SAN DIEGO — Liquor Barn, the San Leandro-based liquor discount retail chain, said Wednesday it will move its headquarters to San Diego by May 1, a move that will result in laying off about 40 employees at its administrative offices in the San Francisco Bay area.
Executives at the 65-store chain also said they plan to open at least 22 new stores by 1993, nearly all of them in Southern California. A major focus of the expansion will be in San Diego County, where five to seven new stores will be added in 1990 to the six already here, president Harvey Rosen said.
Liquor Barn could "comfortably double its size" over the next six to eight years, Rosen said. Currently, all its outlets are located in California and the chain has no plans to open out-of-state locations, he said.
Described by industry observers as the nation's largest specialty liquor chain, Liquor Barn was acquired for $40 million last year by an investment group headed by Triton Group Ltd., a publicly traded conglomerate based in La Jolla. The buy-out was completed shortly after Liquor Barn emerged from Chapter 11 bankruptcy proceedings.
Triton owns 67% of the chain's equity while a management group led by San Diegans Rosen and Lewis Silverberg owns the other 33%.
At the time of the buy-out, Rosen said Liquor Barn's headquarters would remain in San Leandro even though he and Silverberg were longtime San Diego residents. On Wednesday, Rosen said he changed him mind because of company's growth plans are concentrated heavily in the southern half of the state.
"We see an opportunity in the south for expansion and internal growth," Rosen said. "A lot of us are from the area and we know the area and there is no reason for the penetration and average volumes to be at the level they are."
The attention that previous Liquor Barn management gave to Southern California, in terms of advertising, inventory, supervision, special pricing and "just being on top of the market in terms of competition, was sorely lacking," Rosen said.
Liquor Barn has approximately a 10% share of the $2.2 billion total of annual spirits sales in California. But David Ross, managing editor of Impact Newsletter, a trade publication that covers sales and marketing trends in the alcoholic beverage industry, warned that the competitive climate in California is getting tougher.
"Liquor Barn faces faces intensified competition from chains including Safeway, Lucky and Price Club, the mass discounters and the grocery chains," Ross said. "Ever since Safeway sold off Liquor Barn they have become more and more competitive with Liquor Barn."
Paul Gillette, publisher and editor of California Beverage Hotline, a Los Angeles-based industry newsletter, said the new Liquor Barn management has done a better job of promoting wines at the lower price ranges that most consumers want to pay. Using the new approach, Liquor Barn can easily double its California locations, he said.
"The key to whole thing is that the places have to be made user friendly," Gillette said. "And user friendliness starts with well lighted parking lots and attractive stores where consumers are serviced promptly and are made to feel comfortable. A lot of people get intimidated going into a wine or liquor store these days."
The Liquor Barn employees slated for layoffs were informed of the impending job cuts last week and are currently being offered outplacement counseling, chief financial officer David Buck said Wednesday. Of the company's 65 administrative employees in San Leandro, about 25 will move to San Diego, Buck said.
Founded by Safeway Stores in 1979, Liquor Barn reached its zenith as a chain in 1986 when sales reached $332 million and stores totaled 104. But the operation went downhill after it was sold in 1987 to London-based Majestic Wine Warehouse in a highly leveraged $110-million transaction.
Majestic closed many locations and changed the merchandising focus from the high volume approach made successful by Safeway to a boutique concept featuring a smaller selection of higher-priced spirits. The approach failed and Liquor Barn filed for protection under the federal Bankruptcy Code in 1988.
Since Rosen and Silverberg took over the Liquor Barn reins last summer, Liquor Barn has returned to high-volume, low-priced merchandising. Rosen said the switch has been successful and he expects sales for the year to end Jan. 31, 1991, to reach $225 million, up from $200 million for the year ended last month.
Jim Sprague, manager of Liquor Barn's Pacific Beach store, said the number of items in his inventory now totals 7,000, about double the total before the Triton buy-out. Sprague said his Mission Boulevard store sells 243 different kinds of beers, up from 95 brands last summer.
Rosen said the company is looking for office space in the Sorrento Valley area of San Diego.