how to start a microbrewery

Asked and Answered: Starting a Microbrewery

In today’s episode of Revision Legal’s Asked and Answered podcast, we interview Tina Schuett, co-owner of Rare Bird Brewpub, to find out what it takes to start a microbrewery.

Music: “Drink Beer Til the Day That I Die” by Dazie Mae; “Friday Night” by Cheap.

Transcript:

John:                        Hello everyone! This is John DiGiacomo and this is the Asked and Answered Podcast. This is Revision Legal’s Podcast on, typically, Internet and Intellectual Property Law. I’m normally joined by my partner, Eric Misterovich, but he is gone today because he had a kid on Wednesday of this week.

He is enjoying that, and I am joined today by Tina Schuett. Tina is the co-owner of Rare Bird Brewpub. She’s also a friend of ours and a client. We’ve worked with her for a long time, so we’re really excited to have her. Tina, how is your Friday? Happy Friday.

Tina:                         Happy Friday. It’s going good, thanks for having me.

John:                        Yeah, thank you for doing this. The reason we’re having you do this, as we discussed before we jumped on air, is because it’s really interesting. I think your story is really interesting and I think other people would find your story to be really interesting, not from a legal perspective, though there are some things that are kind of interesting from a legal perspective.

I think people love beer, people kind of want to know how you get into beer, how you start a brewery, and what that whole process is like. I just wanted to talk to you about it today and that’s where I think this will go. Let’s kind of start at the ground floor. Can you tell me how you got into beer making?

Tina:                         Just like pretty much anybody else, I started homebrewing in college. Its one of those obsessions that kind of stuck around, which it does for a lot of people. Everybody who starts homebrewing is like, “Oh man, I want to be a brewer someday!”

John:                        Did you buy the Charlie Papazian book? What [crosstalk 00:02:24]?

Tina:                         Joy of Homebrewing, had that, yep. I just had a friend teach me in college though, and then stuck with it. In between that time of learning and graduating college I was a park ranger. I worked in some vineyards in New Zealand, like the grunt labor. I did children’s health research. Eventually, I just kind of got sick of that indoor office life and thought, “All right, I’m going to try and pursue the brewing stuff.”

You just really have to apply to every brewery and say, “I know I’m not going to be a brewer right away. I’ll fill kegs. I’ll wash tanks. I’ll do whatever I have to do to get my foot in.” Luckily, one of them let me get my foot in, and then trained me to be a brewer, and that’s where it went from there.

John:                        You said somebody let you in, was that somebody here in Traverse City?

Tina:                         Nope. It was in Black River Falls, Wisconsin, San Creek Brewery. It was about 2 hours away from where I was living in Milwaukee area, kind of middle of nowhere. It was interesting move into population of a couple thousand.

John:                        What year was this? Was this prior … obviously now craft brew is popular, it’s probably the forefront on the scene.

Tina:                         It was 2009, 2010. It was a while ago. Craft beer was definitely booming, but still not to the extent that it is. It was kind of, I don’t know, toddler years, I’d say.

John:                        Okay, so you get into this brewery. How do you get from there to being a production brewer?

Tina:                         Well, I don’t think my story is very normal. If you look at anybody else when you’re applying to more head brewer jobs, it says you need 5 years brewing experience just working in a brewery. I went from scrubbing floors to owning and operating my own brewery in about 4 years, maybe. It wasn’t long. That’s just not normal.

John:                        No, but it’s cool.

Tina:                         It’s awesome.

John:                        It’s why you’re here!

Tina:                         It was just complete dumb luck at times. I went from San Creek mainly doing filtration everyday, getting to brew a little bit here and there, helping with the kegging, the bottling. The location was really hard in that small town and kind of knocking heads with the management. I started looking around at other breweries, hoping to move. I randomly ran into Russell, the owner of Right Brain at a Beer Fest in Madison. I had already given my notice at San Creek, just like whatever happens I got to do something. While I was there, he offered me the job here at Right Brain. I was familiar with it because my mom is from the area, my grandma is here so we come every summer. I knew Right Brain, I love the area, and I thought, “That’s perfect! I’ll just move there, be a brewer there.”

When I moved here, that’s when I met Nate, my business partner, and we hit it off. Coincidentally, about a week after I started there, him and a slew of other people got fired.

John:                        The mass exodus.

Tina:                         The mass exodus, yeah! We kept in contact and he approached me one day saying, “I have a really cool idea. I want to start a brewery.” The original plan was to take over the old Right Brain location. We knew they were moving, we thought, “Okay, we knew this is a proven location that works. People are going to be coming here by chance anyways not knowing, necessarily, that Right Brain moved, so let’s take this spot.” It just progressed from there. Obviously, we’re not there anymore. We went through a big debacle with the building owner.

John:                        Yeah, so let’s talk about that a little bit. I know it would be difficult to remain PC on some of this-

Tina:                         I’ll try to keep it anonymous; I’ll keep it anonymous.

John:                        Well, you don’t … this is a Podcast, so you can say whatever the fuck you want. It doesn’t matter.

You had this building. You really are into the building, you know it’s good because you have foot traffic, you know the people are connected to that location-

Tina:                         It was the most popular spot in Traverse City.

John:                        Yeah, and for listeners, this was a spot where after work, everybody would go there. Everybody knew it was there …

Tina:                         Like, standing room only.

John:                        Yeah, definitely. I fell in love with this [inaudible 00:07:02]-

Tina:                         Until the mass firing. He fucked it up there.

John:                        Right, right. So you find the spot, what happens? Why can you not get the spot?

Tina:                         So we work with the building owner, and part of his deal is that for him to be a part of it, he was going to be part owner of it, he wanted his daughter to be part of it. We worked for probably 6 months. We had builders and contractors coming in, getting bids. We had already been talking with you about copyrighting and trademarking names. We had worked on it really hard.

John:                        You had architectural drawings, if I remember.

Tina:                         Yeah, architectural drawings. Side note, we also had some private investors, family friends of Nate’s that said they would bankroll majority of it if we all put in, I think, maybe 25% or 50%. At some point, we realized that it wasn’t going to work out with the building owner. We told him that we just wanted to lease from him, no ownership. In retaliation, he said, “Okay, I want my daughter to be a part of it.” We clearly said, “No, that’s absurd. There’s no reason.” The day before we were supposed to sign the lease he gave it away to somebody else, who is Pete Kirkwood who owns Workshop now.

John:                        Which, to be fair, you’re probably on good terms with him. Nice guy.

Tina:                         Yeah, great guy, nice guy. He had no idea what was going on. But that completely took the wind out of our sails. The investors were kind of banking on us having this location and working everything through it. Then we were left scrambling and we went looking all around Traverse City trying to find any possible spot that would work. We ended up finding the spot on Lake Avenue, which is our location now. At the time, it was professional office space, so it was dropped ceilings broken up into a bunch of little rooms. It was really, really tough to see it as a brewery. We’d poke our head through the ceiling tiles and we decided this could be really sweet, old 1931 brick building.

We went ahead; we signed the lease. They started demoing it for us. At that point, I think Nate and I had put in all of our own money, the parents money that they had loaned us, we were, like, $100,000 into it and the investors backed out.

John:                        I remember this very vividly because my office was above you, at the time. I remember coming downstairs and I can’t remember if it was you or if it was Nate, but one of you was in a hole in the ground, in the dirt, inside of the building. I think you were digging out some of the …

Tina:                         For the plumbing, right. Yep, that was me.

John:                        I can’t remember if that was before of after this happened, but I just remember thinking to myself, “Number one, I have no idea how this spot is ever going to look like a brewery.” Not to say you didn’t have vision, but I didn’t see it. It’s hard to see it.

Tina:                         A lot of people didn’t. They were like, “What the hell are you guys doing?”

John:                        Then this happened. Talk about what happened. This was a pretty tragic event, right?

Tina:                         Yeah. It completely, it was like we were on the ground getting kicked in the stomach. We’d already gotten over the hump of getting our building taken from us. We got back on track, found a new, cool building that we really liked, and then this. It was, like, catastrophic at the time. All we did was we went around to every single vacant town, talked to anybody … I think friends of yours, anybody that could possibly be an angel investor. We went through every possible avenue, SBA loans.

It ended up that First Community Bank here in town, they were willing to do the majority of the loan but they needed other people to alleviate risk. We had Northern Initiatives, which they specialize in small business loans here in Michigan, they did a chunk of it. Cherry Land Electric gave us a chunk.

John:                        It was 0% if I remember correct?

Tina:                         Yeah, it’s an awesome loan, 0% interest.

John:                        Yeah, very cool community [case 00:11:28] loan.

Tina:                         That was huge, and then two of the loans, one from First Community and the one from Northern Initiatives are SBA backed loans. We went through every possible avenue. It took months to get it all figured out. The whole government shutdown crisis happened right when we were supposed to close on the SBA loans. We had people to pay, so because of that we started an Indiegogo Page. We were able to raise, I think, $15,000.

John:                        Let’s talk about that a little bit because it was really innovative. A lot of people have done it since. They’ve also done it through things like Localstake where they’ve traded equity in exchange for investment. You did this in a really cool way. Talk about the incentives you provided because I think they were really great.

Tina:                         We tried to do as much homework as we could. We looked at probably hundreds of different profiles, looking at really good ones that totally over-exceeded what they were asking for and ones that totally failed. We tried to pick apart what made it successful, what made it fail. We decided a) you have to have a great video; really important. So we hired, actually a kid that Nate babysat for back in the day. Treefort Collective, I think they are called, really good video production place here in town. They did an awesome job on the video. We got that done.

Then we decided that incentives, you can’t just be like, “Hey, give us money. Help!” We pre-sold Mug Club Memberships. You could put your name on a stool. You could get a special One Off t-shirt with a membership. There was all sorts of cool stuff. The bigger ones being a founding membership. For $500, you get this Lifetime Membership, your cool own ceramic mug with a 20 ounce $2 fill for life.

John:                        … which is a huge deal.

Tina:                         Yeah, you’re saving $2.50 a pour plus the extra 4 ounces. The math is, if you come in once a week, it’ll pay for itself in a year or 2.

John:                        That’s why I got fat for a long time.

Tina:                         We had the bigger ones, the one that Revision did where for $1000 or $1500?

John:                        I don’t remember.

Tina:                         Somewhere around there, you could sponsor a tank. You got your name up on the tank and you could put a really cool, the Benjamin Franklin or …?

John:                        No, it was Hunter S. Thompson.

Tina:                         Hunter S. Thompson quote, yeah.

John:                        We tried to keep it in-theme of the brewery and-

Tina:                         Yeah, it was awesome!

John:                        I tried to pick something that I thought you guys would like.

Tina:                         I like it, yeah.

John:                        Okay, good.

Tina:                         Yeah, that included the founding membership. We just tried to make it appealing for people. Not necessarily … There was a ton of support from family and friends of people that got these memberships and they’ve never used them, but there was also people that just saw it as a good deal. Like, “Cool. I’m going to get this awesome membership and help at the same time.” We tried to make it not just a charity pity party.

The biggest thing we got out of it is seeing all of the support. We had been talking about it and had stuff on Facebook. People were always asking us, “What’s happening? When is it starting?” but we were ages away from actually opening at that point. I don’t even know if we had framed out the building; I think we just had the plumbing put in or something. So to see all that support from the community, and family, and friends was something that really got us going and amped up again. Like, “All right, we are going to do this. We are going to crush it,” and just kept running from there, basically.

John:                        You get a bank loan. You get what is effectively a community development loan. You threw in a lot of money yourself; Nate threw in a lot of money himself. You get the money from [compfunding 00:15:29]. Is it enough to open? What is a brewery of this size … You don’t have to tell us specific numbers, but I think it’s helpful for people to understand just the sheer cost of equipment because it is so massively expensive.

Tina:                         It’s very expensive. Breweries, I mean those tanks you see in the windows, fermenters and [serpentines 00:15:49], those are $8,000 a piece and we have 11 of them, or something. It’s a huge cost. I think the brew house alone costs around $150,000 just equipment. I think overall it ended up costing us roughly half million.

John:                        Wow.

Tina:                         That was another funny part of it. This is where you came in to help all the time. The landlord, we had it in a contract the build out, so he was supposed to take the space and build it to a certain point. Then we were supposed to take it from there, but he never came through on his end of the deal. That’s where we got into the whole battle of should we sue him, should we not? We have his contractual obligation but, in the end, if we sue him where does it put us? Even though, 100% we thought we would win it because he …

John:                        No, I understand. Before we came on the air, I was telling you I’m having the same problem now so this is not a problem that is unique to people who are not lawyers. It’s really that cost-benefit analysis of, “Do I sue this person and waste 6 to 12 months suing them? Or do I just undertake the cost and hope that I open my doors and get back to business almost immediately?”

Tina:                         Right, so because of it when we priced everything out he was supposed to do something like $140,000 worth of work. We didn’t have that in our budget; it was supposed to be taken care of by him. So we had to get crafty. We decided that Nate and I would be the general contractors. We did all of the building, all of the construction that we could. That we legally could, so we couldn’t do electrical, couldn’t do plumbing, no HVAC. Beyond that, we were the contractors. We had a ton of help from family and friends. People showed up everyday like it was their job. We definitely couldn’t have done it without them.

We just had to get creative because otherwise there was no way it was going to happen. We couldn’t go to the bank again and be like, “So we were like $100,000 off!” It did, it saved us tons of money.

John:                        And it looks good! I’ve copied 3 things, at least 3 things out of your place.

Tina:                         Nice!

John:                        The dinner table that I have in my house-

Tina:                         Yeah, the slabs.

John:                        … is now the exact same as your slabs in your place, and the floors. I copied our basement floors for our theater room because you did-

Tina:                         What do they call it [inaudible 00:18:26] when you polish concrete? Something fancy …

John:                        I think so, but it looks great. The idea that you had to serve as the general, you have the skillset. I don’t want you to undersell it!

Tina:                         It’s called YouTube. I had never done … I built a chicken coop beforehand just to make sure I could build something.

John:                        Really?

Tina:                         Yeah, and it is one hell of a chicken coop. I think I could live in it. But yeah, it just came out of necessity. Then things like the concrete floor. It wasn’t cheap to polish it, but it was way cheaper than putting something on top of all of it.

John:                        Sure, hardwood or …

Tina:                         Something that would look cool, you know. And the wood on the walls, it was because that was free. We just chopped up a bunch of apple boxes and threw them up.

John:                        … and it looks great.

Tina:                         It just came out of necessity. We always wanted that feel of kind of industrial but a lot of reclaimed, rustic and cozy. It all ended up working out, obviously. We’re open, we’re doing good, but it was the scariest roller coaster of my life.

John:                        I’m sure it continues to be scary as a business owner, but at least it’s not the unpredictable scariness of opening.

Tina:                         Yeah. Right now, I think we’d have to burn down or get horribly sued, like there are things that could happen to really knock us on our ass but overall the big stuff is done and we just get to roll with it now which is a huge relief. I think it took years off my life in the process.

John:                        Oh yeah, it’ll happen. Now that you’ve gone through this process, would you ever do it again?

Tina:                         Yeah, absolutely.

John:                        You probably feel like you’re smarter about it.

Tina:                         Well, yeah and that’s another thing. Going into it, we definitely made mistakes just trusting people. I was 26 when we started planning it and I think 28 when we opened. I didn’t know. I like to think I’m pretty smart and savvy and pretty good at judging people most of the time, but there’s just certain things that we couldn’t predict. We had a contract with our landlord for him to do this work, so as far as we saw it, it was a done deal. It was safe, it was legally abiding him, but there was nothing we could do in the end besides get into a nasty battle and where does it put us in the end? You live and you learn. Next time, hopefully I go about it in a much safer, wiser way.

John:                        I hope you don’t mind, but I want to talk a little bit about how you came up with the name. I want to discuss the process of getting this trademark registration for Rare Bird.

Tina:                         Oh, yeah.

John:                        If you don’t mind, if you don’t mind me disclosing it because I think it’s a really interesting process.

Tina:                         No, I thought it was … I was scared, again, but you did an awesome job.

John:                        Tell us about the name and give us some background on Nate because I think the name partially comes from Nate.

Tina:                         Totally, yeah. Before I even moved to Traverse City, Russ came back and told the staff that this girl was coming to be a brewer and that I had worked in New Zealand banding kiwis. Nate is a huge birder. He is, to this day, he is like a point of reference in town. People, serious birders and professionals, will come and ask him stuff. He’s no joke a birder.

John:                        Oh yeah, he’s serious.

Tina:                         He’s serious. When he heard that this girl was coming that had worked with kiwis in New Zealand, like super endangered, very rare bird species, he … like when he first saw me, he just comes up and he’s like, “Hey! Is it true that you banded kiwis in New Zealand?” Like didn’t say, “Hey, I’m Nate. I heard about you,” blah, blah, blah. I just looked at him like who the hell are you. I’m like, “Yeah …”

That’s my first recollection of him, meeting him, and so that was always a thing that we had in common. I’m not a huge a huge birder; I was doing it more on the scientific end with my biology degree. That and then being a female brewer in the brewing industry, we kind of play off of that like I can also be the rare bird. It’s not very common; you don’t see it much.

John:                        No, and it’s really cool. That’s why i think this is such a cool Podcast or an opportunity to have a cool Podcast because no one hears from brewers, and then no one hears from female brewers. It’s such a rare thing and it’s really cool. I don’t know, I’m happy that I know you because I think it’s a cool thing.

From my perspective, you wanted this trademark, we filed for it and we got a rejection on the basis that there was a guy out in California, if I remember correctly?

Tina:                         Florida, I think.

John:                        Florida, that’s right … who owned a winery and the winery-

Tina:                         Not even!

John:                        Oh no, that’s right. He was labeling it.

Tina:                         Yeah, they were importing it from Italy and he putting a name on it.

John:                        That’s right, and so this guy owned a similar trademark.

Tina:                         It was Rare Bird. Rare Bird Wines or something …

John:                        We got this rejection; we tried to overcome the office action rejection. Then we were kind of stuck because we got a final refusal.

Tina:                         For the record, we had already, again, gotten way too deep into this.

John:                        I think there was signage ordered and everything, absolutely.

Tina:                         Oh, yeah. We had hired the graphic designer long ago. It had this sweet logo, had our whole image based on it. This was way past the Indiegogo phase, so people knew Rare Bird. We had already branded it; it was already a thing. There was no way we could go back and change it.

John:                        Unfortunately, I deal with that all the time, especially in the brewing industry because a lot of people are now … [inaudible 00:24:25] breweries, number one, but a lot of people are starting to sue each other because there is a lot of confusion in between names.

Tina:                         All the time.

John:                        Yeah, I mean you saw [Dolls 00:24:32] this year. They had a [trademark 00:24:35] try on [appeal 00:24:35] board issue. Then, obviously, [Ivant 00:24:39] had an issue in Grand Rapids.

Tina:                         It’s all over the place, yeah.

John:                        From my perspective, my thought was, “Well, we need to clear this immediately so that you’re not in danger moving down the line.” Luckily, we were able to talk to this guy. He was actually a nice guy.

Tina:                         Yeah, thank god.

John:                        I sent him photos of you, I sent him photos of the brewery, and then I sent him-

Tina:                         … of me in the trench digging!

John:                        Not that, but actually it was a photo of, you had a coming soon poster on the outside of the building on the Lake Ave side. I sent him a photo of that and I sent him a photo of the equipment that wasn’t even hooked up yet. I just made this appeal to his human nature-

Tina:                         Help us! Please!

John:                        Yeah! Like, “Look, these guys are building this brewery out. Can you agree that there is no confusion?” The guy, like I said he was a nice guy, and he said yes.

Tina:                         We just had to cover their legal fees or something, which wasn’t much.

John:                        No, it wasn’t much at all.

Tina:                         Totally reasonable, so nice, and we weren’t even sure that that was going to work though. Right?

John:                        No, we weren’t sure at all.

Tina:                         That was questionable. Even if the guy agreed, the government agency could say, “Too bad.”

John:                        Yeah, the process is, basically, you get what’s called a coexistence agreement or consent to register agreement. We got that from this guy. Then the risk is that you submit it to to the US Patent and Trademark Office and the examining attorney will say, “Sorry, no.”

Tina:                         Still no.

John:                        Thankfully, that didn’t happen here. I still wanted to talk about that because I thought it was a difficult mark to get and I thought it as a cool and interesting story.

Tina:                         You handled it like a champ. I was definitely nervous there for a bit once I was like, “What?”

John:                        I was too, especially because I didn’t want to let you guys down. That’s all I’ve got. I’m glad that you came in; I know you’re busy. I appreciate you stopping by. Is there anything that you want to talk about, anything you want to say?

Tina:                         No, we covered all the really fun, scary stuff that I don’t necessarily get to talk about.

John:                        Cool, well I appreciate it. If anyone is in the area, if you hear this, stop by Rare Bird. What’s your website?

Tina:                         Rarebirdbrewpub.com.

John:                        Cool, and you’re on Facebook?

Tina:                         Yeah, that’s even more up to date. That’s the way to go, facebook.com/rarebirdbrewpub.

John:                        Stop in, check out the food. The food is great. The menu just changed recently; it’s amazing.

Tina:                         Lindsey, our chef, 25-year-old girl and she’s killing it.

John:                        Yeah, she’s killing it; it’s awesome. The beer is amazing, as well. I’m still trying to get Tina to name a beer after my dog, Grimace.

Tina:                         Oh! The Grimmy beer.

John:                        We’ll see.

Tina:                         Yeah, it can happen. I love that dog.

John:                        That’s all we’ve got. Thank you for listening. Eric will be back next week. We appreciate it.

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