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The Case for Brew Pubs

While the term “brewpub” may once have described venues known more for their food, today’s leading edge brewpub operators are proving them to be a compelling outlet for creative expression in food and drink and a compelling business model.

Tom Wilmes June 27, 2017

The Case for Brew Pubs Primary Image

Brewpubs have come a very long way since the days of wood-paneled bars, animal heads and beer signs on the walls, and—with notable exceptions, of course—middle-of-the-road beer to match the middle-of-the-road food.

In recent years, a slate of inventive brewpub concepts has opened up in markets across the country. From the sleek and upscale to concepts helmed by both celebrity brewers and celebrity chefs, brewpubs are not only increasing in stature and ambition, but they also represent a compelling opportunity for many owners in an increasingly competitive market.

Growth of the Brewpub Model

“There’s a lot of room for the brewpub model,” says Madeleine Pullman, director of the Business of Craft Brewing Program at Portland State University. “Especially because it hasn’t historically been a particularly creative space and people are becoming more creative with different kinds of foods, beers, and things they do in that retail environment.

“If you know what you’re doing in both food and beverage, it’s a good space to be in, especially if you don’t have to rely on building up a new brand,” she says. “But I think people have to really have a passion for it, especially now. It’s a huge financial commitment, and it’s also super hard work.”

Reaching Out

Owning and effectively managing a brewpub can be a complicated business. There’s the manufacturing side and everything that goes along with running a brewery, as well as the hospitality side with kitchen staff, servers, customer relations, and more. But, for those willing to take on both, brewpubs are an attractive way to diversify their revenue streams and attract customers outside core craft-beer drinkers.

Funky-Buddha-chop

Operating a kitchen as well as the brewery has made Funky Buddha Brewery (Oakland Park, Florida) a more consistent draw. PHOTO: COURTESY FUNKY BUDDAH BREWERY

“My mom wouldn’t go to a brewery with me, but she would go to a brewpub,” says Scott Kerkmans, director at Metropolitan State University of Denver’s Brewing Industry Operations Program, which offers degrees in both brewery operations and brewpub operations. “Brewpubs give you so much flexibility and so many opportunities to showcase your brand that a tasting room just doesn’t offer. You’re also going to reach people who you wouldn’t have reached before, and I think you can also brew interesting beer.

“I encourage our students to think more open-mindedly about brewpubs,” he says. “A lot of them don’t have the desire to run a restaurant, but when you look at the types of breweries that are becoming successful right now—and that I think will continue to be successful—it’s not the large production breweries with a big footprint around the country. Instead it’s small tasting rooms and small brewpubs that serve a local community. Yes it adds a new element of another business to run, but your chances of succeeding in the restaurant business are aided so significantly by having a brewery attached that it’s definitely worth considering.”

Information collected by the Brewers Association on the historical success of brewpubs bears this out. According to an article published in the January 2016 edition of The New Brewer, an Ohio State study found that 60 percent of new restaurants close within the first three years, while only 46 percent of the 2,482 brewpubs that have opened in the past thirty-five years have closed.

Concentrate on Areas of Expertise

Those are encouraging numbers for anyone considering opening a brewpub, and owners can improve their chances of success even further by concentrating on areas where they have expertise while entrusting experienced professionals to run other critical areas.

“I think the reason that a lot of brewpubs fail, or breweries for that matter, is that the owners or managers try to do too much themselves,” Kerkmans says. “They try to have a hand or play an important role in the restaurant side, the brewery side, and on the management side, and they don’t delegate enough responsibility. I think if you’re going to open a brewery or a brewpub, having enough quality partners, managers, or employees involved is really the key so that no area gets neglected.”

Mark Hastings, cofounder and head brewer at Überbrew in Billings, Montana, has experience in all three areas—brewing, restaurants, and business operations. He and his partners decided to capitalize on this experience to help differentiate Überbrew in their local market.

Uberbrew-Burger

For Überbrew in Billings, Montana, offering a food menu was a key differentiator in the already-crowded local market. PHOTO: COURTESY ÜBERBREW/ YELLOWSTONE DESIGNWORKS

“When I wasn’t brewing beer, I was managing restaurants,” Hastings says. “So when we were looking at coming into a crowded taproom market, food was going to be our niche. Maybe it’s become a little more of our niche than what we wanted—about 65 percent of our sales are food—but it’s working pretty well.”

Hastings says that in addition to providing a significant revenue stream in food sales and also helping to bring in a more diverse clientele, the food, beer, and entertainment options at Überbrew all complement each other in creating an overall pleasant and inviting atmosphere.

“We believe that things such as atmosphere and service—even the music that’s playing when you’re enjoying our beer—only enhance the beer, and in the same way the food enhances the beer,” Hastings says. “Überbrew is kind of our mission statement and our name all rolled into one. It reminds us what we’re trying to do every day, and that is to use the best raw materials and really work hard to make sure everything is the best that it can be.”

Competitive Advantage

The competitive advantages represented by brewpubs haven’t escaped some of the bigger players, including AB InBev, which has invested in or acquired brands with a strong brewpub presence in recent years, including 10 Barrel Brewing, which operates five brewpubs, mainly centered in the West and on the West Coast, including a location in Portland, Oregon. Ohio-based Fat Head’s Brewery also recently opened a brewpub in Portland.

John Harris opened his Ecliptic Brewing brewpub in Portland in 2013. He says that while the brewpub model has essentially stayed the same, “the competition has changed.” And as a result, the quality of the food programs—and the beer programs, for that matter—has also greatly improved overall.

Keeping that quality high with a variety of farm-fresh, seasonal dishes paired with top-notch beers has been key in helping Ecliptic stand out in an increasingly crowded field, Harris says.

“For me great food is a big part of my business plan,” Harris says. “I was tired of going to brewpubs and hearing people say things like ‘Okay, we’ll go here for one beer, and then we’ll go somewhere else and have dinner.’ I’m like, ‘why are you leaving?’ I wanted a brewpub that could deliver a better experience all around, where people aren’t just served frozen fish and chips and mozzarella sticks or whatever.

“I wanted to put the foodies and the beer geeks together and have them both be happy. That was my goal.”

The Brewing Industry Guide Spring 2017 from Craft Beer & Brewing Magazine® is still available. Order this complimentary business-focused publication, that features strategies for growth, how to position your brand, Stan Hieronymus on hops contracts, small brewery tips, equipment supplier directory, and much more! Get a copy today!

PHOTO AT TOP: COURTESY FUNKY BUDDAH BREWERY

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