For the Love Of Beer: How Craft Beer Cellar Grew To Become a Franchise

For many beverage retailers, off-premise success started with on-premise experience. That’s certainly true for Kate Baker and Suzanne Schalow, two of the owners of Craft Beer Cellar, a national chain of franchised beer stores. Both spent the early part of their career in the restaurant business, and attribute their success in retailing to the training they received in the hospitality industry.

“Hospitality is all about saying thank you and making someone feel welcome,” Baker says. “Knowing customers’ names and their stories is so important. The same can be said for the brewers we work with – we know their story and we’re able to share it with customers. Often it’s about a family, or a history, or a set of ingredients – and if it’s worth telling the customers will listen. Capturing their heart and their mind ultimately leads to the trust to capture their wallet.”

An Idea Sparks

The first Craft Beer Cellar opened in Belmont, Massachusetts in 2010, after Schalow and Baker left the restaurant business to strike out on their own.

“It was all happenstance – none of this was planned,” Schalow recalls. “You get to be around forty and decide, ‘I really need to work for myself.’ When you work for other people, the creativity that happens when you’re on the clock stays with them, and I aspired to something greater than that.”

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Baker was initially skeptical of the idea of opening a beer store. Her background is in culinary arts and she’d worked in the back of the house in the restaurant business for her entire career.

“Kate asked me why there weren’t a lot of beer stores around,” Schalow says. “There were certainly some that I want to pay homage to, as people who came before us, but only a handful around the country. I told her the number-one reason is margins. No one wants to work that hard – and I get that, since most liquor store owners don’t come from the restaurant business. But for us it wasn’t working hard, it was just working like we always had.”

Both women were also weary initially about opening the store in their hometown of Belmont.

“There were a million reasons not to open it here, because we live here and everyone knows us and it was very risky,” Schalow says. “However, as we looked at different towns, we realized this was the perfect place to open a beer store. Belmont, in the Cambridge area, has a reputation as a hard place to do business, but that’s not the case in my experience – the town has been amazing to us.”

At first, Craft Beer Cellar was adamant about not carrying mainstream brands because the owners didn’t want to financially support conglomerates in any way, but that position has softened over the years. “We refused to carry products from the large brewers for the first few years,” Schalow says. “In 2013 we started rethinking that and having conversations internally. Now we just want to carry amazing products, and we don’t care who makes them.”

Expanding the Family

“All we intended from the beginning was to open one store,” Schalow says. “Somewhere in the midst of it all we decided to open a second store, and then we started to wonder how big we could grow.”

Today there are 24 Craft Beer Cellar locations from Maine to California, with 12 more in the planning stages. Most of the stores are owned by franchisees, despite the fact that just two years ago Schalow “had no idea what the word ‘franchise’ meant outside of a sports context.”

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There are 24 Craft Beer Cellar locations nationally, with 12 more in the works.

Both founders knew they couldn’t go through an expansion alone, which is when Marla Yarid-De La Cruz came on board as a partner about a year ago. She’s been a friend of Schalow’s for nearly two decades, and her background in the education industry has helped expand Craft Beer Cellar’s educational programs.

“We brought Marla on around the time small breweries started selling out to investment companies,” Schalow says. “I’d be lying if I said no company has come to us and offered to buy a percentage of the brand. But we’re all about grass roots, and we didn’t want a corporatized Craft Beer Cellar. The idea of finding help to run the business was very appealing to us, especially the right kind of help like the expertise Marla provides.”

She also buys into the Craft Beer Cellar way of doing business.

“We’re particular and have very high standards, both for the liquid we carry in the stores and the people we bring into our family” Yarid-De La Cruz says. “We want to do the right thing for brewers, distributors, customers and each other. We’ve dedicated our lives to this business and we’re very proud of it.”

When the company began selling franchises, the brand team already had 30 regions chosen as target markets, but they’ve been cautious about entering some well-established beer cities like Asheville, NC and Portland, OR.

“We want to make sure we have local partners who know the area, the brewers and the customer base,” Schalow says. “Running a business in an unknown market is hard – we’ve had members of our CBC family move to take on a new store, but it needs to be in the right city.”

When opening a new store, the brand team (which now numbers six, including two who came up through the Belmont store and one brought in from outside) looks at demographic information, local breweries, distribution and, most importantly, local laws and regulations.

“The final decision comes down to how many hurdles we have to jump over to be successful,” Schalow says. “For example, can we sell pints or growlers? The margins on those products are much better, so it’s important if they’re allowed. The flagship store in Belmont is our best-selling store and doesn’t have any on-premise or growler sales, but it’s a challenge to keep that going.”

It’s important to Craft Beer Cellar that each franchisee’s personality comes through to the store’s local customers. Each location has a separate Facebook page and Twitter account, allowing for individuality.

“There’s a reason we chose those franchisees to join our family,” Schalow says. “They’re passionate about beer, and we want that to show through their content and their marketing.”

“We’ve all done a great job reaching out to customers and feeling their love and passion for what we do,” Yarid-De La Cruz adds. “It helps that we all come to work every day guided by the same vision – bringing wonderful liquids to customers. I’m the rookie here, but I’ve seen the passion across the board. That’s the glue of what we do here – bringing people together and educating them in a respectful, mindful way.”

A Lifetime of Learning

“A brewer’s language is so different from an average customer’s language,” Yarid-De La Cruz says. “Because of that, there’s a lot of education that has to happen early on when introducing someone to craft beer.”

Craft Beer Cellar locations offer classes and tasting sessions (where allowed), mirroring the experience Baker and Schalow had when first starting in the industry.

“I don’t have a background in beer – none of us did, other than loving to drink it,” Schalow says. “I had learned about wine and food in the restaurant business, so I took the same approach to beer. I wasn’t a beer-head out of the gate. If anything, I would say we all shared an ‘all in’ mentality when it came to learning.”

Every franchise owner is at least a level one certified beer server, and the CBC team believes strongly in the certified Cicerone program, with each owner achieving various certifications.

“As long as consumers’ curiosity and willingness to educate themselves about beer continues, our industry will thrive,” Schalow says. “I’m still fascinated by new beer innovations after six years of doing this every day, so how can the average consumer not be fascinated too?”

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The Belmont store features 800 SKUs of beer.

Is Local Inherently Better?

Craft Beer Cellar-franchised stores differ in product selection – some sell spirits, and some even sell cigars – but have one thing in common: a focus on local beer. About 25-30% of sales volume in every store across every state is local products. Making room for local beers, which change frequently, has caused logistical challenges over the years.

“We’ve decided that more isn’t better,” Baker says. “When we opened we had 350 beers on the shelf, and by 2014 we had 1200. That’s when we hit a wall and decided to cut the stock down by nearly 400 SKUs to concentrate on the best products. Customers were completely overwhelmed walking into the store, and it was a huge challenge to track inventory, date codes and shelf life. So less is definitely better in our case.”

“Smaller brewers are often better, but local isn’t always best,” Schalow adds. “I think we’ve done a good job of reaching out to local brewers, and we respect them enough to be honest. As a business owner, I’ve had to tell local brewers that we really want to support them, but their beer isn’t very good. It’s a touchy conversation to have, but if a product doesn’t meet our standards it’s necessary. But we always tell them, ‘just because it’s a no today, that doesn’t mean it will be a no to the next brew.’”

Setting an Example

Despite the abundance of men in the beverage alcohol industry, these three women don’t openly define Craft Beer Cellar as a female-owned business.

“We don’t even give it any thought,” Schalow says. “There are a lot of men out there, but there are more women than ever on the brewer and the ingredient sides of the business. We’re just beer geeks – we come in different shapes and sizes, and some of us are female.”

“We want to be respected for setting a good example, selling awesome beer and doing a good job,” Baker adds. “To me, that’s being a good human being.”

Pictured atop as feature image: Co-owners Kate Baker, Marla Yarid-De La Cruz and Suzanne Schalow.

Jeremy Nedelka is editor of Beverage Dynamics.

 

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