At Ole-N-Rick’s Northside Inn, a blue-collar tap in Madison, Wis., sales have fallen about 50 percent since a citywide smoking ban took effect July 1.
The owners of the shot-and-a-beer spot, two retired firefighters, have cut staff hours and beer prices, and they are thinking of throwing in the towel.
We’ve lost all those third-shift guys who used to come in,” said Terry Olson, co-owner of the 16-year-old bar and grill. Now, workers from a local bindery and a food plant are driving to taverns in a nearby village where smoking is allowed.
The experience at Ole-N-Rick’s speaks volumes about how smoking bans are affecting businesses–a crucial question in Chicago, where City Hall sources say a sweeping smoking ban ordinance proposed by Ald. Ed Smith (28th) is expected to be approved Thursday by the City Council’s Health Committee, which Smith chairs.
But by the time the measure reaches the council floor for a final vote, free-standing taverns and bars in restaurants that are separate from eating areas could be exempted in an attempt at compromise, the sources said.
For polished restaurants in prime locations nationwide, the fallout from smoking bans appears to be negligible. And such bans are virtually meaningless for fast-food chains, many of which banned smoking years ago.
But the government-imposed bans can deliver an economic blow to some operators, primarily to mom and pop taverns near towns that have no bans.
“If you are a restaurant or bar owner in a fringe area of Chicago, and you’ve got another city across the street from you, you could be dramatically affected,” said Greg Ortale, chief executive of the Greater Minneapolis Convention and Visitors Association.
He’s watching this phenomenon play out in his own back yard. Hennepin County, which includes Minneapolis, adopted a smoking ban on restaurants and bars this year, while some of its neighbors have no bans or have less restrictive ordinances.
“We’re dealing with a situation where these are family-owned businesses, many running for three or four generations,” Ortale said. “If they close, they are gone forever, and what happens to the stability of the neighborhood?
“We believe if there’s going to be a ban, it needs to be statewide, so there’s a level playing field,” Ortale said.
In Chicago, the potential impact on small enterprises is a big issue, said Colleen McShane, president of the Illinois Restaurant Association, who noted that 70 percent of the city’s restaurants are mom and pop operations.
Dan Cullinan, who owns Cullinan’s Stadium Club in the Beverly neighborhood, says he’s sure a smoking ban would mean lost business at his bar and grill.
“Seeing as the nearby suburbs have similar establishments, they are likely to pick up a lot more business,” he said. “I’m afraid you’d start seeing less traffic in businesses on Western Avenue.”
The restaurant association is willing to go along with a ban in dining rooms, but not in adjoining bars or in stand-alone bars, McShane said.
Many restaurants rely on alcohol sales for their profits, she said. And, “alcohol and cigarettes go hand in hand,” she said.
Nationwide, 262 municipalities ban smoking in restaurants and 193 ban it in bars, according to the American Nonsmokers’ Rights Foundation. Just what that has meant for businesses, in dollars, is difficult to pin down. More than 150 studies have been conducted in various jurisdictions, with mixed conclusions.
New York City found tax receipts from bars and restaurants rose 8.7 percent in the 10 months after a smoking ban went into effect on March 30, 2003, compared with the same period the prior year.
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In Dallas, where smoking was banned in restaurants, hotels and bingo halls as of March 1, 2003, alcohol sales declined 3.6 percent in 2003, according to a study prepared for the local restaurant association. A more recent study, however, found no evidence of a shift in restaurant business to the suburbs. Permits for new restaurants grew slightly in Dallas while declining in a neighboring county.
In the county that includes Minneapolis, the ban on smoking in restaurants and bars took effect March 31. A subsequent study found liquor sales in the second quarter continued to grow, but at a slower rate than in the year-earlier quarter. “There is some evidence that smaller businesses were more likely to show a decline in liquor sales and less likely to recoup the decline through increased food sales,” the study said.
In contrast, smoking bans around the country don’t seem to be fazing high-profile restaurants.
At Morton’s, The Steakhouse, a sumptuous meal can include not only a prime, aged steak, but an after-dinner cognac and fine cigar at the bar.
“We are cigar-friendly in states where it’s legal,” noted Patty Pleuss, vice president of marketing and sales. But some of the chain’s 69 restaurants are in cities or states where smoking is banned in restaurants and bars. And surprisingly, the bans “make no difference in our business,” she said. “People come to Morton’s for our steaks.”
Other prominent Chicago-based restaurant companies, including Lettuce Entertain You Enterprises Inc. and Levy Restaurants, report smoking bans have little or no effect on their businesses.
“When large cities have gone non-smoking, we’ve seen no impact other than healthier guests and team members,” said Chris Harter, president of Levy’s restaurant group.
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What’s next
The City Council’s Health Committee is scheduled to vote Thursday on a sweeping smoking ban proposed by Ald. Ed Smith (28th). If it passes, the measure would go before the full City Council for a vote Tuesday.
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