First brewery in Queens post-prohibition becomes first to open second and third locations in New York City.
Note to readers: This Q&A is part of a series of peer interviews from The Equipped Brewer. Installments will share the key experiences, lessons learned, and advice of owners, operators, and other key contacts at young craft beverage companies as they’ve tackled the challenges of growth.
In the Spring of 2012, New York City’s Rockaway Brewing Co. of Long Island City, Queens became the first brewery to open in the borough since the end of Prohibition. Since then, thanks largely in part to New York State’s Farm Brewery license, a forward-thinking series of legislations requiring qualified breweries to use state-grown ingredients in their beers, as well as allowing them to operate in up to five branch locations in the state, Rockaway opened its second location in Rockaway, Queens and plans to open its third location within the next year.
Equipped Brewer spoke with Rockaway Brewing co-founder, Marcus Burnett about the brewery’s beginnings, how he and co-founder, Ethan Long funded their original and new locations, and how multi-tasking and a DIY attitude is essential to starting a brewery.
What were the challenges you faced in the beginning that led to you opening in Long Island City [instead of in Rockaway, Queens]?
It takes a long time to develop a company. We were really passionate about Rockaway—my partner [Ethan Long] and I had been brewing out there [as homebrewers]—we both have bungalows there and spend our time out there brewing in the summertime. When we chose the name, Rockaway sounded good and we went for it.
Consequently, we couldn’t find a good space there because of manufacturing zoning laws. The zoning has to be M1-1 here. We found this little place [in Long Island City] really cheap—[it was] pretty much a garage—we had a little teeny two-tap taproom for growlers to go, and this [gestures to what is now the taproom] was the production space. If you’re looking for a place, you really have to look into the zoning laws.
How much capital did you start with here [at Rockaway’s first location]?
We went the slow, self-financed approach of taking a small business loan. For the first two years, Ethan and I both financed out of our pockets. We put up our houses, we put up our jobs, our life savings to do it. I think we both threw down $50,000 to start it. We got a two barrel system, a grain mill, bought some kegs, got our [microbrewing] license and paid some lawyers.
Right away, we were able to sell the beer we made, but we weren’t employing anybody. I kept my part-time job. We were brewing on weekends and [eventually hired] one person to come in and do all the work [on weekdays]. It was very bare bones.
We were eventually able to take a little bit on sales in the taproom, which was off-premise only at the time, show the numbers to a bank, and convince them we would be bigger next year. We were able to convince the bank to give us $450,000 for a five barrel system and do the infrastructure we needed. It’s been a real adventure. And our brand is growing...I think we’re past the fail point.
Which bank did you go to?
Chase Bank. Chase has a specific New York City brewers section—they have two people on staff who are specifically working on the brewery sector—so that makes things easier.
How has obtaining the New York State Farm Brewery license been beneficial to Rockaway?
The Farm Brewery license has given us a lot of great opportunities to support other local breweries and cideries, and to expand our ability to sample our products on a larger scale. There’s a finite amount of revenue you can gain by selling [beer] wholesale, so that’s why this whole idea of opening new locations for retail is a great opportunity for us.
What are some of the new issues you’ve dealt with while opening the second location and planning the third location?
A lot of lawyers, fees, applications, insurance, and leasing. First, you’re looking for real estate and [looking at each] location. What does it cost? What are the surroundings? What type of neighbors does it have?. [Then you have to figure] out what sort of lease you need to have to satisfy the State Liquor Authority, and what sort of insurance your landlord needs to satisfy them, then you have a lawyer to look over the paperwork. Then you’re dealing with community boards and the community at large. [You have to ask], “How is this going to affect them? Are they going to agree to be ok with that? Are they going to be calling because of noise, or production, or trucks parking in the street?” All these things are involved with brewing and the tasting of said products. It’s a complicated labyrinth of different things going on all at once.
How can you prepare for all of that?
Go to business school first. If one of the people [in your business] actually went to business school, it is a really big plus. I realize that now. My partner and I were both entrepreneurs [who didn’t go to business school]. We had our own businesses for 15 and 20 years—and that’s fine, you have to have the wherewithal or self confidence to think, “yes I can start my own company”—[but] starting from scratch, the business plan is the very first thing everybody wants to see.
[In business school] you’re asked all the questions that everybody else wants to know: How much beer are you going to make? How much profit are you going to make? How long is it going to take? When do I get my money back? All of those things are rolled into one with a business plan. Take a class. Business planning 101. Just do it.
How are you handling upping production for the new taprooms?
We have a very simple menu of beers that we release to our distributor, usually only three at a time. We work on our core beers on our larger tanks, and our tasting room beers on our smaller tanks. When we laid out our brewery, we had a set of five barrel fermenters and then one 10 barrel fermenter. We keep our larger tanks just for production beers to go out to the world, and the smaller tanks we allocate to the taproom. People want to see a lot of variety in taprooms, so we try to keep eight on tap. Having an assortment of different tank sizes helps keep a variety of different beers in the taprooms, while still meeting our production needs for the general market.
What would you suggest other breweries have ready or keep in mind before opening a second location?
In every state, you have to sit down with the state law and your lawyer and [ask], “what can we do with this license?” A lot of times, you’re [utilizing] a very small part of it. There might be a ‘Section 13, Clause B’ that says you can sell packaged goods out of your brewery, and you might not have known that. You learn by seeing other people do it, or getting your lawyer to ask the right questions to the State Liquor Authority.
Opening a second location for us had a lot to do with Rockaway, and our situation here [in Long Island City]. Our landlord is looking to demolish our building within the next couple of years, so we needed a backup plan. We had to get a small loan to move into the new place. It wasn’t much, but we did have to revamp our business plan to show that we met marks [in order to] re-apply for a little more money. I don’t think we’d be so apt [to open the new locations] if we didn’t have the pressure or possibility of not having this location.
Another thing to look at is leases—make sure you get a 10-year plus lease. The bank bases their loan on the number of years your lease is, so if you have a five-year lease, you have to pay it back in five years, [and so on]. It’s always better to get a longer lease. We’ve had a hard time finding them, but we did it.
So, your second location is up and running, and your third location is on the way. When will that be open?
In the Spring of 2017, we will open a third location at Beach 67th Street [in Rockaway]. [It] will be an open air tasting venue for sampling our beer and New York State ciders and wines. There will be picnic tables, a food venue which will be operated by [a third party] like a food truck, [and we might have] a different one every two weeks or something like that. It’s right on the beach.
What are the benefits you see—or foresee—in opening the second and third locations?
We see the benefit from the second location already. I’m sure it varies state to state, but in [New York] we’re able to sell full pints of our tasting menu and we are definitely exploiting that to raise capital to build our new brewery.
The third location will be another high volume, forward facing [business] promoting our brand and the other brands we put on our taps. I think people are wondering what we’re doing, but we’ve done cost analysis of what expanding our market looks like...When we get the opportunity to sell retail, that’s where being this small makes sense.
And a final tip from Rockaway co-founder, Marcus Burnett…
If you’re [planning] to buy a manual keg washer, [don’t do it]. Just make it yourself. Ethan downloaded the design [for a manual keg washer] off the internet and made it out of parts, [and] we spent $500 to build our own. When we look at the parts of the one we [later purchased for] $10,000, it’s exactly the same design.
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