Taxes, fees eating away at Costco profits in Illinois, Proft tells listeners
Net profits at Costco stores in Illinois and Wisconsin are dramatically different because of high taxes and other overhead, Dan Proft, co-host of Chicago’s AM560’s Morning Answer, said during a recent program.
Proft told listeners that while he was at a lunch attended by various commercial real estate brokers, he started talking with a businessperson involved in commercial real estate who he talks to investors and large companies in terms of location decisions.
"We’re talking back and forth about ... what’s going on politically and where we find ourselves, and all of the intractable, seemingly intractable, problems that afflict us,” Proft said. “But he said, ‘Let me give you an example of what’s happening and where Illinois is vis-a-vis, like, Wisconsin.'"
The businessperson said a Wisconsin Costco store just south of Milwaukee had a net profit 13 times that of a Chicago-area Costco in west suburban Melrose Park, Proft said. The businessperson said it costs the same to build each of the facilities, around $33 million dollars, and the sales at the two stores are substantially the same, Proft said.
Proft told listeners the businessperson then said the net at the Milwaukee store was $8 million and that the net at the Melrose Park store was just $600,000.
“It’s the taxes and shakedown fees,” Proft said. “He talked about, like, there’s a $50,000 a year roof inspection fee and all of these other layers and layers of taxes, and because we have so many units of government, and fees and, basically, shakedown scams. That’s basically a difference of 13 (times) in terms of return – $8 million dollars just north of the cheese curtain in Milwaukee, a year, that’s their net; $600,000 in Melrose Park in Cook County.”
He said Gov. Bruce Rauner tried to get a meeting with the Costco chief executive officer. “He said, look, basically, he (the CEO) didn’t take the meeting,” Proft said, recalling what the businessperson told him.
“We have nothing to talk about. I mean, he’s not blaming Rauner,” Proft told listeners. “We just have nothing to talk about. We have nothing to talk about in terms of locating more outlets here, doing business in Illinois, until something changes in Illinois, because it makes absolutely no sense. And all you have to do is share that vignette about the tale of two communities – Milwaukee and Cook County.”