My Faith in Localism

Today our Governor announced Phase 1 of reopening to roll out on May 1. This doesn’t include bars (or tap rooms), but those are expected to be allowed to reopen in mid-May, so long as this pesky curve doesn’t unflatten itself. So we’re still weeks out from legally being allowed to operate a tap room. And, even when we get the legal go-ahead (which will come with plenty of caveats and conditions like reducing occupancy, etc.), it’s still up to us (and our staff, and, to some extent, our customers) to decide when the right time is and how to do it appropriately.

Even once we’ve opened, I have no illusion that things will be very different. Plenty of people will decide to stay home to drink their beer, and those who do go out will do so less often and with more caution. Even once bars and restaurants are allowed to run at full occupancy, a crowded bar will be an unacceptable risk to many patrons (and some bar owners / employees). Even once COVID is fully behind us, a lasting impression will be left in the form of a hyper-awareness of personal space and an internalization of possible germ spread (handshakes will be even more awkward). Even if there’s no imposed capacity limitation, there will be a natural one.

And that capacity limitation will have a pronounced impact on our business. In a typical week, the busiest 4-6 hour period (Saturday afternoon, usually) might account for 25-40% of the entire week’s sales. This is the time where we pay rent and pay ourselves. This is the time when tipped employees hustle and make 3x what they make during “normal” hours.

And that’s during a normal week – in a typical year, there are a handful of big events like our anniversary party, where we’ll staff up and pull more in a day than the ten days before that combined. These peaks have been where our tap room really thrives, and I suspect every other bar and restaurant (including the accounts we sell to) will tell a similar story. With these peaks diminishing, I’m not optimistic about our sales volume recovering to previous levels any time soon, and I worry about the hospitality industry in general.

There’s also potential for a second wave of this Coronavirus to make its rounds, reinforcing the notion that we cannot get away from this scourge so easily. Add in a few high-profile lawsuits of businesses getting sued into oblivion for aiding the spread of the virus and thus killing grandma, and you’ve got the recipe for hospitality doom.

But look at all of the beer-to-go! If people are still drinking beer, but just doing so at home more often, why not “lean in” to the moment and “pivot” toward a heavier emphasis on beer-to-go? We certainly will be doing this to an extent. We’ll probably re-start our beer-to-go / curbside shop before opening the tap room, and we’ll continue to improve our packaged offerings. However, we built this business around a customer experience of drinking beer at the brewery, and it’s a huge competitive advantage we have over, say, a grocery store. Compare that can in your fridge to a beer poured directly from the brewery tank into a pristine glass designed for the beer and served to you by a knowledgeable, friendly, passionate Houstonian; and you’re enjoying it in a unique setting – the only one we’ve ever designed (and one that we pay rent for). The entire experience is curated and quality-controlled, and that’s a major point of differentiation.

With packaged beer, sure, we can differentiate on quality. We’re very proud of the flavor and freshness of our packaged beer and would put it up against the best; but is that enough to justify 2 or 3x the going grocery store rate – a price set by breweries with 1000x our capacity? Meanwhile, we’re paying rent on a retail space that’s 20x bigger than it ought to be for a beer-to-go shop. While beer-to-go can help mitigate damage, particularly in the short-run, it is not the panacea for tap rooms and bars, and I would suspect there’s a parallel story with restaurants and their to-go sales, too.

Our mindset today is still “wait and see”. We’re not furiously scribbling together a reopening plan, because we have no idea what tomorrow’s business environment will be. Instead, we’re attempting to keep our balance sheet in good order, keep our options open and our heads clear, and maintain our place in the community. As I mentioned previously, we’re fortunate to have zero debt. We’ve had to furlough our entire staff, but many of them have successfully filed for unemployment benefits and we’re keeping in touch.

We are in hibernation, except we’re selling a small amount of beer through a delivery program. This is beer that we had already produced and it’s being kept fresh in brite tanks, and we’re filling cans to order and delivering them one day per week. In order to keep this one-man operation manageable, we limit the number of orders, and thus we’ve been selling out each week’s bounty rather quickly. The amount of beer we sell through this program is tiny, and the means of fulfillment and delivery is highly inefficient – the business owner is driving across town and coordinating with a customer to get through their apartment complex to deliver 3 cans of beer that he filled and labeled by hand. It’s hardly a way to sustain a business, and if we had to actually brew more beer to support this program, or if we had to deal with normal traffic on the roads, it would be entirely uneconomic. Oh, and it’s currently illegal for breweries to deliver beer to individuals in Texas. So, there are multiple reasons why this may run out of steam at any time.

But while it lasts, it’s a great little program. Of course, it benefits the business by allowing us to maintain relationships within our community, and it helps us pay rent. What I didn’t anticipate was how much I would personally enjoy it. It had been a couple years since I last worked the bar – since I last had the joy of making people happy by serving them beer. And, even though our deliveries have been socially distant and accompanied by masks and gloves, I can still see their faces light up when they open the door. It’s Friday afternoon and they just received fresh beer from their local brewery on their doorstep! How freaking awesome is that?

In the four weeks we’ve been running this program, I’ve actually gotten to know some of our regulars better. I now know where they live – it’s a new level of intimacy that might make us uncomfortable if not for the extreme circumstances of today. We talk and text to coordinate deliveries. We chit chat about quarantine life and dream about enjoying a beer in the tap room again one day, pretending that it might be soon. One customer gives us a special beer from their fridge each week. Last week, someone came down to get their beer in their HOLLER FOR HOUSTON, HOLLER FOR BEER shirt and posed for the camera. Another customer left a printed sign on their door saying “HOLLER FOR FRIDAY BEER DELIVERY!” In spite of quarantine and social distance (or maybe because of it), we’re making meaningful connections with one another.

Such a connection does not happen with an Amazon purchase, a supermarket run, or a Netflix binge-watching session. These transactions, irresistible as they are at times, are sterile and one-sided. The companies on the other side of them are massive abstractions from genuine human beings. They’re a black box with complicated machinery inside, and you’re not expected to know or care how the product got to you or who made it or where your money is going. The feedback loop is limited to a star-review process or a call center. The products themselves are made to ultra-tight specifications designed for the median of some demographic and tested by marketing agencies and focus groups. The money you spend goes into the black box, where it’s dispersed among managers, bankers, lawyers, accountants, HR departments, marketing professionals, lobbyists, government agencies, thousands or millions of investors, and perhaps a trickle of it going to the people who actually rendered the product or service, wherever they may be, if they even exist. This, we’ve been led to believe, is a how an efficient marketplace serves us as consumers. Or could it be that the consumers are serving the marketplace?

Last week, for the first time, we drove out to the country to buy farm fresh eggs. We found someone on Craigslist selling them for $3 per dozen. It was a 60-mile trip each way to Shepherd, TX, but there were several factors in favor of the trip: cheap gas, no traffic, free time, social distancing, and the current going rate for eggs at the grocery store is $7 (if you could get them). To economize on the trip, we bought 15 dozen eggs. The deal went down in a parking lot. We met Linda and chatted about how her “business” is booming. She has 300 chickens going, and 300 more on the way to meet demand. The eggs are laid in their yard where the chickens roam around and eat vegetables. They’re fed no antibiotics or hormones or cable news. The eggs are different colors and sizes, but all super fresh and delicious. Upon our return to Houston, we disseminated the cartons of eggs to our neighbors and friends except for a couple that we now have in our fridge.

When I eat these eggs, I feel good. Not just because of the superfood status of the incredible edible egg, not just because of the delicious flavor and luscious texture of that yolk, but because I am, in some small way, circumventing that black box of an overly-optimized, inhuman supply chain in favor of direct, personal commerce. In this case, we might have saved some money ($3 vs $7 per dozen), but I would gladly pay more (to some extent), given that I’m making a meaningful connection with someone in a neighboring community, and then I’m making connections with my neighbors by sharing the bounty. Given the richness of this experience, buying eggs at the supermarket doesn’t compare.

Now I know what some of you are thinking: How insanely ironic is this act of using modern mass-produced technology to espouse localism? Indeed, the computer I’m typing on was not locally produced by an artisan, nor were any of the servers on which we’re relying to convey this information. Even the buying of those local eggs couldn’t have happened without a host of modern products brought-to-you by the faceless global market – we used Craigslist to make the connection, Google Maps to navigate to the meetup, and Zelle to make the payment. Not to mention the cheap gas – available thanks to the cooperation of millions of people in a global marketplace that is truly marvelous.

But we don’t have to choose between going entirely off-grid on the one hand and mindless consumerism on the other. To value localism for its own sake means to inject more conscious thought into what we consume, who we transact with, and the chain of consequences from those transactions, particularly the consequences for my own community. It means embracing, or at least exploring, alternatives to the cheapest, safest, most convenient options to which we normally default.

Localism is nothing new, but COVID has given it a renewed emphasis. In today’s economic climate, I’m assuming that every business’s survival is at stake. While I’ve always known there are consequences to my consumer decisions, today those consequences are top of mind. If we’re venturing out and spending money to get take-out, we’re doing so to benefit small, owner-operated outfits – those personal businesses to which we can form a meaningful connection. To even think about giving my money, instead, to a chain restaurant backed by some private equity firm or public company, is out of the question.

And I know I’m not alone in this. Sure, there are plenty of people in the fast food drive thru lines right now. Sure, Mayor Turner himself proudly posted a picture of himself getting lunch for his team from Chili’s, rather than one of the hundreds of local businesses within a couple miles. However, the very fact that those hundreds of local businesses have survived this long (5+ weeks) on to-go sales alone indicates that a lot of our neighbors are stepping up to support local.

We went around town last week to pick up empty kegs from accounts and refund their keg deposits, and were surprised that many of them wanted us to sell them more beer (we happily did). These local spots have become neighborhood supply stations of beer-to-go, and they wanted more local beer on their menus. One of the bar owners told me, “We want to be hyperlocal right now”.

I’m optimistic that this attitude and behavior will remain after COVID leaves us. Linda’s egg operation will continue to get my business and I suspect she’s converted a lot of people to directly purchasing yard eggs, even after the store shelves are replenished. Once you go in that direction, it’s hard to reverse. Why would I want to put my money in the black box when I could put it in the hands of a neighbor?

A long-lasting boost in localism would be great for our business and for many of the businesses and neighbors we care about, and it will be necessary to combat the severe headwinds that face us. Aside from the disease and its social implications, there may be a massive economic depression on the horizon. Today, most of the people buying beer and food to-go still have jobs. Many are white-collar folks working-from-home and earning the same paycheck they had a couple months ago. Their 401K has barely suffered, thanks to the Fed propping up the stock market by mortgaging our future. But we’ve now got 26 million people unemployed in the U.S., and the price of oil – something quite important for Houston’s economy – is currently at a 22 year low (adjusted for inflation, it’s at a 74-year-low). Might this foretell a threat to the livelihoods of some of our customers? And what would that mean for us, then? 

Pontificating and predicting have become serious pastimes for lots of pundits, blue-checks, bloggers, and other armchair epidemiologists, and I too am guilty from time to time. It’s hard to resist, given the non-stop flow of new, groundbreaking information on this virus and its impacts. And it’s prudent to develop contingency plans and update them as new information comes to light. But, right now, for us, there’s just too much unknown-ness out there to make any useful prediction or plan. Since I don’t know how this virus / shutdown will impact our employees, our operations, our customers, our accounts, and our business environment, I don’t know when we’ll open, how we’ll open, or what it will be like when we’re open. For now, I have to settle for taking it day by day. Fortunately, I do have faith. I have faith in our ability to serve our neighbors, in our ability to work with others, and our community’s ability to come back from this, however long it takes. Today, more than ever, I have faith in localism.

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