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Posted on 11/01/2001 5:57:16 AM PST by Just another Joe

Employees of Z's Deli in the Holiday Center sit in the newly created smoking section of the restaurant for a break. The owner closed off a section of the restaurant with a separate ventilation system and he says customers don't like it. RENEE KNOEBER / NEWS TRIBUNE

Businesses feel sting of smoking ban

BY PETER PASSI

"We used to get very good business from smokers in here during lunch and breakfast, but now they don't like it because it's so closed in.''
ZEIDAN ZEIDAN, Z's Deli owner, who says sales have dropped 20 percent.
NEWS TRIBUNE STAFF WRITER: As the Duluth voters consider the fate of the city's smoking ordinance and amendments that would make it stronger, many businesses are warning of dire economic consequences.

But predictions about the impact smoking restrictions could ultimately have on revenues vary widely.

Since January, when Duluth enacted a less sweeping measure that required restaurants to either keep smoke from drifting into nonsmoking sections or prohibit smoking altogether, overall sales by Duluth restaurants appear to have remained fairly stable.

An analysis of restaurant sales taxes adjusted for inflation using the consumer price index suggests that for the first eight months of this year, restaurant receipts were off 0.6 percent compared to the same period last year.

But that doesn't mean no one has been hurting.

Zeidan Zeidan, owner of Z's Deli in the Holiday Center, said his business has fallen off by about 20 percent since the smoking ordinance took effect.
Although he re-established a smoking section in his restaurant by enclosing it with glass and installing a new vent system, Zeidan said many of his smoking customers still have not returned.

"We used to get very good business from smokers in here during lunch and breakfast, but now they don't like it because it's so closed in,'' he said. "I think they feel isolated.''

Zeidan said that before the ordinance went into effect, the now glassed-in area of his restaurant generated about five times the revenue it does now.

His efforts to win back smoking customers could backfire on Zeidan. New language in the proposed smoking ordinance would no longer permit Zeidan to serve smoking customers even within the confines of the glassed section he spent about $10,000 to install.

A handful of other businesses, including Bellisio's Italian Restaurant, have made similar investments that would be rendered worthless in 2003 by a blanket ban on smoking in restaurants if the proposed ordinance is enacted.

Not all restaurateurs are bemoaning new smoking restrictions, however. Mark Prosen, general manager of Applebee's Neighborhood Grill & Bar, said that even if voters reject the ordinance, he will probably continue to disallow any smoking in the dining area of his restaurant.

Up until the terrorist attacks of Sept. 11, Prosen said Applebee's total sales had been running well ahead of last year's pace.

DIFFERENT STROKES

Dennis Christensen, co-owner of Jim's Hamburgers, said one size doesn't fit all when it comes to smoking policies.

"How you're affected by this depends a lot on the area you're in,'' he said. "Sure, I wish there were less smokers, but the majority of people who come in here are smokers.''

In January, Christensen removed ashtrays from the tables of his Lincoln Park/West End restaurant and saw his sales slip nearly 20 percent. He applied for and received a hardship exemption from the city after documenting the decline.

The no-smoking policy had a less dramatic effect at another restaurant Christensen operates in Duluth's Central Hillside neighborhood, reducing sales there by a little more than 10 percent. Christensen said he saw the restaurant's already narrow 5 percent profit margin shrink when the new smoking rules went into effect, forcing him to borrow money to keep the business open.

Jim's Hamburgers in Central Hillside remains smoke-free, but Christensen said business there has bounced back nearly to former levels.

Christensen is most concerned about his West Duluth restaurant. If voters approve the proposed smoking ban amendments, hardship exemptions will be phased out by 2003. Losing that exemption for his Lincoln Park/West End restaurant frightens Christensen.

"I'd be right back to where I was last year,'' he said. If sales took a dive like that again, Christensen said he'd need to consider closing a restaurant that has served hungry Duluthians for more than 50 years.

As vital as Christensen considers his smoking ordinance exemption, other business owners have found the same status a mixed blessing.

Sean Flaherty, president of a company that operates four Perkins restaurants in the Northland, said that even though he had obtained a hardship exemption from the smoking ordinance for his restaurant in West Duluth, invoking it proved problematic.

With its exemption in hand, the West Duluth Perkins allowed smoking only in the evening, when a higher percentage of smokers typically visited the restaurant, but Flaherty said even that move upset a group of nonsmokers.

"The smoking policy is so divisive, and we, as restaurant operators, are stuck in the middle,'' Flaherty said. Eventually, the West Duluth Perkins went entirely smoke-free.

Nighttime traffic in the restaurant has dropped off substantially, Flaherty said, and at the end of September, he decided to shorten the West Duluth restaurant's hours so it would close at 10 p.m. Sunday through Thursday, staying open through the night only on Friday and Saturday.

Flaherty believes the smoking ordinance played a key role in driving down nighttime traffic at the restaurant and bringing about shorter hours.

"Duluth is not an island,'' Christensen said. "Proctor and Hermantown will be happier than hell to take our customers if we push them up over the hill.''

OTHERS AFFECTED

The proposed smoking ordinance would hit not only restaurants, but bowling alleys and pool halls, too.

"I've lost a lot of sleep over the issue,'' said Scott Carlson, manager of Country Lanes North, a Duluth Heights bowling alley located just a couple of blocks from Hermantown, a city that does not have a smoking ban.

"We've had patrons flat out tell us they'll leave if we ban smoking,'' Carlson said.

Paul Goeb, manager of Stadium Lanes Inc. in the Denfeld neighborhood, pointed out that many teams involved in bowling leagues are a mix of smokers and nonsmokers. If some bowlers decide they want to switch to an alley that allows them to smoke, Goeb said they'll undoubtedly take nonsmoking teammate friends with them.

Kenn Rockler, executive director of Bowling Proprietors of Minnesota, an organization that represents operators of bowling alleys, said he knows of no bowling facility in the state that is completely smoke-free, although a few have prohibited smoking directly on the lanes.

If smoking is banned entirely in Duluth's bowling alleys, Rockler said it will knock the city out of the running to host bowling tournaments. "There's no question about it,'' he said. "If that happens, some of the adult tournaments couldn't even think about Duluth.''

Big money is on the line, Rockler said, pointing to the Minnesota State Women's Bowling Association Tournament that's expected to bring between 16,000 and 17,000 people to Duluth in 2003.

Goeb said the city's policymakers don't fully understand the ramifications of the proposed smoking ordinance because they haven't spent enough time talking to businesses.

"The ones being impacted the most are the ones being talked to the least,'' he said.

PETER PASSI covers business. Call him at (218) 279-5526 or (800) 456-8282 or e-mail him at ppassi@duluthnews.com.

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