Now that bars, restaurant dining rooms and other businesses are closed across Texas, their survival is in question — they still have to pay rent and taxes, among other expenses, while making far less than their usual revenue, if any at all. They face the possibility of permanent closure.
Breweries are in a similar position, and not just in Texas. A survey by the Brewers Association found that 98.9% of responding craft breweries from across the U.S. have already begun to feel the effects of the coronavirus pandemic on their small businesses.
"I think this is the biggest challenge to the American craft brewing industry since Prohibition," said Caroline Wallace, deputy director of the Texas Craft Brewers Guild. "There will be a devastating economic impact."
So far, many Austin breweries have decided to counter the loss of taproom sales — which, in some cases, supply a bulk of their revenue — by at least offering carryout beers. The ones that serve food can sell that to go, too. Still, owners fret that it’s not enough, and many have already laid off employees and taken other measures to shore up costs.
One of the breweries that has not let workers go yet is Austin Beerworks. Co-owner Michael Graham said the money from to-go sales going forward will be directed to payroll and employee health insurance.
These sales last week exceeded expectations. People could order and pay online, stop by the front parking lot for curbside pickup and have their beers handed over by employees wearing gloves. But Graham worries to-go sales will be a temporary success.
"I think we're cashing in on a lot of goodwill, and people are going out of their way to support local right now, just because (what’s happening) is so novel and fresh and new, and I don't think that's a sustained sale," he said.
On Sept. 1, Texas manufacturing breweries like Austin Beerworks were able to sell beers to go from their taprooms for the first time after a change in state law. (People can buy up to a case of beer per day.) Since then, Graham said, take-home beers have been 20% of total taproom sales.
Although the North Austin brewery sells only about 5% of its total volume in the taproom, on-site sales — including cans and crowlers for off-site consumption and merchandise — nonetheless supply 15 to 20% of Austin Beerworks’ revenue. Graham and the other co-owners are aware of the hit they’re taking, though they may be able to weather the current economic storm in a way that perhaps less financially secure businesses can’t.
"By all metrics, we've been able to be a successful brewery," he said. "I think we're in a better position than most to survive it, but it's still a tight, scary situation."
Austin Beerworks is prominent on local store shelves and on bar and restaurant menus. (At the moment, only the store shelves are accessible.) But brewpubs that are more taproom-focused — such as Jester King, the Brewer’s Table and newly arrived Hopsquad — will see their sales curtailed significantly, Texas Craft Brewers Guild executive director Charles Vallhonrat said.
The guild is already working behind the scenes, as it did last year to legalize beer-to-go sales, to help out its member breweries until they can reopen. Gov. Greg Abbott has mandated all bars and restaurants shut down statewide until April 3; Austin’s restrictions go until May 1.
Among the measures the guild hopes to see, Vallhonrat said, are excise tax suspension and an excise tax credit for dumped inventory. (All breweries must pay an excise tax, as well as a sales tax.) The most crucial thing that Texas officials can do, according to the guild, is to agree to let breweries temporarily deliver and ship their beers.
On Friday, the Texas Craft Brewers Guild created a petition in support of delivery and shipping as an option for the more than 360 breweries in the state with shut-down taprooms. There were 10,660 signatures on the virtual petition as of Monday morning.
Without those changes, industry members say, some breweries may not reopen in May or will close for good later this year.
Jester King was among the breweries that laid off staff last week. In a personal statement co-owner Jeff Stuffings made on the Hill Country brewery’s blog, he noted that on-site sales make up 77% of Jester King’s revenue — which is, "for now, a severe detriment."
"Rather than trying to grow our business by increasing our beer production volume year over year, we’ve chosen to grow the on-site experience by purchasing land and adding a restaurant, farm, inn, and private event hall," he wrote. "What was designed to diversify our business and make it more immune from the intense competition of off-site retail and distribution is, for now at least, making us highly susceptible."
He noted in the blog post published March 17 that "our insurance company has denied coverage citing that our buildings are still intact. Our bank has not indicated whether they will attempt to foreclose on us or grant us relief."
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Like Austin Beerworks and most other local breweries, Jester King is offering beer to go, as well as pizza and other food items, during temporary new hours. Stuffings believes revenue from these sales will recoup only a small amount of what the brewery’s already lost.
The Brewer’s Table in East Austin tried a to-go only model last week, selling a limited food menu, crowler fills of beer and bottles of wine. Founder Jake Maddux laid off his entire front-of-house staff and half of the kitchen staff and worked with the employees still on payroll to box up meals for customers.
"We are on the edge of disaster," he said. "I’m just hoping something happens that helps us survive. Hopefully, we can get some sort of relief on our mixed beverage taxes, which would be very helpful."
His brewpub is one of three in Austin, along with North by Northwest and Central Machine Works, that has the mixed beverage license to sell cocktails, according to Wallace — and a tax that goes along with it. Bar owners such as Jessica Sanders of Drink Well have also been asking for Texas officials to ease up on the tax temporarily.
Sunday became the Brewer’s Table’s final day of food service. Maddux announced that afternoon that he is now the only one remaining on-site to offer crowler and growler fills and keg sales.
There was good news for at least one local brewery, however. Though keg sales "have gone pretty much to zero," Graham said, last week was the biggest week of sales for Austin Beerworks and its colorful cans at grocery and convenience stores. "Taproom sales are down overall, but to-go sales have way exceeded expectations."
Maddux sees another small silver lining that is harder to quantify but gives him hope.
"This sucks for everyone," he said. "The fact that we're all in the exact same situation, and that might be the only comforting aspect of this whole mess. We realize, now more than ever, that we're all connected and we're all one community. Our industry provides such a value to society and always has. We provide food, drink, company and community."