We caught up with the brilliant and insightful Ian Mccall a few weeks ago and have shared our conversation below.
Ian , looking forward to hearing all of your stories today. Let’s jump right into the heart of things. Outsiders often think businesses or industries have much larger profit margins than they actually do – the reason is that outsiders are often unaware of the biggest challenges to profitability in various industries – what’s the biggest challenge to profitability in your industry?
Cash flow, labor and food costs are, ultimately, the greatest obstacles to profitability in my chosen business. Honestly, I underestimated their overall impact as a first-time business owner and am paying dearly for it, almost 9 months in. We opened our brewpub in December 2023. Not the most optimal time for beer drinking, but I knew we had to open our doors as quickly as possible and start turning malt and hops into cash. At the same time, I made an overly confident and fool-hardy decision to take on the restaurant ourselves, to bring in a chef, and to go all in. I don’t regret those decisions, but I now see the error of my ways. It’s hard enough to turn a profit in the beer industry, let alone a restaurant, but I felt I had the brewing aspect under control with years of experience and a clear plan for a path to success. The restaurant has become a beast that I am slowly learning to tame and has taken an overwhelming majority of my time and energy to dial in. There are many aspects of restaurant operations that contribute to my overwhelm still to this day, but I now have a budget and a path forward for controlling these issues.
Let’s start with cash flow. As a self-distributed brewpub, we make many styles of beer, from a multitude of ingredients sourced from around the world. Raw materials suppliers and vendors expect payment prior to shipping (sure, the big guys get terms, but lets be honest, we are minute in comparison, plus I really don’t want to get behind on the guys who supply our beer-making materials) and we generally order a week in advance before we brew. The brewing and fermentation process can take as little as 17-18 days, or as long a 6-8 weeks, possibly longer, before we have a finished product ready for packaging and distribution. Assume the beer spends 4-5 days in our walk-in cooler before it is committed and delivered to an account. In general, accounts expect NET 3o terms. All this to say our cash flow runways in the brewery can be as long as 2-3 months before we see tangible returns on distributed product. Now, this only accounts for about 60% of the beer we make. The balance is sold over the bar at retail and we see those returns with more immediacy. Running a restaurant is much the opposite. Produce and meat is sold and delivered to us on net 30 terms, items are prepared and sold within a time span of 3-5 days and the cash is in our bank account. Over-prepped or unused items are thrown away without concern, and waste can quickly overcome sales in the blink of an eye. Keeping an eye on cash flow has become top of mind for me each and every day.
In California, labor is not cheap. The cost of labor has skyrocketed and there may be more increases on the horizon. I knew when I opened ISM Brewing that there were only so many hours in the day and I would need to bring in managers to oversee each aspect of my operation. I have a Head Brewer, who oversees all production and leads the team in the brewery. I have a Chef, who oversees all kitchen operations, writes recipes and is responsible for all aspects of the kitchen. Finally, I have a General Manager, who oversees all front of house operations, manages special events, and is a general leader for our staff. I came out of the gate swinging, we “hired up” and had a great, but financially bloated, staff. We have lost a few people along the way and brought on others to fill their positions, but it wasn’t healthy for our bottom line, and profitability slipped further away.
The cost of food is a constantly moving target. The cost of avocados (a CA must-have), limes and tomatoes are in constant flux, affecting our overall food costs. We came out the gate with an ambitious and unique menu. We have kept many of those original items, but the cost of the raw materials, labor for prep, and execution, plus any waste, has caused us to throw away money sometimes.
There are many challenges that affect profitability on a daily basis – these are just a few of the major ones for me. We are instituting food cost management systems to gain control over food cost. We are scaling back our menu to a handful of high quality items in order to control labor cost. And I very recently started working with a restaurant coach to teach me all of the things I did not know I did not know, so I can get my cash flow under control. I have spent the last 20 years of my life learning how to make, sell, market and grow a beer brand, but now I am shifting my focus to learning as much as I can as fast as I can about owning and operating a restaurant as well.
Ian , before we move on to more of these sorts of questions, can you take some time to bring our readers up to speed on you and what you do?
My name is Ian McCall. I have been lucky enough to a small part of the craft beer industry since 2004, when I happened upon a small brew-on-premise (BOP) in Huntington Beach called Brewbakers. Brewbakers is no longer in business, but it is where my passion for brewing was ignited. As a BOP, we would teach people how to brew beer on 15 gallon kettles, handle the beer through fermentation and prepare it for packaging. The customer came back 3 weeks later, after creating their own personal label, and bottled the same beer they made weeks before with their friends and family. I immediately fell in love with the brewing process and the never-ending creativity that brewing allowed for.
I left Brewbakers in 2009 to go back to college and got my BA in Comparative Religion. I had two options – get my Masters Degree and go into teaching or figure out what else to do with my life. I had been working in the construction field for the prior few years but it was not what I was passionate about. I still felt the itch of the beer industry and wanted back in. I was hired to work for Beachwood BBQ & Brewing in 2011 as they opened their second location, a brewpub in Downtown Long Beach. Although I started as a bartender, I moved into the brewery within about a year and a half, just in time to celebrate our first Brewery of the Year award in 2013. Those times were amazing. Beachwood was on fire, and being a part of the growth was inspiring and exhilarating. During these next 6 years, I learned how to be a professional brewer and began to hone my skills in the brewhouse and cellar.
In 2018, I left Beachwood BBQ & Brewing to take a Head Brewer position at Riip Beer Company in Huntington Beach. During my time at Riip, we more than tripled our annual sales revenue, expanded the brewery a couple times, increased capacity 4-fold and built a solid brand that was well respected in the beer industry. I am a huge advocate of collaboration and during my time at Riip we collaborated with some of the industry’s biggest names.
In 2023, I was offered the opportunity to return to the space that formerly housed Beachwood BBQ & Brewing in DTLB, to create something fresh and new. ISM Brewing was born out of this opportunity. ISM is simply an idea that we can change the beliefs about what independent craft beer is and create a new craft beer movement that is community focused and engaged, quality driven, and uniquely authentic.
In just 9 short months (we opened Nov 27, 2023) we have garnered local, national and international attention, winning 5 medals at the California Craft Brewers Cup and 3 medals in the World Beer Cup.
I am most proud of the team we have built, not only in the brewhouse but in our kitchen and front of house. I am surrounded by a superb team of people with the same passion and drive for beer and food as I have.
How’d you build such a strong reputation within your market?
ISM Brewing is still infantile in size and age. We have a lot of growing to do, but I firmly believe that we can’t / won’t grow without continuing to establish and nurture relationships. Networking and establishing durable working relationships is vital to brand building. I like to think about two divergent brand definitions when I consider the overall brand of the business.
First, there is the outward and visible brand which is built around marketing and imagery. This is what first draws a new customer’s eye, whether it be on social media or during a walk in your market.
Second, and much more important, is the “personal” brand. In my mind, this is built of all interactions your customers have with you, the business owner, and with your staff. Because your staff is an outward reflection of you, it is very important to clearly communicate how you want them to interact in your / their community. Service is one of the largest aspects of this and providing superior service should always be top of mind.
Community is the word that comes to mind most when I think about ISM Brewing. Building relationships in my community includes much more than just walking out my front door. In the brewing industry, I strive to be a knowledgeable innovator and a compassionate leader, by involving myself in organizations and groups that better the craft beer community. In the restaurant industry, where I have a lot to learn, I strive to connect with my peers / leaders of our industry, to donate to charitable causes, and to support the overall growth of our community.
I think being optimistic, hard-working and (mostly) always willing to say yes, contributes to the reputation my business and I have built.
How do you keep in touch with clients and foster brand loyalty?
As I touched on above, in the craft beer industry, relationships are everything, especially during tough times like these. The cards are seemingly stacked against most of us. But I have found that through relationships and collaborations, I can keep my finger on the pulse of what’s happening and maintain connection with brewers, accounts, vendors and ultimately, customers in many different markets.
Collaborations are a perfect opportunity to work with a new, upcoming, or well-established brewery in a specific market. I try to include a new product or vendor in collaboration beers, because it’s a great time for us to experiment with a one-off, unique beer.
Contact Info:
- Website: https://www.ism.beer
- Instagram: @ISMBrewing
