Subsidizing the cafe and store at the Kansas Soldiers' Home at Fort Dodge has gotten too expensive to keep the contract as is, the Kansas veterans bureau said.
The Sutler's Store at Fort Dodge will remain open, Kansas Soldiers' Home administrator Scott Hilmes said, though it may not remain as a cash restaurant if the current operators and the state cannot agree on a new contract.
Becky and Kim Holland, who have been running the diner and shop since it was re-opened last year, received notice in May that the state would not renew the contract. They were asked to remove their property by July 1.
"We recognize that you have devoted energy and effort into making the Sutler Store a place where the Ft. Dodge residents could congregate and enjoy themselves. Unfortunately, after one year of operation, the Sutler Store is operating at a deficit each month and our funds can no longer support its continued operation," wrote Kansas Commission on Veterans' Affairs Executive Director Gregg Burden.
Under the current contract, the Soldiers' Home buys the food; the Hollands operate the restaurant and receive a cut of sales. In the last year, the store has operated at a loss of about $25,000, paid by the state.
"State taxpayers were taking it in the shorts," Hilmes said. The Sutler's Store contract was identified early into his administration as a significant loss to the facility. He understands the importance of the store as a place to gather, but the terms of the current contract led to too much state subsidization.
The Hollands will soon offer a different contract, one in which they accept the risk food purchases and an incentive to operate the store at a profit, Kim Holland said.
"This is a good thing," Hilmes said. "I spent a lot of time with (the Hollands) talking about what would be a much more acceptable alternative to the taxpayers. We want to be good stewards of the taxpayers' dollars." A new contract "has to be something that's cost neutral."
In the eagerness to re-open the historical shop, previous administrations may have forecast the restaurant's potential number of clients too optimistically, Hilmes said, an opinion shared up the chain of Veterans' Affairs.
"We were hoping it would attract more customers and it didn't happen," Burden said. "There just weren't enough customers got make it a viable operation. … When we opened it, we tried to promote it. We can't just rely on (Soldiers' Home) residents to support it, there's not enough to support it."
One difficulty in running the store at a profit is the state's contract with food distributor U.S. Foods, Holland said. Due to the economy of scale, purchases made by the Soldier's Home's kitchens come in at institutional contract prices. Small, special deliveries made to the Sutler's Store under that same contract could lead to prices two to three times higher than grocery store retail.
For the Sutler's Store cafe to turn a profit on a pie that could cost up to $18 they would have to charge $7.50 per slice, Holland said. He's confident they'll be able to run it with a small profit margin with some changes and the freedom to purchase locally.
The Hollands have been receiving advice from Soldiers' Home residents in turning the business into a profitable one.
"The possibilities are unlimited out there, you know," Holland said. "Our plan is to have a little bit different hours and sell more store items instead of just food." They're also considering stocking dry goods, saving Fort Dodge residents from the trip to the middle of Dodge City for basic staples outside of the three-square served daily at the mess hall.
If a contract between the Hollands and the Soldier's Home doesn't work out, whether financially or legally (the state may have to open it for bids), Hilmes said the plan is to keep the store open in some capacity, for example, as a coffee shop or an alternate dining room for residents.
"We got to keep it open," he said, for its importance to residents and visitors, and as a part of the fort's important historical heritage.
With a little more than two weeks until bug-out day, the veterans' affairs board would need to act quicker than likely possible to avoid a service interruption, or extend the current contract for a limited period and continue taking the loss.
So far, "All I've heard is, they want to talk. I haven't seen anything in writing," Burden said. "These are business decisions. We're not going to rush into anything. It's going to be whatever is in the best interest to the Soldiers' Home out there and for the state."
"We want to see it successful out there, and we want to do our part."
This could include other private operators. "We would certainly entertain other options for the Sutler's, whatever it is, it's got to be a good fit with what's out there," Burden said.
Hilmes said the Hollands have had been a positive presence and he hopes they can come to an arrangement that's mutually beneficial.
"They're good for the fort. They're good people. They respect the fort, they respect the people out here. I don't think we could do better than the Hollands," Hilmes said.
"I think it could be a win-win here, which is ultimately what we'd be looking for."