San Francisco craft beer pioneers Magnolia Brewing grew quickly from a Haight Street basement operation into a two-pronged ale empire with the addition of $3 million, 10,000-square-foot Dogpatch brewpub Smokestack, but despite busy restaurants and happy customers, costs have been adding up faster than sales. The Business Times reports that last week owner and local beard icon Dave McLean voluntarily filed for Chapter 11 bankruptcy protection in what that publication describes as a potentially "cautionary tale for growing food and beverage businesses in the Bay Area."
"Our two restaurants are busy, sales are strong, and we're seeing really great growth in our beer distribution. We feel like this is the best course for all of our stakeholders and expect to emerge from this stronger than ever," said McLean. "From an operational perspective, we don't expect anything to change as we continue to brew, serve and distribute our beer, cook the food that we love as much as our guests seem to, and deliver the same experiences that we've always strived to do."
At the time of expansion, 1997-founded Magnolia was worth $3.7 million. Seemingly poised for success in a booming beer market, many others of its ilk — some with admittedly flashier offerings than Magnolia's faithful but milder renderings of British-style bitters — have appeared to crowd the market. Craft brewers, however, are loathe to cite competition with one another, instead insisting on a David v. Goliath narrative pitting them against larger breweries and distributors. That could be changing. "I will say, hands down, that the biggest challenge going forward is going to be a more competitive marketplace," said executive director of the California Craft Brewers Association Tom McCormick.
Magnolia doesn't bottle or can its brews, instead selling growlers at its operations and to select retailers like Bi-Rite and Whole Foods. For now, as it always has been, the brewpub is reliant on its restaurants. But as beer week approaches, boosting sales and visibility, don't expect any immediate changes from McLean and Magnolia. They'll be pouring draughts as usual.
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