As Sales Signal Rebound, Arkansas Brewers Discuss Lessons Learned

The evidence is anecdotal, but brewers interviewed by Arkansas Business last week said business is generally looking good, trending up even from 2019, the last pre-pandemic year.

They also shared what they’ve learned in the last 16 months, since March, when Gov. Asa Hutchinson declared a COVID-19 emergency and ordered restaurants and bars in Arkansas to close their dining rooms, a move that greatly curtailed the customer traffic that many craft beer brewers derive from their taprooms. Chief among those lessons: Pay people more and look out for your staff; the federal government’s Paycheck Protection Program was a lifesaver for some businesses; bolster takeout and delivery orders by making ordering online easier; and pay attention to cash flow.

The owners and executives of Bike Rack Brewing of Bentonville tried to find “the silver lining in what COVID offered,” said CEO Bradley Riggs. “It really allowed us to explore our business from the inside out and say, ‘What’s working? What’s not working?’” he said. “Our company is stronger because of it.”

This self-examination has led the company to take big steps in the quality of its product, branding and marketing, Riggs said. “All of that has been re-examined and I think it’s been strengthened in the last year.”

Bike Rack’s big steps have included a merger with Hawk Moth Brewery & Beer Parlor of Rogers, which Riggs founded, a merger that became official in January. In addition, the brewery is providing the beer to Hissho Sushi & Craft Beer Bar, which has opened a location in the former McDonald’s in the Walmart supercenter on South Pleasant Crossing Boulevard in Rogers.

As for revenue, “I know that we’re going to exceed last year’s total revenue,” Riggs said. “We’re trying to get as close to 2019 numbers as possible, even if we do a little bit less barrelage, kind of getting a little more creative and efficient in how we’re getting our revenue, based on our split of what’s in draft, what’s in package.”

In the first six months of 2021, Bike Rack’s revenue is approaching that of all of 2020, he said. The second quarter of this year “was one of our better quarters ever,” Riggs said.

Nationwide, craft brewer volume sales were down 9% in 2020, according to the Brewers Association. Retail dollar sales of craft beer dropped 22%, to $22.2 billion, the association said. The dollar sales decline was greater than the volume sales drop because beer volume moved from bars and restaurants to packaged sales.

Production figures for Arkansas from the state, whose deadline for reporting is June 30, were not available as of deadline.

Although not restricted to craft brews, beer excise tax receipts in Arkansas for the first four months of 2021 signal continued strong sales.

‘We Definitely Raised Wages’

At Lost Forty Brewing of Little Rock, the state’s largest brewery, beer sales this year appear to be flat compared with 2019 or 2020, said John Beachboard, a co-owner of the business. That’s because big events, such as concerts at Simmons Bank Arena in North Little Rock, where a lot of Lost Forty products are sold, are only now resuming. “That’s a big chunk of sales,” he said.

In terms of the restaurant at Lost Forty, “We’ve seen a lot of demand, even compared to 2019, just for getting back out and getting into the world. The taproom at Lost Forty has been doing similar revenue to 2019, if not up a little bit.”

Rose Schweikhart, owner of Superior Bathhouse Brewery in Hot Springs, said 2020 revenue was down about 21% compared with 2019, while this year it has rebounded “significantly,” up 40% compared with pre-pandemic 2019.

“We’re really lucky in Hot Springs because we’ve really positioned ourselves as a destination for people who live within driving distance — Dallas, Tulsa, St. Louis, Memphis,” she said. “I think that’s really helping us right now because people are not ready to fly yet or it’s gotten hard to fly or people are on a budget, so Hot Springs is attracting people who are within an eight-hour radius by car. We’re busier than ever, at the moment.”

At the beginning of the crisis, Schweikhart laid off almost her entire staff. By Labor Day last year, most of them had been hired back. And now, it’s hard to find workers. “It’s definitely a challenge,” she said. “We definitely raised wages pretty significantly since 2019.”

Schweikhart has raised wages for a starting worker, such as a dishwasher, from the state’s minimum wage of $11 an hour to $13 or $13.50 an hour. In addition, she has given “quite a few pay raises, retention bonuses, that kind of thing, trying to be a great place to work because there’s a lot of competition right now.”

Beachboard said that even before the labor market grew so tight, “we started raising hourly and salary pay, just as a thank-you to all of our employees that were working through the pandemic.” Lost Forty, too, has raised the starting minimum wage to $13 an hour.

‘A Really Big Help’

Riggs, of Bike Rack Brewing, said his business received a couple of PPP loans. “That made for a really big help,” he said. Once the federal government figured out the logistics of the first PPP outlay, forgivable loans designed to help businesses retain employees, “all the next waves were pretty well-organized,” he said. “Anytime it felt like it was getting a little too tight, that’s about when that next round would show up, from the state or on a federal level. That’s been really awesome.

“There is a strong understanding as to how important small businesses are, and a lot of people doubled down and kind of put their money where their mouth was in making sure that we’re all still here,” Riggs said.

“Paying attention to safety first was one of the biggest things that helped us not only in terms of people’s health, both customers and employees, but also in terms of a market perception,” Beachboard, of Lost Forty, said. “That was No. 1 in what helped us survive the pandemic.”

No. 2, he said, was the business’ development of its online ordering system. Lost Forty is part of the Yellow Rocket restaurant group, which includes the restaurants Big Orange, Local Lime, Zaza and Heights Taco & Tamale. “I think pivoting not just to to-go orders, but pivoting to a more modern web-based approach to to-go orders — I think it’s actually going to help us long term. I think it’s one of the reasons why our to-go orders have grown so much,” Beachboard said.

Schweikhart said she has always emphasized having a good understanding of cash flow, debt-to-income ratios and performance measures. The pandemic taught her that that was, indeed, a good strategy. “I learned that being a cash-flow hawk is a great thing to prepare for an unforeseen circumstance, like a pandemic hitting,” she said.

Ultimately, Schweikhart said, she adopted the mantra of “I didn’t cause the pandemic and I can’t fix it, so I just need to make sure to take care of the people around me and myself, and hopefully the business will emerge back out of this stronger than ever.”