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Tuesday, September 5, 2017

The Commons: When Things Go Wrong

When Portland Beer was published back in 2013, I held the release party at The Commons original location on Southeast Stephens. That place had become a regular stop on my travels and I knew Mike, Josh, Sean and Travis well. Despite dreadful weather, the party was a success.

Following several years of solid success, the collective decided to move to a significantly larger space where they could increase production and seating capacity. I don't recall anyone in the beer community questioning that decision. It seemed to make sense, given their apparent trajectory.

Of course, we now know things didn't work out. When news broke that The Commons would close and relinquish its space to San Diego's Modern Times Beer, the hyenas began howling about why this had come to pass. Poor planning, poor execution, poor strategy. Pick your poison.

But these situations are rarely as cut and dried as some would have us believe. In the case of The Commons, I suspect there are variety of explanations for the calamity. And not all of those explanations are readily visible, even to folks in the beer community.

I first sensed that things were not quite right when I visited The Commons soon after they opened on Belmont in 2015. The main pub area had an unfinished feel. A satellite seating area upstairs was off limits to the public due to fire code. Without expensive sprinklers, the area was unusable.

During a visit several months later, it was clear to me that the building did not have sufficient ventilation. I eventually learned they couldn't put commercial rooftop units on the building without reinforcing the infrastructure, a monumentally expensive undertaking.

More recently, I learned they had brewed an IPA. Say what? That came as a shock to me because I knew it was something Head Brewer Sean Burke never wanted to do. Soon enough came news that Burke himself had bounced from the company. I guessed the IPA wasn't his idea.

The early intel told me the guys were overextended and at risk. Sure, businesses often function at a basic level when they're new or making a big transition. You put some things off until you have a cash flow. But appropriate ventilation and seating are requirements, not luxuries.

Then came the seemingly endless construction in the area. Several nearby buildings were leveled to make way for condos or apartments. An area that was busy and congested before the construction became increasingly problematic in terms of access and parking. Bad for business.

There are those who believe they needed a full kitchen and pub food to make the space viable. That was never part of the plan. The Cheese Annex, operated out of a tiny kitchen on a lease basis by Steve Jones (Cheese Bar), was a makeshift arrangement with limited offerings.

The food argument segues into another facet of The Commons masterplan. Until late in the game, they did not offer mainstream beers. So offering mainstream pub fare probably wouldn't have done much for them. They certainly knew this, which is why a kitchen was never part of the plan.

Not offering mainstream beers may have been a fatal error once they moved to the larger space. I took non-geek friends and family to The Commons on several occasions. There was nothing for them on the beer menu. Food choices wouldn't have mattered. They wanted to go elsewhere.

There's an argument floating around that The Commons should have jacked up prices to make their beers seem more special, such as Cascade, Hair of the Dog and others do. The idea is that they might have changed the perception of their beers by charging more.

The problem is, the beers probably could not have fetched significantly higher prices. That's not to say they weren't and aren't pretty great. Are they in the same league as the fruit-infused, barrel-aged stuff offered at high price points by others? I'm not so sure.

There are unknowns. Owner Mike Wright evidently got divorced a while back. We don't know what effect that had on the business or its cash flow. It's also true that craft beer is slowing and many brewers are showing flat or declining sales. Did that play into what happened? Hmmm.

By all accounts, The Commons was highly successful in its original location. The space was smallish, but friendly and homey. Wright didn't own the building, but the overhead had to have been low. Enjoying their eccentric beers while perusing the brewery had a definite cool factor.

Everything flipped in the move to Belmont. They got more production space, but expenses increased dramatically and the new place never lived up to the charm of the old one. Which left them stuck with a boutique product in a much larger space with much higher overhead.

To make a go of it there, they needed to sell a whole lot more of their beer or cater to a more general audience. That would have meant mainstream beers and food. Except for the 11th hour foray into IPA, they did none of those things.

People sometimes become rigid in business. Overconfidence, ego or lack of capital are some of the reasons. I don't know what happened at The Commons. But a new space with significantly higher overhead likely required a different approach than the one they had used on Stephens.

The cautionary tale, for anyone who cares, is that taking on significant debt in an industry prone to shifting tastes and fickle patrons is a risky business. If you're going to go down that path, build some flexibility into your plan so you don't find yourself in a financial rabbit hole.

It isn't clear what will happen to The Commons. Beginning in January, Modern Times will lease the space from Wright, presumably shielding him from the monthly mortgage. Once the dust clears, he may decide to reinvent the business in a smaller venue similar to the old place.

A lot of people would like that.

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