State Fair drives $250 million in economic activity over two weeks

Published 10:16 am Monday, September 12, 2016

By Neal St. Anthony

Minneapolis Star Tribune

Mike Brennan, Linda Young and Charlie Burrows are veteran St. Paul-area bar-and-restaurant operators who just finished a third year as partners in Lulu’s Public House, a two-story eatery in the Minnesota State Fair’s two-year-old “West End Market,” a spacious mosaic of food, retail and performance.

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The three, who for 12 years operated a small food stand called Axel’s Bull Bites on a busy corner at the fair, in 2014 invested more than $1.3 million to build what was a packed joint through the good-weather, 12-day stand of the fair that ended on Labor Day.

“It worked,” Brennan said. “Business has been fantastic.”

In fact, Lulu’s owners, who employ 100-plus workers during the fair, including managing the Schell’s Brewery concession next door, might pay for the construction in as little as another two years. That means paying it off in as little as 60 days of operation over its first five years at the fair.

Brennan, who declined to cite annual revenue, said Lulu’s amortization could take longer if the owners choose to pay down debt more slowly, or have a horrible weather year. Regardless, Lulu’s and other popular venues among the 300-plus food, beverage and several hundred other vendors prove a good product and location can create a gold strike at the fair.

Mike Lewis, a Schell’s executive, said the fair is a significant business for Minnesota’s largest beer maker.

On Sept. 3 alone, the Schell’s booth sold about 100 barrels of beer. A barrel is 31.5 gallons of Schell’s or Grain Belt, or about 180 servings at an average cost of $7 per glass. That adds up to gross sales of up to $1,260 per barrel.

Schell’s, Minnesota’s biggest brewer, sells a barrel for about $100. The bar owner also pays wages, taxes and other costs. That’s still a nice margin.

“We just sell our beer to Lulu’s and other retailers and they work their business and margins,” Lewis said. “But the fair is one big sandbox. It’s one of our biggest events.”

Try to find another event in the country, much less Minnesota, where food and beverage sales top $50 million over less than two weeks.

That’s from the Minnesota State Agricultural Society, the quasi-state agency that manages the fair and other fairground events year round.

Fair management projects this year’s bazaar in St. Paul generated about $50 million in revenue and a few million in profit. Fair management gets 95 percent of its $50 million in annual revenue from rents, fees and a 15 percent slice of food and beverage sales.

The fair management operates a staff of 80 year-round employees and 3,100 fair-time and seasonal workers. Everything from ticket sellers to security and garbage-and-recycling disposition.

“About a decade ago, I was told the fair is the single-largest attraction in the English-speaking world,” said Jerry Hammer, the longtime general manager. “I said, ‘B.S.’ What about Disney World? But their average daily attendance is only 120,000 or so.”

The state fair this year attracted a record 1.94 million people, or about 162,000 a day who pay $13 apiece to enter. And they spend a ton after that.

An analysis last done for the fair board in 2014 by Markin Consulting, its third since 2003, estimated the “economic impact” of the fair at $250 million per 12-day run. That would include gross revenue generated by fair businesses, including the amount they pay to suppliers for beer, food, fuel and other supplies.

By comparison, the Minnesota Vikings had annual revenue of about $280 million in 2014, Forbes Magazine estimated last year. Sun Country Airlines, the Upper Midwest’s largest carrier, posted 2015 revenue last year around $500 million. The fair’s gross revenue is equal to the one-year revenue of nearby Hamline University and St. Catherine University combined.

The economic impact estimate breaks down roughly this way: Food and beverage operators rake in about $50 million, fair management estimates based on extrapolating from its 15 percent take of those receipts. Food is the single-largest sales driver at the fair. There’s an estimated $125 million in direct sales to the 1,000-plus commercial exhibitors and performers at the fair. And at least $75 million is spent by fair businesses and patrons with suppliers of fuel, parking and other goods.

“You can safely say in 2016 [economic impact] will exceed $250 million,” Hammer said. “That’s conservative.”

The average attendee spends something approaching $75.

“Although the fair is short-term, the amount of money that changes hands in fair-related transactions is definitely a boon to the area and … to businesses involved,” an analyst at the Minnesota Department of Employment and Economic Development Department wrote in a 2013 report. The next largest state event: the Renaissance Festival that had only 300,000-plus attendees.

Not every ma-and-pa vendor mines gold, but the aggregate numbers are big.

A thousand vendors and exhibitors. Martha’s Cookies alone employs 500. Others a few. Fair goers consume 55,000 pounds of Mouth Trap cheese curds, 26,000 gallons of milk, 70 tons of Pronto Pup batter and 4 million mini doughnuts.

—Distributed by Tribune Content Agency.