Jeff Joliat, co-founder and owner of Shale Brewing Co., had been reluctant to reopen his North Canton taproom since closing in March amid the pandemic-prompted business shutdown. But he has reached a point now where he can't afford not to — even if that means doing but a fraction of the business he was used to.
Joliat, who signed a lease before the pandemic for a second location in the Oakwood Square Plaza in Plain Township — where Royal Docks Brewing Co. also recently opened a taproom — intends to reopen his flagship taproom July 9 at roughly half capacity. The new location is slated to open in September.
"For us, it's a matter of I need to get reopened and get going," said Joliat, who's so far opted to stay closed and has forgone carryout or delivery options because of the health risks and logistical challenges, combined with skepticism there'd be enough customers to make it worthwhile. "We just can't afford to be closed."
Breweries in Ohio's once-bustling craft beer industry were enjoying steady growth before the outbreak hit. The state was trending toward 400 independent craft breweries in operation for pre-pandemic 2020, easily the most for the Buckeye State since the repeal of prohibition.
But craft brewers, like most industries, are in a much different position today than they were several months ago, one that's eating into revenues and raising concerns for future viability as the pandemic drags on, stimulus funds wind down and cash flows slow.
It's still too soon to tell what the total impact of COVID-19 will be on Ohio's brewing industry. There are still 346 active craft brewery permits today. And Justin Hemminger, deputy director of the Ohio Craft Brewers Association, said that there have been just four known permanent craft brewery closures in Ohio in the past few months, with 10 new permits issued in the same timeframe.
However, the industry at-large faces a precarious situation, one that looks worse the longer the pandemic drags on. Worse still could be another shutdown of businesses if coronavirus cases continue to rise, something that's already playing out in other states like Texas and New Jersey.
Many breweries reopened facilities to the public when allowed at the end of May — provided they adhere to the state's COVID-19 guidelines. Other operators, like Joliat, have been biding their time, waiting to see if the risks and costs of reopening could be worth it.
Those with small spaces might find it hard to operate effectively under the state's COVID-19 rules. Outdoor tables can only replace so many seats lost inside.
The upfront costs for personal protective equipment, cleaning supplies, plastic barriers and restocking kitchens is burdensome for these small businesses reaching for income, many of which are already managing debt supporting previously announced expansion plans or bridging revenue shortfalls.
"Losing two months or more of on-premises sales — a revenue stream that most small breweries had based their business models upon — is a massive hit to the bottom line," Hemminger said. "Revenues for the summer months are likely to be down as people are exercising caution returning to public spaces. Businesses are doing whatever they can to protect their employees and customers with social distancing and sanitation practices, but all these measures bring additional costs to bear."
For those who choose to serve the public, there's no guarantee customer traffic will be there.
"It's not always a case of something is better than nothing. There are operating costs. We have a large facility," Joliat said. "If I crank on the AC and have 30 people coming in, I might be operating for the sole purpose of paying the electric bill."
"If you build it, they will come," Joliat said. "That's what we hope at least."
For those who have reopened, business is a mixed bag. Customer traffic can be unpredictable. And even those who have filled seats are still bringing in less than they were used to with a full, unsocially distanced house.
Cleveland's Noble Beast Brewing Co. was doing well with takeout until restaurants were permitted to reopen, at which point that "revenue driver just fell of a cliff," said owner Shaun Yasaki.
"So we were losing money for a couple weeks, and it was pretty stressful," he said, noting his brewery was also forced to close for curfews imposed by the city in the wake of Black Lives Matter protests.
Now the taproom is operating at roughly 50% capacity.
"What we're doing right now, it's enough to scrape by," Yasaki said.
Great Lakes Brewing Co. CEO Mark King said it's been very difficult to plan out the business for the rest of the year.
The Ohio City brewery will benefit from additional outdoor seating with Market Avenue shut down, and business, since reopening a few weeks back, has picked up, King said. But it's crap shoot on which days are busy. The former predictability of customer traffic isn't there, which makes staffing more challenging at a time when margins are already tight.
King's 2020 forecast for GLBC expects for about half as much revenue as normal for the foreseeable future. Even with strong off-premise sales, that can't replace the higher-margin sales being lost at the taproom, which is about half as full as it would normally be. About 35% of the GLBC business was in on-site sales last year.
"It's really tough, at 50% capacity, for any restaurant to make money," King said.
Sam McNulty reopened Market Garden Brewery July 1 and plans for Nano Brew to reopen July 14. He's hopeful expanded outdoor seating in parking lanes on West 25th Street will help offset lost seating inside.
Ever-optimistic about the business, and with little debt, McNulty is feeling good about future prospects. If these reopenings go well, they could be followed by the reopening of McNulty's Bier Markt and Bar Cento. But the future is anything but certain.
"We are certainly under financial pressure to reopen," McNulty said, noting how he opted to stay closed longer because of concerns over health and safety for staff and patrons and a generally different customer experience.
There is a sense among some that if customers are going to some establishments, then others should get a piece of that.
"The world has changed enough where I think it's a good time to open," McNulty said. "I think a lot of us have tested positive for cabin fever, and I think a lot of people want to get back to work and a little bit of play."
He said his properties will be strictly enforcing social distancing among customers and is taking the COVID-19 guidelines seriously. If others choose not to, he said, it puts others at risk and could lead to another business shutdown that could be financially devastating.
"We've all read about certain local establishments that are not only disregarding all these requirements, risking their employees' and their guests' health. Those scofflaws put the entire industry at risk if, gods forbid, there is a super-spreader event and a dramatic spike in cases due to that flagrant disregard for the CDC guidelines," McNulty said. "My only concern is if a few bad actors ruin it for the entire industry, and we have to close back down."
Some efforts playing out in the Ohio Legislature could help struggling brewers, including House bills 669 and 674.
The former allows a brewery, bar or restaurant to expand their permit premises onto adjoining property with permission from the property owner. This would allow for more seating capacity with social distancing in mind. The latter would make it easier for municipalities to implement or expand designated outdoor refreshment areas (DORAs) to allow people to consume alcohol in defined outdoor spaces. It could also permit bars to serve alcohol until 4 a.m. — of brewers listed in this piece, most were underwhelmed by that, with only McNulty indicating he might take advantage of that option.
Twenty-eight municipalities in Ohio have created DORAs to date, and they have proven to help grow local economies and can be an effective option to encourage social distancing, according to the OCBA, which is encouraging state senators to approve the bills as soon as possible.
That ability to create a DORA without approval from local governing bodies is something Collin Castore of Seventh Son Brewing in Columbus is yearning for after being snubbed by the city when applying to expand outdoor drinking areas to parking lots.
In an email shared with Crain's, Edward Johnson, director of public health policy for Columbus, told Castore the city, "including input from the Mayor's Office, Building and Zoning Services, Division of Fire, Department of Public Service and Public Health," has "decided that temporary expansions are not allowed in the city."
The passage of HB 674 would enable Castore, who is frustrated with the city, and others to expand outdoor seating under proper conditions but without city approvals.
With every dollar mattering more than ever, everything to help save costs counts, said Joliat, who would like to see the elimination of the $50 registration fee with the state for new beers. For microbreweries making a wide variety of new and one-off batches to attract customers, that adds up. Joliat said he paid about $2,500 in fees last year.
In Cleveland, brewers like Yasaki would like to see the suspension or elimination of the sin tax, which pays for sports facilities that, he points out, aren't even open right now.
For brewers like Castore, operating today is a matter of survival.
"I think myself, and most others included, are just trying to keep heads above water for the next five to six months," Castore said, "and hopefully things change a little bit in that time. It's hard to see what happens with surges or spikes or vaccines or treatments. And that makes it hard to tell what the end of the year could be like."
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