Source Lunch with … Sam McNulty, co-founder and owner, Market Garden Brewery

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As co-founder and owner of Market Garden Brewery and several other enterprises clustered along a once-depressed strip of West 25th Street — McNulty’s Bier Markt, Bar Cento, Speakeasy, Nano Brew Cleveland — Sam McNulty operates a business model unique from other craft beer-centric enterprises here.

With competition among craft brands only continuing to grow across the country and Ohio itself, which is now home to more than 310 craft breweries, Crain’s sat down with McNulty to talk about the landscape for independent brewers today, his approach to business, the reasoning behind building an enterprise along a single strip of Ohio City and why he thinks his operations are well-positioned to coast through a market contraction that may lie ahead.

What do you see when you think about the craft landscape nowadays?

So it’s certainly competitive. There is a finite amount of shelf space in stores, and it’s getting crowded. The local craft beer world is very collaborative, but you’re starting to see some more elbows out more than you would’ve five years ago. Now, I always try to make this distinction: There is still plenty of room for brewpubs. But the folks who are rolling into distribution, that’s where it’s hypercompetitive. That’s where there is a lot of venture capital going in. And the macros are out there on the hunt to buy craft beer brands because they see them chipping away at their market share. The Bud/Miller/Coors of the world, they want to innovate in-house, but very often it’s easier to acquire innovation.

We obviously saw that here with AB InBev’s acquisition of Platform Beer Co. What do you think of that?

Not speaking to any particular deal, I do find that any time a multinational corporation buys a local company, regardless of industry, that I’ve yet to see a single instance where it was good for the local community, the employees of that company and the brand itself. There are often a lot of promises and then the next thing you know, the company is gone, the jobs are gone or relocated elsewhere. So I guess we’ll see what happens.

How many times have you been approached about an acquisition?

Well, I’ve signed nondisclosure agreements, so I can’t talk about those.

What is something you think will be a trend in the craft business in 2020?

Closures and consolidation.

So you think we’re getting near that saturation point that has been talked about for a while?

I do think so. Or, put another way, you could be looking at either bankruptcy or Budweiser.

Do you see a market contraction affecting your businesses?

I don’t think so. The secret sauce to our business model is our four partners. We’re north of 200 employees today. We have no outside investors. And we’re so underleveraged it’s almost comical. But we are very happy that way. We can sleep well at night knowing whatever happens in the future, we’re going to be just fine.

Why build all your businesses on one street? Is it not a reasonable worry that those could all cannibalize each other?

You know, it’s funny, when we opened (McNulty’s Bier Markt) in 2005, people thought we were crazy to do anything in Ohio City because it was a bad neighborhood. Then, we opened an Italian restaurant and wine bar, and they said, “Now you’re really crazy because you’re just going to cannibalize the business you created at Bier Markt.” Then, we opened Speakeasy in the same building, and Market Garden brewpub across the street. Same thing. The thought was always, “Why are you not diversifying geographically?”

So why didn’t you?

My background is actually in city planning. I was an intern in Ohio City 26 years ago with what is now Ohio City Inc., working on the neighborhood and forming a Special Improvement District, which was a novel idea at the time. Putting on my urban planning hat, my partners and I realized if we were really going to succeed at attempts to rejuvenate the neighborhood, we had to play real estate developer, neighborhood planner, restaurateur, brewer and also coalition builders. We are capitalists with a conscience. So, as a result, instead of taking the Market Garden concept and cookie-cuttering it — one on the East Side, West Side one south, then go to the next city — our approach is to have five different concepts all on one street. And we own our properties, so we are invested both in the sticks and bricks and in the operations within those.

Ever think about expanding more aggressively or building something beyond Ohio City?

So one model is a taproom/brewpub in different markets and using that as your home base and marketing tool. We’re obviously on one street. And we distribute from that home base. The other approach is fast-growth, breakneck pace, just racing into new markets, signing distributorship deals and maybe losing sight of the quality of the beer. The model of racing into new markets and expanding quickly, that usually leads to two options: bankruptcy or Budweiser — not referencing anyone in particular. We are not growing by smearing ourselves out 5 miles wide and a half-inch thick. Our approach is to be 5 miles deep in our local markets. So it’s just a different strategy, not saying one is really wrong or right.

What’s your growth strategy look like today?

Growth on the production side is incredible. We’ve expanded four different times in terms of brewing capacity. And we just expanded distribution into the Toledo market. So right now, we are there, in Northeast Ohio, Columbus and contiguous surrounding counties. We have taken a more measured approach than some other brands.

Is there any beer the McNulty brands would never make?

I’m not a big fan of saying never. But I can say we’ll never brew a beer with corn syrup.

Biggest influence in your life?

“My dad, William McNulty. He was a social worker, raised seven kids and somehow maintained his sanity throughout.”

Favorite beer you make?

“Prosperity Wheat, though Citramax IPA would be my desert island beer.”

If not your beer, what are you most likely drinking nowadays?

“Evil Motives IPA from Noble Beast Brewing Co. We love what (owner) Sean Yasaki is doing there.”

If not in the beer biz, what might you be doing?

“Historic real estate development.”

Random fact

“I have dual citizenship in Ireland. I’m also one of seven kids who were all born at home with no midwife.”

Zaytoon Lebanese Kitchen

1150 Huron Road East, Cleveland, 216-795-5000

The meal

Falafel salad with spicy tahini dressing for one; chicken shawarma plate with Lebanese salata for the other.

The vibe

The small, urban space downtown has a bit of a New York vibe, with most seating along a window counter.

The bill

$21.65, plus tip