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City audit finds Chiba Hut largely compliant; 7 Iron exceeded alcohol-sales threshold in several months
Summary
The city's internal audit unit reported that Chiba Hut met the ordinance food-to-alcohol sales test for the audit period, while 7 Iron Social exceeded the alcohol-sales threshold in 11 months of the reviewed period; the ALRC accepted both reports and referred tax discrepancies to other city offices.
The Alcohol License Review Committee on Aug. 20 accepted two special finance audit reports that examined whether two establishments met the city's ordinance limits on alcohol sales relative to total gross sales.
Internal auditors told the committee that Chiba Hut complied for the audited period (29 months reviewed) with an average ratio well below the city’s threshold. In contrast, auditors found that Seven Iron exceeded the alcohol-sales threshold for 11 of the 29 months reviewed, with an average monthly alcohol percentage substantially higher than Chiba Hut’s.
Auditor Kola (internal audit unit) described the reviews as special audits requested by the ALRC, not part of the routine audit plan. The staff also flagged a separate concern for management: apparent discrepancies between point-of-sale sales data and Wisconsin Department of Revenue sales tax returns for Chiba Hut, which the auditors forwarded to the city finance director and the assistant city attorney for potential referral to the Department of Revenue and further follow-up.
Representatives from the license-holders and managers addressed the committee. Heather and Robert Hoon of Chiba Hut explained the tax-reporting discrepancy: third-party delivery sales are recorded in the store’s point-of-sale system but, for sales-tax remittance, delivery platforms may report and remit sales differently. Chiba Hut said third-party delivery accounted for roughly 25–30% of orders in typical periods; this explained some variances between POS numbers and tax returns, the owners said.
Seven Iron’s operator announced the business would close after the audit, citing business and operational difficulties; he told the committee the restaurant would shut down rather than continue under the audit’s scrutiny.
Police Captain Hartman told the ALRC that MPD had observed operational improvements at Chiba Hut after the business adopted patron-scanning, security for peak nights and de-escalation and ID-check training; the captain described the overall trend as positive.
Motion and outcome: Miss Carter moved to accept the audit reports; Alder Glenn seconded. The committee accepted both reports without objection. The ALRC also received additional information from the city attorney’s office and the finance director intended for committee members.
Why it matters: Audits help the ALRC enforce the municipal code provision limiting the proportion of alcohol sales relative to food sales for certain licenses. The Chiba Hut finding reassures regulators that compliance was met for the audited months; the Seven Iron results prompted operational consequences and a planned closure by the license-holder. The tax discrepancy flagged by the auditors has been referred to the finance director and the assistant city attorney for potential referral to the Wisconsin Department of Revenue.
Quotes
"Out of the 29 months, we found that the establishment was not in compliance for 11 months," Kola said of Seven Iron.
"We have implemented security on Friday and Saturday nights," Heather Hoon said of Chiba Hut’s operational changes.
Ending
The ALRC accepted the audits and asked city staff to pursue the tax-report discrepancies with appropriate departments; the committee asked auditors and staff to remain available for follow-up questions.
