On any given day, a visitor to Surdyk’s, the single-unit retail store near downtown Minneapolis, is likely to find third-generation owner Jim Surdyk sitting at a booth in the store’s bar and lounge, Sidebar, adjacent to the main selling space. He’s still got the title of president, but his three children are in charge now. The business has changed significantly in recent years, but as Sidebar begins to fill up with customers later in the day, Jim is undoubtedly satisfied. The surging crowds are proof that Surdyk’s is in good hands.
At the center of the operation today is Melissa Surdyk, who has inherited the CEO title from her father, essentially overseeing all facets of the store’s operations. She is one of triplets: her brother Taylor is the COO, overseeing the wine bar and adjacent delicatessen as well as the growing catering segment, while her sister Molly is the general manager of Sidebar, as well as payroll manager for the store’s 50 employees. Melissa’s grandfather Bill Surdyk was named a Market Watch Leader in 1984, while her father, Jim, won the title 25 years ago, in 1997. Now the award goes to Melissa, a chip off the old block in more ways than one. For her dedication to the family business and her efforts to help it evolve and thrive for a new generation of consumers, Melissa Surdyk has been named a 2022 Market Watch Leader.
Family Business
Jim Surdyk has had a long and illustrious career as a forward-looking executive, taking a leading role in the 1980s in transforming his 10,000-square-foot traditional liquor store into a serious wine destination. Wine is still important, but consumer tastes around Minneapolis are changing fast, as evidenced by the string of new local craft breweries with bustling tasting rooms that have opened nearby in recent years. At the Surdyk’s on-premise venture Sidebar, which opened two years ago with a capacity for 62 inside and three dozen more seats outdoors, spirits-based cocktails actually outsell wine by two-to-one.
At one time, Surdyk’s fully supported lower-priced spirits. A few decades ago, the store had nearly a dozen facings of budget-priced Windsor Canadian whisky in 1.75-liter bottles, but that’s been reduced now to a single facing of Windsor in a smaller bottle ($12 a 1-liter). Now, customers in their early 20s are willing to pay $40 or more for a single bottle of Tequila without hesitation, Taylor says.
The entire neighborhood around Surdyk’s has changed, in fact. A generation or two ago the store, on Minneapolis’ northeast side, was surrounded by factories forging machine tools, but they’ve since gone dark, leaving behind rusting industrial buildings. For years, the store made its living as a destination with beer- and wine-minded customers driving from afar for a good selection and price. More recently, gentrification has taken hold, as developers have knocked down the old buildings, replacing them with sleek apartments and condominiums that feature a hefty monthly rent. New businesses to service that burgeoning population are also going up in once-neglected storefronts that have been resurrected. “A real neighborhood is cropping up around us with lots of young, hip residents,” Melissa says. “The demographic change has helped our business, and it bodes well for our future.”
Passing Of Generations
Surdyk’s was founded in 1934 after being granted the Gopher State’s 11th liquor license upon the repeal of Prohibition. Joseph Surdyk, who emigrated from Poland in 1906 and worked as a grocer, was the original owner. Troubled by emphysema, he left the store at the outset of World War II and was succeeded by his son Bill, who took over at 19, before he was even legally able to drink. Jim Surdyk, born in 1952, was working nights and weekends making deliveries on his bike before he could even drive. He took over from his father, Bill, in 1989. Melissa and her siblings took on the business in 2015, though Jim is still majority owner and his children are minority owners. While Jim is officially retired, Melissa notes that “he’s still either here or just a phone call away when we need advice.”
The current store was opened in 1979, when Surdyk’s moved from a nearby smaller space. The timing of the move was fortuitous: Napa Valley was coming into its own and after 1980, Jim needed more space to promote American wines. He also insisted on an adjacent cheese shop, which opened in 1990, after outvoting his father, who wanted the family to open a video store.
Jim grew up in the business, working long hours with little time for sports and other extracurriculars. Melissa got her full-time start at the store in 2008, after graduating from the University of Minnesota with degrees in business and communications. Before that, she worked for the family business after school, stocking shelves and filling orders, and then developed an interest in catering special events. “I kept asking for more responsibility, and my dad gave it to me,” Melissa says. “He and I worked closely together on marketing, and later on I got into digital technology.” Her brother and sister were never far away. Taylor graduated from the University of St. Thomas and came to work for his father almost immediately. Molly got an English degree from Iowa State, and then went to work elsewhere before returning home.
One of the biggest changes facing Surdyk’s—increasing competition—has been beyond the family’s control. More than two decades ago the company hit its peak of $25 million in annual sales. Not long after that competition mushroomed, with seven Total Wine & More superstores entering the metro Minneapolis marketplace. Both Total Wine and the single-unit Liquor Boy in St. Louis Park lead the market in pricing most days. Haskell’s occupies the high ground with a dozen locations and a world-class selection of French wines, while fast-rising Top 10 Liquors now matches that with a dozen stores of its own. Surdyk’s new on-premise unit Sidebar and some of the company’s other recent changes have been driven largely by the urgency to compete more effectively against such rivals.
Last year Surdyk’s sales declined 5% to $17 million. That was off a banner year in 2020 when sales rose nearly 9% as customers stopped going to bars mid-pandemic. Currently, the store’s sales comprise 40% wine, 30% spirits, and 20% beer, with the remainder coming from accessories and mixers. The company carries 1,625 spirits SKUs, 2,100 wine SKUs, and 1,550 beer SKUs.
Amazon Alliance
Melissa is eager for more volume. Surdyk’s partnered with Amazon Prime back in 2016, erecting its own storefront on the Amazon website. The alliance carries plenty of pressure, with Amazon typically demanding each order to be picked, packaged, and ready for pick-up within an hour. To cover all bases, Surdyk’s also works with Drizly for home deliveries and offers a curbside pickup service. Curbside, Amazon, and Drizly together now account for roughly 10% of the company’s overall sales.
A website refresh was completed two years ago, as Surdyk’s has moved much of its technology, including accounting and point-of-sale information, away from on-site servers to Cloud services. The construction of Sidebar, also two years ago, cost more than $1 million. It’s all been a bit overwhelming for the Surdyks, who are preservation-minded when family history is mentioned. “It’s a huge challenge to take 88 years of operations and try to make them more efficient,” Melissa says. “Sometimes we get the feeling it would be easier to just start the whole business new again from scratch.”
Maybe, but key managers are staying on top of the latest trends. Taylor reports that bitters continue to rise in popularity, with an aperitif from South Africa called Caperitif ($27 a 750-ml.) in hot demand. Mezcals are also sought out, with labels like La Luna ($40 a 750-ml.) and Apaluz ($25) selling well. Minnesota was once a liter-bottle state, but Taylor says that’s shifting. “In the past five years we’re moving more 750-mls.,” he says, noting that Tapatio is a new Tequila whose añejo ($50 a 750-ml.) is so popular that Surdyk’s can’t keep it in stock.
Brandy is a big seller in neighboring Wisconsin, but it’s gone quiet in Minnesota, Taylor says, except for one notable label, Leroux Polish Blackberry Brandy ($13 a 1-liter). In the single-malt Scotch category, a favored label lately has been the Ardbeg Wee Beastie 5-year-old ($40 a 750-ml.). Customers like the easy price and bold peat flavors, Taylor says.
Surdyk’s new wine manager, Peter Plaehn, is a former sommelier. He is directly importing a French Bordeaux label, the 2018 Clos Manon from the Médoc, that serves up good profit margins at $38 a 750-ml. Collectors are more apt to be seeking out the 2014 Château Cos d’Estournel ($155) or even the 2010 Château Lafite Rothschild ($1,900), the most expensive bottle in the store. At lesser prices, the 2019 Saint Cosme Gigondas from the Rhône sells decently at $65 and a Chianti from Italy, the 2019 Felsina Berardenga, does well at $30. On the value front, Plaehn says the 2020 Bacchus Pinot Noir Ginger’s Cuvée from California “delivers a lot of taste” for a mere $16, which is close to the average wine sale at Surdyk’s.
Recent inflation has Plaehn worried. “We have had three increases imposed on some wines in the past year,” he says. The 2019 J. Lohr Seven Oaks Cabernet Sauvignon from Paso Robles that was priced at $17 a year ago on the shelf now goes for $19. “So far, our customers either aren’t noticing or they aren’t complaining,” Plaehn says.
Looking Ahead
More changes are likely coming, as the Surdyks are contemplating a facelift for the salesroom that would include new paint, lights, tile floors, and more. Melissa doesn’t like to miss a beat—she gave birth to her first child, a son, a year ago and was back to work six weeks later, even stepping in as the substitute beer buyer post-birth when the department needed help and continuing her duties as the sake buyer, something that has been a passion since she studied in Japan during college. She tried working from home for a while, but wasn’t satisfied with that regimen despite her tech background. “A computer can tell you a lot about your business,” she says. “But to really learn what’s going on, you have to be here in person watching people shop and seeing firsthand a department evolve.” She’s not afraid to get up close in the process: she frequently steps in during busy times to run a cash register herself.
Triplets running a business together might strike many onlookers as a potential recipe for trouble, but not at Surdyk’s. Molly is content with her role as the general manager of Sidebar, and she says disagreements are rare. The family, for instance, has agreed that there’s no need for a second location, and has also quit traditional print advertising in favor of social media. “We grew up close to each other and we’ve been able to work together since the beginning,” Molly says. “We’re quite like-minded, able to talk ideas back and forth with each other freely. There is always some compromise necessary, yet in the end we trust each other.”
Molly has no children, but like Melissa, Taylor has a young son of his own. As for the generation that might come along next, Taylor says, “If our children all want a place here, they can have it. I would love to pass this business on.” He also acknowledges the need to keep improving: “Most family businesses don’t last past three generations. We’re aware of that, and that’s why we are all in a race here to keep up with the competition.”