Four hundred rural and remote LCBO agency stores were served a new $250 delivery fee by The Beer Store on Monday.
Dave Bryans, CEO of the Ontario Convenience Stores Association (OCSA), said this charge could force up a store’s expenses by about $13,000 a year.
“It takes about $5 million a year out of the rural convenience store pockets,” he said.
Agency stores are not allowed to mark up their alcohol prices to absorb the added expense, unlike restaurants and bars that are permitted to sell booze for more than the LCBO price, Bryans said.
An LCBO agency store makes 9.8% on its sales, and the LCBO charges 2.5% for delivery, he said.
Credit card fees also chip away at the revenue, he said.
“Now The Beer Store has dropped … another $250 delivery charge,” Bryans said. “So really, these stores are going to be working on 2% to 3% which is unfair when they handle all of the returns, all of the empties, and they have labour costs, refrigeration costs, rent costs and there’s no way to recoup that.”
Ted Moroz, president of The Beer Store, said in a statement Monday that the delivery fee schedule is fair, flexible, and lower than the fees charged by the LCBO.
The delivery fees are consistent with The Beer Store’s break-even cash flow financial model under an agreement signed with the Ontario government, which requires it to fund its operational costs through offsetting service fees and other revenue, he said.
“The volume of beer sold through the LCOs ( LCBO Convenience Outlets) since June 2019 has doubled while overall industry volumes have remained flat,” Moroz said. “The costs associated with delivery to LCOs are currently being subsidized and absorbed by other users of The Beer Store system.”
In a message to agency stores, The Beer Store said there are ways to lower the fees and it will continue to pick up empties at no additional charge as part of a delivery of “full goods.”
Bryans said The Beer Store has never charged this delivery fee before, and instead was content to absorb the profits from the sales of its product.
If the fees can’t be altered, the Ontario government should allow agency stores to charge more for the alcohol, he said.