A brewpub and a coffee shop in Minnesota’s Twin Cities have used this one-time payment method to save their businesses. And there’s no reason to think the model can’t spread.

 

There is a price tag for unlimited beer for the rest of your life. It’s $1,000.

 

In reality, the cost for that much beer is a lot more. But for a few dozen people, free beer for life is their reward for investing in a small restaurant called Northbound Smokehouse & Brewpub in a quiet southern corner of Minneapolis.

 

Amy Johnson and her two business partners needed to raise $220,000 to secure a bank loan and fulfill their dream of opening a restaurant that served beer brewed right there at the pub. They went to investors who offered to give heavily for a voting share in the restaurant. But since the potential investors had no experience in the restaurant industry, the owners backed away.

 

And then came the idea from some friends and family who wanted to help out. “They were, like, ‘I’ve got a few grand, but I don’t have too much money,’ ” Johnson recalls. “And people kept saying this over and over, and we latched onto the idea. Why not just take a couple grand from everybody and then we’d have all the money we’d need?”

 

So, that’s what they did. People who invested $1,000 receive free in-house beer for the rest of their lives, or as long as the place stays open. People could also receive 0.1 percent nonvoting equity in the company for every $1,000 invested. Or for $5,000, investors get 0.5 percent equity and free in-house beer for life. The brewpub, now a registered LLC, hit its goal of $220,000 through the 46 people who chose the first option, 42 who picked the second, and 30 who took the third, all finding out about the opportunity by word of mouth.

 

Northbound has now been open for almost two years and is thriving. The investors didn’t drink them dry. The restaurant is giving away some 17 beers a day, and the cost is low, at just 40 cents a beer. Plus, investors aren’t just going to the brewpub for a beer by themselves—they order food, bring people, or maybe order a scotch after dinner. For the investors, it’s also about the sense of ownership. Or, as Johnson explains, “We have an army of over 100 people who are our cheerleaders.”

 

One of those cheerleaders is Andy Root, the owner of the building and one of the investors who decided to give $1,000 to the cause of free beer. His simple reasoning: “Hey, if I live nearby and it’s my neighborhood bar, I’m going to pay $1,000, because I’m a beer drinker and show up and drink.”

 

The whole project is a Kickstarter campaign with a twist. Since Kickstarter doesn’t allow alcohol as a reward for investment, it’s basically useless for a restaurant where the greatest allure is in-house beer.

 

It’s also a model that could help wannabe restaurants across the country. It has already been used in neighboring St. Paul by a struggling coffee shop looking for a fresh start.

 

Groundswell is a fitting name for this coffee shop in the Midway neighborhood, which has transformed from being in a space and bleeding cash to now operating in three times the space and earning eight times the daily profit. And it all happened in one year, and all from the support of 75 people willing to give $1,000 on a gamble.

 

To create a complete menu—with food made from scratch, with a beer and wine license—and to take over more of their building, the owners needed to raise $55,000.

 

The coffee shop decided to use the Northbound model, which it saw working for the brewpub, but with its own spin. Instead of unlimited beer for life and equity, Groundswell offered investors $1,000 for one beer, glass of wine, or cup of coffee per day for the rest of their lives. For $500, the deal lasted two years. For $250, the deal lasted a year. The exact Northbound model wouldn’t have worked as well for Groundswell, considering the extra costs for beer in a place that doesn’t make it in-house.

 

“From the business side of it, it was a no-brainer,” co-owner Tim Gilbert says. “When someone comes in to have a beer, they’re probably not just going to have one, they’re probably going to bring friends with them, they’re going to be buying food items with it. Even with a cup of coffee, margins on coffee are high as it is.”

 

Groundswell went from making $200 a day last year to now making $2,400 a day. And that was during Minnesota’s colder months. Since people are leaving hibernation, the coffee shop is opening up its patio, which offers more space, and with it more business. “The corner of Hamlin and Thomas is now alive,” Gilbert says.

 

It’s a model that worked for both of these places, and could work across the country.

 

Like Northbound, Groundswell thrives primarily because of the neighborhood. They are two, small eateries, two blocks from light-rail stops, with investors living in surrounding homes. Before she started Northbound, Johnson used to live in one of those homes in the Midway neighborhood, grabbing coffee at what is now called Groundswell. In just a few years, her idea that built the brewpub would become the prototype that would save the coffee shop she once regularly visited.

 

Source: http://www.citylab.com/

This is a great article sent in by long time reader Husar.

The most popular style of craft beer in the U.S. right now is India Pale Ale. Not only do Americans want hopped-up craft beer in pale and brown ales, they prefer more fragrant, costlier hops.

 

The average price for all hops was $3.59 per pound in 2013, nearly twice as much as in 2004, according to data (PDF) from the Hop Growers of America:

 

Craft beers make up about 8 percent of U.S. sales by volume and tend to use more aroma hops (which give beers their citrus, pine, and other notes) than alpha hops (which lend a bitter flavor). Aroma varieties cost more because of lower yields, says Ann George, executive director of the Hop Growers of America, and the higher demand is luring some growers to remove alpha varieties to grow the aromas. Aroma hops can cost two to as much as seven times more per pound than alpha hop varieties, according to Chris Swersey, technical brewing projects manager at the Brewers Association.

 

Cost has not stopped craft brewers from using higher-priced hops in high concentrations. While the average beer is made with about 0.2 pound of hops per 31 gallons, craft brewers use 1.25 pounds, according to George.

 

Even within the craft industry, the use of hops is now greater than it was in 2009 because of the current IPA boom, Swersey says. Consumers’ desire for hop-heavy craft beers has stabilized, he says, so hops sales now will be driven by volume increases rather than shifts to even more flavorful varieties.

 

As craft continues to rise, U.S. farmers are turning out more aroma hops. The country’s primary hop growing state, Washington, historically had about 70 percent of its acreage in alpha varieties and 30 percent in aroma. During the past few years the ratio has shifted to about 50-50, and the outlook for 2014 is 40 percent alpha to 60 percent aroma.

 

The shift to pricier varieties is helping hop farmers turn profits on a crop that has lost money for years; the industry suffered an oversupply during the recession. George says prices are likely to remain high in the near term to pay for infrastructure improvements to meet craft brewers’ more demanding requirements. An average-sized grower in the Pacific Northwest will be investing upwards of $5 million, she estimates.

 

The change has also led to an increased number of hop farms, many of which are small and supply only local brewers located outside the main growing region in the Northwest. According to the recently released U.S. Agriculture Census (PDF), there were 166 hop farms in 2012 compared to 68 in 2007. Craft beer, it seems, isn’t just luring new brewers and drinkers.

Source: http://www.businessweek.com/

And the tide is starting to turn.  It seems that in Portland craft beer is now outselling Anheuser Busch and MillerCoors.

Craft $$ sales up 16.3% in Portland IRI foodstores yr-to-date thru 3/30 while total beer $$ up 6.8% overall.  Portland mkt off to a very healthy start in 2014. But with craft’s continued outsized growth in its most developed mkt, craft jumped 3.8 share of $$ to 45.8.  Craft now bigger than Anheuser Busch and MillerCoors combined. They are down to 40.6 share of $$ in Portland foodstores. Down another 2.1 share, even tho their $$ sales up 1.5% each here.  MC at 23.7 share of $$ in IRI foodstores, off 1.2, and ABI down to 16.9, lost 0.9 share.

 

Portland mkt is currently tough for all larger suppliers, including craft. Each of top 6 suppliers in city lost share of $$ (in descending order: AB, MC, CBA, Deschutes, Crown and Pabst) and lost 3.9 share collectively.  Craft Brew Alliance off to rough start. Its $$ sales down 13% and it lost 1.4 share of $$ to 6.2.  Deschutes $$ sales up just 0.7% and it lost 0.4 share to 6.1.  Who’s comin’ on? Boston Beer doubled again.  Up 99.8% and gained 1.6 share of $$ to 3.5.  But that’s likely mostly Angry Orchard. Cider mkt in Portland is unbelievable.  At 5 share. Up 73% and gained 2 share.   Wow!  Ninkasi also continues up strong.  Up 25% and gained 0.5 share of $$ to 3.4.  Both Boston and Ninkasi passed Heineken USA in Portland. HUSA $$ down 3% and lost 0.3 share to 2.8.

 

The other big gainer still comin’ on is Ten Barrel, up 131% and gained 1 full share of $$ in Portland to 1.8, almost as big as Diageo there.  So Boston, Ten Barrel and Ninkasi gained 3 share of $$ yr-to-date in Portland supers.  Other larger craft brewers include Bridgeport holding at 2.6 share of $$ and Full Sail, holding at 2.2 share of $$.  The top 7 craft brewers in Portland at 26 share of $$.  New Belgium (up 15.5%), Lagunitas (up 10%) and Sierra (flat) are another almost 5 share of $$.  Those 10 craft brewers each have over 1 share of $$ in Portland. The other fastest-growing craft brewer in volatile Portland mkt: Laurelwood Public House and Brewery, up 133% and gained 0.3 share to 0.6.

Source: http://www.craftbrewnews.net/

Taco Bell is launching a new upscale taco chain.

 

The restaurant, called U.S. Taco Co. and Urban Taproom, will feature a menu of 10 premium tacos, thick-cut fries, milkshakes, craft beer, and wine, according to Nation’s Restaurant News, an industry publication.

 

The first location is set to open in Huntington Beach, Calif., this summer. Taco Bell declined to elaborate on expansion plans.

 

Here are some of the menu items, according to NRN.

• Winner Winner:Southern-style fried chicken breast with South of the Border gravy, roasted corn, pico de gallo, jalapenos, and cilantro in a flour tortilla.
• One-Percenter: Lobster, garlic butter, red cabbage slaw, and pico de gallo on crispy fry bread.
• Brotherly Love: Carne asada steak, grilled peppers and onions, roasted poblano queso, and cotija cheese in a flour tortilla.

The side of fries comes with dipping sauces including “ghost chile ketchup” and “roasted poblano crema.” One of the beer-spiked milkshakes on the menu, called the “Mexican Car Bomb,” has vanilla ice cream, tequila caramel sauce, chocolate flakes, and Guinness.

 

Tacos will be priced at about $4 each, and the average check size is expected to be roughly $12 with a drink.

 

Customers won’t be able to customize their tacos like at Chipotle, but they will be able to watch their food being made.

 

“Most dishes will be prepared in-house, in glass-enclosed kitchens that allow guests to see meat grilling or tacos in the works — though a few ingredients will come from outside suppliers, like the Texas smoked brisket or Southern pulled pork,” NRN reports.

 

The new concept is meant to attract a demographic of higher-income edgy foodies who would never step foot inside a Taco Bell.

 

“We could spend time and money trying to get these people interested in Taco Bell,” but they would probably never become regular customers, Taco Bell CEO Greg Creed told Ad Age. “We thought, maybe there’s a new brand we can create to address this opportunity.”

Source: http://money.msn.com/