Brewpub popularity hops across the US

Nation's Restaurant News, August 28, 1995 by Carolyn Walkup

While house-brewed draft beer was once a curiosity offered by only a handful of pioneering restaurateurs, the brewpub craze today is barreling across the country -- and even pumping up some excitement on Wall Street.

More than 100 brewpubs opened in the United States between September 1994 and June 1995, increasing the total to 417, according to statistics compiled by The Institute for Brewing Studies in Denver. That compares to 241 open in January 1994.

While the Pacific Northwest and Colorado have led the brewpub push, other regions that have lagged behind are starting to catch up. The Southeast, Midwest, Northeast and Texas are seeing considerable numbers of openings.

"We're a beer-drinking nation, not a wine-drinking nation," asserted Thomas Dall-dorf of Celebrator Brew News, a regional microbrewery newspaper in Hayward, Calif. "We have an audience in the millions who already know how to drink beer and are raising their sights to quality craft beer. I think there is a tremendous opportunity for growth."

Opportunity is especially growing in those states that most recently changed laws to allow brewpubs -- Georgia and South Carolina. "We are just now coming out of the stone ages with regard to alcohol," said Peter Finazzo, owner of The Chicago Brewpub in Greenville, S.C., and president of the South Carolina Restaurant Association.

Still not allowed to serve alcohol on Sundays, Finazzo, who also owns Peter David's fine-dining restaurant, was the first to open a brewpub in upstate South Carolina last March. Public response to his operation has been enthusiastic in this fast-growing region, he said.

Several operators have contracts to open brewpubs in Georgia, including Hops Grill & Bar, a 13-unit Tampa-based company that claims to be the largest chain of brewpubs under the same name. Hops expects to have four or five more units open by spring next year, according to chief executive David Mason.

Since Hops is in the process of pursuing an initial public offering, Mason would not speculate on long-range expansion plans. All 13 existing brewpubs are located in Florida, a state that had 27 brewpubs as of last May.

Big River Grille & Brewing Works, which operates two brewpubs in Chattanooga and Nashville, Tenn., also has targeted Southeastern states, from Virginia to Florida, for expansion. Big River, which also hopes to go public, just landed a brewpub contract with Walt Disney World.

"I think people are hunting for alternatives to casual-theme restaurants," said Tim Hennen, Big River president. "People want to be entertained more."

The Disney project is scheduled to open next summer on the Boardwalk, a $200 million waterfront resort and entertainment district being developed on Crescent Lake in the Epcot Center area. That brewpub will be double the size of the Chattanooga unit, which seats 230.

Total revenue of $3.5 million in Chattanooga represented a 9-percent increase over the year-ago figure, Hennen explained. Sales in the Nashville unit, which has 310 seats, are running about $4 million.

So far, Big River's financing has come from bank loans and "a lot of partners," Hennen said. Cash flow from the first two will pay for building the third.

Countless other investors around the country are putting their money on the growing popularity of craft-brewed beer. Sales of about 2.5 million barrels in 1994 reflected a 50-percent increase over 1993 production, according to the Institute of Brewing Studies.

Market share of total U.S. beer sales in 1994 was 1.3 percent for craft-brewed beer, up from 0.9 percent in 1993. Mass-produced 1994 domestic beer sales decreased 0.06 percent from 1993 volume.

"If people are going to drink less, they want better quality," said Thomas Moxcey, president of Denver-based Rock Bottom Brewery. "You can look at corollaries in wine and coffee."

With seven brewpubs open and per-unit average sales of about $3.2 million, Rock Bottom intends to open three more this year in Chicago; Cleveland; and Kansas City, Mo.

Not to be outdone on its home turf, Chicago's Goose Island Brewery, which opened in 1988, is building a second microbrewery with an attached restaurant near the United Center, home stadium of the Chicago Bulls and Blackhawks. "Chicago has lagged behind. We have been the only one in Chicago for the last three years," said John Hall, Goose Island owner, who said that five brewpubs are operating in the suburbs.

"It's more difficult to set up shop in Chicago. Rock Bottom is one of the few real professional people to do it. You can't get into Chicago on a small budget," Hall added.

Goose Island's beers are known by beer drinkers who have never been to the brewpub because they are distributed to about 130 Chicago-area restaurants and bars. The new location will have a bottling plant, making it a microbrewery.

In suburban Aurora, Ill., former Chicago Bears football great Walter Payton is heading a brewpub and microbrewery development. One of the beers is likely to be named Payton Pilsner.

Elsewhere in the Midwest, which had many small breweries in the last century that were operated primarily by German immigrants, brewpubs are making a strong comeback. At least 15 brewers have applied for brewpub licenses this year in Michigan alone, according to Harry Kourelis of Great Baraboo Brewing Co. in unincorporated Clinton Township near Detroit.