Are the days of Sonoma County brewpubs numbered?
For more than 20 years, Sonoma County brewpubs have been a focal point for local beer lovers and out-of-town tourists with the perfect pairing of a pint and a pizza or burger.
But that business strategy has been upended, thanks to rising labor and supply costs and changing consumer habits in a post-pandemic world. It’s a trend happening regionally and across the country.
Today, many brewers are asking if they should continue in the food business and, if so, what should be the new model?
That includes Bear Republic Brewing Co., which will close its Rohnert Park brewpub Dec. 11 and remain vacant through until at least the spring to give president and CEO Richard G. Norgrove time to decide its next step.
The brewpub had already cut back its operating hours and experimented away from the traditional waitstaff model. A slower winter season would put the brewpub in the red, forcing Norgrove to reexamine his hospitality element at the business just south of Roberts Lake Park along the Highway 101 corridor.
“I just don't know how survivable it is under its current format. That's where we needed to make some changes. I mean we're just not making money,” said Norgrove.
Almost 40 employees will be furloughed.
That decision follows Wednesday’s announcement by Third Street Aleworks that it will close its pub and food operation in downtown Santa Rosa as its lease is to expire next year. The 27-year-old brewery will solely focus on production through retail outlets across Northern California.
“This is a decision we hoped we never have to make, but it has been on the horizon for some time,” the owners wrote in a Facebook post.
The news comes after the closures of No Quarter Brewing in Windsor; Steele and Hops in Santa Rosa; and Grav South Brew Co. in Cotati as a result of financial distress from the pandemic. All three breweries featured an on-site food component for its customers.
Breweries make their greatest profit by selling beer on site. They also can distribute it to retail outlets, whether groceries and stores and via draft beer to taprooms and restaurants.
That’s the path Third Street will pursue as its available in local stores and has lined up more distributors to cover the northern part of the state.
“We could try to defer blame to multiple scenarios and events outside our control, but in the end, we have made the decisions that has created the path we are on today. One that is bright for our passion in beer production,” the owners wrote in their Facebook post.
The wholesale business, however, is becoming tougher to crack amid consolidation because preferences are given to bigger brewers who deliver more product.
Bear Republic is a mid-tier brewery that distributes across California and other states from its Cloverdale production facility, giving it an advantage over its smaller rivals.
The changes have presented an existential crisis for many who served food via the traditional restaurant model. Local brewers are asking: “Is it worth serving food given the rising costs, especially as the restaurant industry has been battered since the onset of COVID?”
“Hospitality is constantly changing,” said Bart Watson, chief economist of the Brewers Association, the Colorado-based trade group that represents mostly smaller, independent craft breweries.
A rule of thumb in the restaurant industry is to change your concept after seven years before it gets stale and consumers are attracted elsewhere, Watson added.
There are other options.
Third Street tried leasing out its kitchen to a third-party restaurateur and focus on selling its beer on site before taking the step of closing the brewpub. Crooked Goat Brewing has had success with its location right next to restaurants in its Sebastopol space (Acre Pizza) and its Petaluma location (Acme Burger) for its food options.
Norgrove said he is exploring all options at the brewpub including food trucks. “There's a level of popularity that some of those guys have been able to garner and then they bring their own (customers),” he said.
Another possibility could have an entertainment option, Norgrove said, specifically mentioning Billco's Billiards and Darts in Napa.
“It’s a location where people come and hang out more and the food is just basic pub grub,” he said of Billco.
Watson of the Brewers Association also noted that consumer preference changed during the pandemic as more people relied on food delivery via such apps as DoorDash and Uber Eats while on-site dining was closed.
That trend has continued even as food places reopened, especially for younger customers.
“On the consumer side … we continue as a society to look for convenience,” he said.
Even fan favorite Russian River Brewing Co. is not immune from the market disruption. Its popular Windsor brewpub does not serve food on Monday and Tuesday because it has fewer customers since COVID-19 struck almost three years ago.
“We are going to stay the course, but I wouldn’t be surprised if we had to make some adjustments in the future,” co-owner Natalie Cilurzo said.