COVID-19 Survival Blog #2 - First Impressions
As promised in our first post, we wanted to start by giving some insight into our initial reaction when 70% of our business disappeared with a few flicks of a couple of governors' pens. And here's roughly how it went:
We had been monitoring the situation over the couple of weeks before the big closures and knew mostly by comparing the traffic at both our Carson pub and our Portland pub to what we would generally expect at this time of the year and by reading the news headlines obsessively that the situation was growing worse, quickly.
In fact, we spent the weekend prior to Jay Inslee's announcement (and Kate Brown's the following day) preparing a Doomsday Plan document just based on the guess that business would fall naturally even without government intervention. More on that Doomsday Plan in the next post, though.
Our business is about 80% pub sales, thanks to two great pubs led by a couple of rockstar GMs and their own core teams of front-of-house and back-of-house leads. We're lucky to have them, and we're thankful every day. The other 20% is brewery distribution in which we sell our beer to bars, restaurants, bottle shops and grocery stores throughout Washington and Oregon.
When the news hit, we had to face the following hard truths:
- Even with takeout still being possible, a huge hit was going to be taken in our pub sales. People are staying home, and ambiance is kind of a big part of what we have going for us.
- Brewery sales were likely to drop. Although this one was a little tougher because we didn't know how much grocery sales were going to pick up. Still, in normal days we're about 60% keg sales and 40% package sales, so it would be tough to make up the drop with anything we would add.
- While the Carson pub had a fighting chance with takeout, especially being a pizza place and our home base, there is so much competition around our Portland pub that it was unlikely to have as decent of to-go sales in this new climate.
- Our costs to keep the lights on during this time were going to outstrip by far any amount of sales we might be able to maintain.
Taking all of those into account, we shed some tears as a family and made the following tough decisions:
- Hourly pub staff at both pubs were laid off and placed on standby for eight weeks. I've heard stories from other breweries (okay, actually only one) claiming that they were proud to say that no one has been laid off during this crisis. I'm proud of them too, but I honestly have no idea how they could do that, unless they have just an amazingly huge rainy day fund. Payroll is the biggest expense in this business, and it doesn't take too many weeks with no sales for your legs to be cut right out from underneath you from payroll costs alone. We held meetings with each pub the first chance we got when we heard the news in both states. We offered them beer and toilet paper, and told them that the hard fact was that this was a step we had to take to make sure they had a place to come back to when this was all over. We also had people on staff to help with enrollment in unemployment.
- Remaining staff took temporary pay cuts. The request that we made to our teams was to take 10%, with the exception of owners and officers, who took 15%. We let them know that we didn't know how long "temporary" would be, but we hope to make it up to them one day and we wanted to make sure they knew that we were right there with them.
- We closed the Portland pub for the duration of the crisis. As I mentioned above, it was too risky to keep it open with so much competition all around.
- We stopped all plans for upcoming brews. This was half smart and half stupid, we later learned. We did end up selling a fair amount of packaged beer, and we ended up having to trash some early generation yeast because of timing issues. More on that in a later post, I'm sure.
- We enacted a quasi spending freeze. Any proposed spending of any amount had to be ran through the CEO, who actively monitored the bank account (again, we're a pretty small company...)
- We suspended services, asked our bank for forbearance, and spoke with our landlords to see if they could defer or abate. Lovely conversations, all of them.
- We paid only necessary accounts payable. We also communicated to our vendors with upcoming past dues that we were pursuing emergency funding and needed to temporarily preserve cash to make sure we survive until it arrives, which leads right into...
- We began hunting for emergency funding. Actually this started about a week prior to the big upset as part of the Doomsday Plan. But like I said, more on that in the next post.
- We started to think of fun stuff to do with no money and a little time on our hands. There was still a crew left over after the standby layoffs, and it seemed like a good time to boost morale and show the community that we're still here and we can still be depended on to be an escape during crazy times, even if we have to get a little creative in how we carry that out. Some fun stuff has already come out of this, and these projects will be broken down in future posts.
And that was everything going through our heads on day one. Long post, I know, but it was a long day.
I'll end this post the way I ended the Portland all staff meeting that week:
"I was hoping to end this on a positive note, but..."