A Coronavirus Action Plan for Breweries

It’s a black hole vortex of information out there and so protecting our energy and attention is critical right now.

My inbox, if any indication, is an absolute war zone at the moment.

Instead, we have (hopefully) condensed down what we know into an initial set of actionable recommendations you can use or a least verify against your own thinking.

So for now, we’ll cut through the pleasantries and jump straight in.

Strategy Focused Leadership

Todd Herman spent last week interviewing 29 CEO’s to unpack their psychology, plans, and current experiences. They fell into 3 buckets:

  • The Fear-Focused Group.
  • The Un-Focused Group.
  • The Strategy-Focused Group.

Getting right to the point:

The Strategy-Focused CEOs are consuming far less media, are already shifting product/service offerings, are already making changes to their teams, are prioritizing action and planning, and are heavily leveraging their networks.

Our goal is to, as much as possible, help us all shift into Strategy Focus as we press forward into the next few weeks.

We met with an exceptional group of our clients last Friday. Many of them were already there. And by Thursday morning, they were planning, pivoting, executing. Many of these ideas come directly from their creativity and leadership.

Here’s what we’ll start off with…

Cash Flow Contingency Planning

Cash Flow Contingency Planning

In the backdrop of the swirl of information right now, are the looming questions about sales, timelines, team, and cash. The questions most of your peers are focused on:

  • What type and length of revenue loss should we plan for the taproom?
  • What about distribution and what happens if that dips as well?
  • What is our current cash position and how much runway do we have given our current operating expenses?
  • What access to debt, relief, capital can we tap into?
  • Given the above questions, when should we take action?

It’s likely you’ve already started to venture down this road.

And the answers to these questions are going to be highly specific to the situation on the ground in your state and local community, your business, and your personal approach to the situation.

What we can say is this:

Even in its simplest form, this exercise needs to be done and should be down on paper… if for no other reason than the emotional relief that comes from having something to work off of.

Get it out of your head so you can focus your attention and energy on action.

With all of that said, here are some considerations:

  • OpenTable is publishing their year-over-year reservation data daily. Apart from the restrictions on the ground (you don’t need data to tell you that you’re shut down), this may be the best indication of the type of taproom losses to place into your model for the next 4, 8, 16 weeks, especially as restrictions are lifted.
  • What should we expect in distribution? Bart Watson’s analysis indicates that orders are still flowing, with some variation region-by-region. Some of our clients are reporting the same type of information coming in from distributors. Will this last? No telling right now, but it’s fair to say the distribution losses are in a wholly different category than the on-premise restrictions we’re seeing and should be treated more as a reflection of the general economy than on the extremes we’re experiencing with the taproom.
  • What sources of cash do you have? Rank them and prioritize actions to secure any additional cash flow sources you can in the short term. Traditional, lower-interest-rate options should be prioritized first (state-specific small business Coronavirus response loans, the SBA Disaster Assistance Loan product, a line of credit through your bank, etc.). Shorter-term high-interest options should fall further down the list (Square and Cabbage high-interest loans, credit cards).
  • Explore other cash relief options. Open a discussion with your landlord about rent abatement. Prepare to ask for deferrals on existing loans. These may not be necessary if you’re in a good cash position now, but make the list and line up the action steps you would need to take if the time comes.
  • And finally the hard questions. What cuts can you make and in what order? Again rank and prioritize labor, materials, etc. Back out, based on your current taproom restrictions what level of staffing is required. Plan out how you will communicate looming cuts to your team.

Here’s the goal:

Have a plan outlined for the prioritized steps you’ll take when revenues decrease 25%, 50%, 75% based on your current cash position.

This will likely change daily. Certainly weekly. That’s okay. Adapt the plan as you gain more information.

Now some specific actions.

Let’s go distribution first, because it’s more straightforward…

Distribution Actions

Just a few key points:

  • Open the lines of communication. If you work through a distributor, ask them what to expect. Be annoying. If you self-distribute start talking to your top 40% of accounts now. Put the bottom 60% on the back-burner, because 80% of your revenue comes from the top 20-40% of the accounts. Then if you have time, tackle the remainder.
  • Keep your sales staff away from the production area and vice versa. Minimize the risk to your production by keeping team members most likely to have external contact away for now.
  • Start with depletions. Determine what level of production is required. Do not overload your cold storage as sales slow, which will stack additional losses and wastage on top of the top-line losses you’re experiencing.
  • Confirm the supply chain. Check your aluminum supply and place a call into your point of contact to verify you can get enough product. Speak with your key vendors and verify their action plan to ensure your raw materials can be delivered. Identify and address what could prevent you from conducting business. This applies to taproom operations as well.

Finally, taproom…

Taproom Actions

Given the uncertainty and variation state-to-state in terms of restrictions, the best thing we can think to do here is to simply highlight some examples of what peers are doing.

Here are a few.

Brew Gentlemen pivoting hard into taking online and call-in orders.

brew gentleman pivot

DC Brau is in pick-up mode as well and offering incentives.

dc brau pick-up

Macleod Ale pulling out all the stops.

macleod pickup strategy

Here’s what we can say:

  • Don’t hold back. Now is certainly a time in which more social media activity promoting your product is not only warranted, but expected and welcome among your patrons.
  • Share what you’re up to. This is not to tell people what to do, and not to commiserate or patronize. But instead to simply show what you’re up to. How you’re adapting to the situation. To show that maybe you can both take the situation seriously, while at the same time adding some personality, levity, and even… fun.
  • Ask for help from your customers. Give them a clear way to support you and help you through. People want to help, so let’s try to make it as easy as possible for them. Can you give them a way to do that?

Let’s wrap up for today…

The Intelligent Action Test

We have been on this Intelligent Action theme for a few months now, and now the concept is truly being put to the test.

  • Can we clear away the (justified) emotion?
  • Can we clear away the noise?
  • Can we clear away everything that doesn’t contribute to us taking the decisive action that our businesses, employees, customers require?

I’ll leave you with this:

“Who then is invincible? The one who cannot be upset by anything outside their reasoned choice.”Epictetus

Email me at chris@sbstandard.com to open up the discussion.

Whether to toss out ideas and get feedback.

Or just simply to dump for a moment to someone on the other end that recognizes what you’re going through.

We’re here for you.

Let’s take this thing one step at a time.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top