For a monthly fee, members get two curated bottles of wine, picked up in store, complete with detailed description of the varietal and winery, plus recommendations on how to pair each with food.
“That’s the box they put me into for loans”
When it comes to accessing capital and completing government processes, Kevin says the shop gets lumped in with liquor stores and bars, despite their differences, with real consequences.
It echoes an “economic friction” that Karen Mills, author of Fintech, Small Business & the American Dream, calls “heterogeneity”: small business needs and operations vary widely, yet our financial and government systems tend to treat them the same.
“There's a rigidity and in the loan system, they look at me as a liquor store, like a corner bodega, which isn't really what I do. But that's the box they put me into for loans,” he says. “When we first started out, we used our own money. But we’re pursuing our on-premise license now so people will be able to sit down and enjoy their wine here. To meet requirements, I have to put in another bathroom, and that will take capital. We’re just starting that process.”
In order to build up inventory and get operations running, Kevin and Michele didn't pay themselves for the first five months in business. It was a challenge for lenders to see beyond. “They’d ask, ‘do you have income for the first five months?’” Kevin says. “And I do other things, so I had a little bit, but not much. And I had to be like, well, I’m growing the business. We just put everything back into the business at the time.”
Door 24 has had similar challenges with seeking city permits. “The city is very inflexible. To the city I am absolutely a liquor store, no different than the corner store selling pints of malt liquor. I remember when I went to the first hearing to get our zoning approved. The only person that complained said that they were worried about people drinking in the alley behind the shop. I was like, ‘well, we're selling higher-end wine and I don't really think that's going to be a problem.’ But the city doesn't look at it that way.”
After eight months of waiting on their permit – paying rent on the empty shop – and a mere three minutes in front of the zoning board, ultimately Door 24’s permit was approved and Kevin and Michele could open their doors for business. It didn’t take long for Door 24 to gain recognition as a neighborhood gem.
Local wine shops “live and die by the neighborhood”
In 2021, over a one-month period, beer, wine and liquor stores nationally saw a median of 46 card-using customers per day, according to our data.
By Kevin’s count, 60% of Door 24’s revenues come from repeat customers. Of those, 75% are from a radius of about 10 blocks from the store.
“A shop like ours lives and dies by the neighborhood,” Kevin says. “The neighborhood is always going to be the people that regularly come in. People come in from across town, but they're not going to keep you in business.”
So what’s next to bring in the neighborhood clientele and beyond?
“With the on-premise license, now we’ll be able to put tables out front so people can come have a bottle of wine in the summertime,” Kevin says. “And with Covid receding, we’re going to start doing more wine education. I’d like to host classes once a month.”
And if Kevin could leave us with one recommended wine to try?
“Timorasso,” he says. “It's a full-bodied white from the Piedmont in northwest Italy with great complexity, depth, and a rare aging potential. Timorasso is a buzzy grape in Italian wine circles but isn't widely known. It can be hard to track down a bottle but it's worth it.”
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