Mitch Ermatinger’s outlook has improved in the weeks since the mid-March closure of all Michigan bars and restaurants, but the economic effects of the pandemic are still weighing heavily on the co-founder of Speciation Artisan Ales LLC.
“When we first realized that we were going to be shut down, I ran the numbers in my head and I was like, ‘We’re not going to be able to last more than like two months,’” Ermatinger said.
Once the executive order hit, Speciation laid off all but one production employee so staff members could stay home and collect unemployment. The same day, Ermatinger and wife/co-owner Whitney Ermatinger went “line by line” through the company’s bills and “cut all of our expenses down to the absolute bare bones.”
“It was preemptive,” he said. “We weren’t out of money or anything, but we knew it was going to get rough.”
As business has settled into the new operating environment over the last month and a half, Ermatinger got more clarity on the company’s survivability.
“It’s still bad, but we do have a longer runway than I thought initially,” he said, noting his wife took a full-time job as a social worker to help diversify his family’s income while he continues to work on the business.
Despite the upheaval, Speciation is taking a risk by pushing forward with plans to build-out and open a second taproom on Wealthy Street in Grand Rapids that will also feature its Native Species Winery subsidiary. That means the company currently is paying double rent as it continues to lease its production facility and taproom in Comstock Park.
Ermatinger admits the move is “kind of a gamble” given the company’s reduced income, but he expects it will pay off as long as the Wealthy Street location will be able to open “in some capacity” in the coming months.
Unlike most other West Michigan breweries, Speciation does not have a brewhouse. Instead, the company contracts out production of wort, the base liquid for its beers, and performs all fermentation in house. The brewery also specializes in wild and spontaneously fermented products that are aged in oak foeders or various barrels for long periods of time.
“A lot of other breweries had tanks full of beer that basically needed to be served fresh and the clock is ticking on that beer. Whereas for us, we could go a year without brewing because we have a whole massive inventory of oak barrels that we can blend,” Ermatinger said, noting the business model “helps with cash flow.”
“We spent a lot of our money already just getting the beer in the barrels. It’s already there,” he said. “It’s funny, I’ve always referred to those barrels as little bank accounts. You’re putting it aside in a savings account for use later. And it turns out that that is more true now than ever.”
The company successfully applied for and received a small business grant, as well as a Paycheck Protection Program loan from the SBA, which combined will help “fill in the gaps,” he said.
“One other thing we have going in our favor is that we’ve cultivated this cult following and we have hardcore fans that support us through everything,” Ermatinger said. “I think that is a little bit of insurance against a global pandemic.”
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