Why do breweries close?

Let's be real. If they were making good money, they wouldn't be closing. All about the Benjamins

 

Particularly for young owners, I think there has been an interest to be a sole proprietor and get out of the rat race “working for the man”, however after a few years they may find they lose a passion for brewing, tied to a business they can’t take a break/vacation from combined with not making much money. May be alot better quality of life to just go back to “working for the man”.

 

A lot of breweries close because their founders know a lot more about beer than about business. That's not a knock against them, it's just a fact that a lot of really great homebrewers that have reached the point where they feel they can make their hobby start paying for itself frequently find themselves in over their heads when it comes to what's involved in running a business.

 

I am probably one of the "younger" guys on here, and I don't understand why so many scoff at jobs that provide PTO, health/dental insurance, 401k match, and stable working hours...

My father has been in the restaurant industry for 40 years and the first 10-15 years according to him were a 70-80hr/wk grind with a lot of risk and frustration which nearly led to my parents divorcing.

It wasn't until he and his long-time business partner hit their stride in the mid 90s that life got substantially easier and much more lucrative for them. 40 years later, he's still working 40-50hrs/wk (including alternating weekends) since him and his business partner never believed in just sitting back and letting managers do a half-ass job. My mother continues to work in health care part time solely for the health insurance.

I really feel for those that got themselves into an expensive brewery and are now 'stuck'.

 

I have always heard when you love something as a hobby, like fishing or in this case brewing beer, then do it as a job, the love of it goes away.

 

I’ve seen that landlord issue pop up a few times around here.

 

The days of low interest rates allowing a poor business plan to continue are over. Those who either overextended themselves or had a poor business plan or had a poor patronage are now paying the price.

 

Interesting, but they do come and go. I am reminded of a great English ale by The Badger Brewery named Tanglefoot. I had it many years ago and it was truly a wonderful beer. I would like one now! On another note, Cascade Brewery's Art Larrance has passed away and Cascade is closing. He was a friend and this saddens me. Art came to Guilford College- about a mile from my house- many years ago on a baseball scholarship. We shared many great stories. He was really quite a pioneer. On a long past Fourth of July my family had a freshly baked blueberry pie from fresh fruit picked at about 4,000 feet above Valle Crucis on Elk Ridge Mountain. The two bottles of Cascade Blueberry Ale were magical with the pie. Cheers Jack!

 

Can vouch, I had a sales background and I love beer so I got a job as the head sales guy for a brewery. Burnt out after six months. Making $35k a year with zero benefits and working 60+ hours a week was miserable. Not only was I a sales guy, but I delivered beer too, so I put 25,000 miles on my car in those six months, and threw out my back a few times carying 1/2 barrels by myself.

 

That's dedication! I would have lasted a day and a half.

 

The problem with growing a company is the founder essentially becomes the head salesman regardless of what they produce or sell. A successful founder of a brewery who starts off brewing the beer and enjoying his passion will soon have to take over the duties of scaling the company which leaves less time for brewing and in many cases entire delegation of the brewing.

 

The issue that you're describing is an issue of lacking access to capital. Despite the popular mythos in our culture, businesses that successfully scale are able to access capital to expand when appropriate. That means actually hiring the necessary people to do the various necessary jobs well.

Sure, if you're just starting a local brewery with limited or no distribution then your owner/brewer is gonna be the brand ambassador and salesman. But any brewery that's going beyond that and fails for lack of sales team is failing for lack of capital.

 

I think you’re missing what I’m saying. Think about breweries that started because of founders who loved brewing beer. As those companies scaled, the founders who have had to transition from being the brewer and coming up with new recipes vs having to switch to running the business?

 

Ah yeah, I see what you're saying.

I still think the larger issue you're pointing at is access to capital, but that's exacerbated by a founder who is focused solely on the craft vs the business realities. I've started a couple businesses that have failed and I currently run a couple. Access to capital if you aren't promising crazy growth or selling equity is always a challenge. Having/accessing experienced business advice that fits the smaller model and market is another major issue.

Our modern economy just isn't set up to support small business, and this is especially true when the business is capital intensive and low margin. That's why the USDA has begun offering all kinds of low interest loans for small farms, rural food businesses, and other food system players. It's not a very accessible realm, economically

 

If i were to open a new brewery i would try to finance so i could BUY my own building. Thats the way it was in the old days before leasing. Every goddam business space. Least that way if it goes tits up you have the property

 

High costs and low margins. You can only raise prices so much. It's all about the Benjamins.

 

Nobody wants to work for free, or even worse, lose money.

 

I think this would be a huge mistake. I don't know how businesses were started in your granddad's era, financing-wise, but you're right, many business owners did also own the building. Nowadays, making payments on a building, maintenance costs, etc. would be a huge drain on the capital that you need to grow your new business. Renting is the better option, or a rent-to-own arrangement if you can get one.