Bob Nihart of Reads Landing Brewing Co., located in Reads Landing, Minnesota, just north of Wabasha, chose to open a brewpub because of space limitations. He already owned a historic building along the Mississippi River, and a production facility in the small building would be impractical. “My wife and I do a lot of beer tours, and have realized ambiance is key,” he says. “Some are a big empty restaurant space that somebody took over that don’t have atmosphere at all. Even if the beer is good, it feels stale and sterile.”
Nihart says he knew he could offer something unique with a building pushing 150 years of age that’s located a stone’s throw from the river. “Being on the water is a big draw,” he says. “The main reason I ended up here is because I already owned the building. Of course, had the building been in the middle of a field, I don’t think I would have converted that into a brewery/restaurant.”
Reads Landing and Union both use small three-barrel systems; Grand Rounds operates with a seven-barrel system. The small size of these and other such brewpubs means that even if distribution were an option, it would be a challenge. As such, brewpubs tend to feature more limited-edition beers, which increases their draw as a destination for craft beer enthusiasts.
“I think the brewpubs that open don’t expect large growth,” Town Hall’s Rifakes says about the new wave of openings. “Maybe they’re content with that.” He points to Town Hall as an example. He used to be more hands-on with bar work in the early years, but bartending and brewing are hard, physical work—better suited for younger employees. Eventually, he had to adopt a new strategy and bring on more workers. “You hire people that grow with the business,” he explains. “As a brewpub you’re constantly going to be turning over your young guys because they want to grow.”
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With Mike Hoops holding down the head brewer role at Town Hall, Rifakes says there is no place to promote his assistant brewers. That makes retention a problem—one he believes would be solved were he able to distribute; distribution offers more room for internal promotions. The “satellite” system of distribution that allows brewpubs to sell their beer at restaurants owned by the parent company (e.g. Town Hall beers at Town Hall Tap, Fitger’s beers at Burrito Union, Freehouse beers at Groveland Tap) has helped the issue a little, Rifakes says, but it still doesn’t solve the retention issue. Another consideration is that every satellite location requires investments in real estate and kitchen equipment. “It gets costly,” he says. The bottom line? “I think if you’re selling a legal product and there’s demand for that product, you should be able to sell it,” he says.
John Moore of Barley John’s circumvented brewpub restrictions by opening a new production brewery (as a like-named but separate legal entity from the brewpub) in Wisconsin. Moore agrees with Rifakes’ frustration with the dueling models and regulations. “When you have four walls to a restaurant there’s a limit,” he says. “With a brewery, there are only the limitations of your space.”
When Rifakes, Moore, or Tim Nelson—one of the founders of Fitger’s Brewhouse in Duluth—chose to open brewpubs, it was the early 2000s—a different marketplace for Minnesota craft beer. Like Rifakes, Nelson says he’s seen the pendulum swing, but given industry dynamics he refuses to say one is a better business model than the other. Asked what would he open today: “Two years ago, I would have said the taproom, no question,” he says. “But today, as the competition increases, it becomes a question again.”
As for where a brewpub stands in comparison to a production brewery today, Nelson says its the differing definitions and limitations that are most tricky. “It creates a lot of confusion with consumers, that’s the biggest hurdle,” he says.
The lines will continue to blur as the beer scene develops in Minnesota and the state faces more and more people requesting to adjust regulations. Different communities and individuals have different goals and needs, and the fact remains that some people just don’t want to go to a place that only serves beer. “I think there’s room on both sides,” Nelson says. “I think it still is viable, it just depends on what the individual wants to do.”
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