Study: Smoke-free bars didn't lose patrons

Bar and restaurant industry officials contend report's data is insufficient

Posted: Friday, February 06, 2004

Bar and restaurant patrons have generally not migrated from non-smoking to smoking establishments under the current clean air ordinance, according to a new study by the Mayor's Smoking Ordinance Review Task Force.

The report comes at a time when the Juneau Clean Air Coalition is lobbying to ban smoking in all bars and restaurants in Juneau. The current ordinance exempts some restaurant bars and all standalone bars.

The January 2004 study was done by the management consulting firm, C&S Management Associates of Juneau.

The study documents the first two quarters of fiscal years 2002-03 after the ordinance took effect on Jan. 1, 2002. The city sales tax department did not have figures available for the other two quarters of 2002-03, said task force member Joyanne Bloom.

The analysis examines three groups of facilities: all restaurant bars that were non-smoking prior to the ordinance taking effect, restaurant bars that received waivers to allow smoking and all restaurants and bars in Juneau.

The year following implementation of the ordinance, sales tax revenue for restaurant bars with waivers increased at a lower rate in the first quarter and decreased in the second quarter, the study said. In the first quarter of the city's 2001-02 fiscal year, sales tax revenue grew 7.14 percent. In the first quarter of 2002-03, the fiscal year following implementation of the ordinance, revenue grew but only by 4.41 percent. In the second quarter of 2001-02, revenue grew by 9.43 percent, but the year after the ordinance was implemented, revenue decreased 2.7 percent the second quarter, the study says.

Further, restaurant bars that were non-smoking prior to the ordinance saw increases in sales tax revenue, the study says. In the first quarter of fiscal year 2001-02, non-smoking establishments saw a 2.46 percent increase and 3.11 increase in 2002-03, after the ordinance took effect. In the second quarter, those businesses saw an increase of 2.85 percent in 2001-02 and 3.84 percent in 2002-03. The city's fiscal year runs July 1 to June 30.

"It's pretty conclusive to me that there is no economic harm to the businesses that are smoke-free," Bloom said in an interview.

But bar and restaurant industry officials criticize the study for lacking significant data to draw such conclusions.

"There was nothing that could be gleaned from it to make one point or another," said Neil Atkinson, co-owner of G.W. Teal, a bar that serves food in the Mendenhall Valley.

The numbers were "skewed" because the study only looked at businesses that were in operation; it didn't look at those that closed, Atkinson said.

The city sales tax department did not release sales tax data on businesses that had closed or had a change in ownership and licensing because it wanted to maintain consistency, Bloom said.

Further, the study did not include the economic impact of the ordinance on pulltab parlors and bingo halls, Atkinson said. Pulltab parlors and bingo halls are subject to the ordinance while standalone bars - some of which offer pulltabs - are exempt.

The study also did not consider renovation costs that some businesses undertook to meet the requirements of the ordinance, Atkinson said. Donna's Restaurant in the Valley spent an estimated $70,000 to create separate smoking and non-smoking sections, he said.

The study numbers did not make clear whether the bar or restaurant portion of a business were affected by the ordinance, said Paul Thomas, owner of Alaska Cache Liquor Inc., a liquor store on South Franklin Street. Changes in the ordinance also make the value of a liquor license unknown, he said, because future receipts become uncertain once the social atmosphere of a business is altered.

The task force plans to include the study as part of it final recommendations to the Juneau Assembly by the end of this month, said Chairman Matt Felix, executive director of the National Council on Alcoholism and Drug Dependence.

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