Take 5 with Beth Marcus, Owner/Operator of Cape Cod Beer

March 2, 2021

What is the name of your business; what services and/or goods does it provide?

Cape Cod Beer is a self-distributing microbrewery founded in 2004, located at 1336 Phinneys’s Lane in Hyannis, Massachusetts. My husband Todd and I own and operate the business. We produce over 6,000 barrels of beer annually. For the uninitiated that’s about 186,000 gallons, or about 62,000 cases of beer annually. We self-distribute our beer – meaning we deliver it ourselves instead of using a distributor – in the towns between Plymouth and Provincetown. We also have a brewery tap room and beer garden where the public can enjoy our beer “right at the source,” at our production facility/brewery in Hyannis. We often refer to ourselves as Cape Cod’s Original Microbrewery, because between the period of 2004 and 2014-ish, we were the only microbrewery on Cape Cod. At least eight additional breweries have joined the ranks.

When and why did you start your business?

We first began selling product in April of 2004, but President/Brewmaster Todd Marcus has been a professional brewer since 1996. Between his start in the industry and the start of Cape Cod Beer, Todd brewed for several breweries and brew pubs including: Long Trail Brewing Company in Bridgewater Corners VT, Sunday River Brewing Company in Bethel Maine, and John Harvard’s Brew House in Springfield PA. Todd and I moved to Cape Cod in late 1998, with a 3-month-old baby, for Todd to brew at the Hyport Brewing Company, a brew pub located on Main Street in Hyannis. Cape Cod Beer was actually “born” at that location. The pub/restaurant began having financial difficulties. We purchased their equipment when they went bankrupt. The first craft beer wave ended fairly badly in early 2000s, and while we were confident in our ability to make and sell good beer, we were certain we’d missed the craft beer revolution. Little did we know that a second, much larger wave of craft beer breweries and pubs was to follow in the next 10 years or so. Cape Cod Beer was poised, almost accidently, to be a big part of that. When Cape Cod Beer started in 2004 there were about 1,000 breweries in the US. In 2019 that number exceeded 7,000, at least before COVID hit.

As to specifically WHY: While most business owners can tell you that they always dreamed of doing what they do, Cape Cod Beer was started more due to necessity than opportunity. By this we mean, that 2003 ended with both of us being unexpectedly unemployed, with a small house, a mortgage and two young boys, four and six, at home. The choices at the time were find a job elsewhere and move again, or make a job here. Given the availability of the Hyport equipment at 25 cents on the dollar, and the generosity of some family members offering some seed money, we chose to branch out on our own.

How has COVID impacted your business?

Like most business owners we have at least once speculated about “the bus that comes out of nowhere and runs you over,” but never in our lifetime had we considered something as dramatic and life-changing as COVID 19. Because Cape Cod Beer has multiple revenue sources, including: Wholesale On-Premise customers (restaurants and bars), Wholesale Off-Premise customers (liquor stores), Retail On- Premise customers (people drinking in the brewery tap room) and Retail Off-Premise Customers (packaged beer to go from the brewery in growlers, howlers and cans), there were changes in every part of the business due to COVID 19. Aside from how we make the beer, everything else we do has changed.

Business wise, in some cases where one thing went down, another went up. For example liquor stores have done pretty well during COVID, as long as they could find staff and keep them healthy. But our draft business (beer sold in kegs to restaurants) died off because most restaurants were serving outside and found cans easier. So can demand soared. This is true almost everywhere. This caused us to have an excess of kegs we needed to store, which meant we had to rearrange large portions of the warehouse unexpectedly. It also caused a huge strain on the aluminum can supply chain. So sometimes we felt like we were zigging, only to find that there was something else thrown up in our way.

When Governor Baker shut down in-person dining on March 17th, this put both the tap room and the bar/restaurant wholesale business out of business literally overnight. It was stunning, literally, and we knew that it would have a significant impact on our bottom line. In those early days we spent a lot of time conferring with business partners and business-owning friends on the phone, basically speculating about the business impact. Larry and Laurie Drago at Bizchecks Payroll, along with Cape Cod Beer’s accountant Brian Carey at Depaola Begg & Associates were lifesavers as essential sounding boards, and giving us a better picture of how the rest of the local business community was bracing for the impact of the pandemic.

Our first move was to lay off/furlough four employees, at least temporarily, to cut payroll and assess the long-term strategy. The next step was to make a major decision about summer 2020. Because we need to ramp up capacity in the spring to meet the demands of the summer on Cape Cod, Todd made what turned out to be a crucial decision to continue to brew like nothing had changed so that when things did open back up, Cape Cod Beer was ready to meet the demands of thirsty locals and summer visitors. While it felt risky at the time, retrospectively, this was the most important decision made during “the shutdown.”

In mid-April, we graciously and gladly accepted a PPP loan via the Cooperative Bank of Cape Cod, and quickly hired back the laid-off staff, bumping everyone to full time. At that point, we rebuilt the 2020 budget to consider a loss of about a third of our annual income (yikes!), and then braced for the long wait to reopen our tap room and for restaurants to reopen. The next big shock/hurdle was complying with the state-mandated rules for table service, table distancing, capacity and, most challenging, the food requirement. The CCB ‘Brew Crew,” which is made up of three departments: Production (they make and package the beer); Sales & Distribution (the sell and deliver the beer); and Retail (they operate our retail store, tap room and beer garden), all rose to the occasion, coming up with departmental and company modifications to our SOPs to keep our staff and customers safe, while also complying with some very “new-to-us” rules. In the end, after lots of pivoting and bobbing and weaving, we ended up having a pretty good summer outside in our beer garden, and many of our wholesale customers said the same.

Our worst quarter, like most of in our industry was Q2 2020, during the shutdown. Q3 improved significantly as we all “found our groove,” and because we were blessed with warm weather and restaurant customers that were working hard to get back open, so those numbers were down less than expected. Q4 started out like the summer, and we tried to remain hopeful, but dropped like a rock when the cold weather made outdoor dining uncomfortable and the beer garden closed.

Has the way you operate your business changed due to COVID; have you done anything to “pivot” temporarily?

Honestly almost everything we do has changed. Our salespeople haven’t been in the brewery since March, and have all their meetings either virtually or standing six to eight apart in a parking lot around a sales vehicle. Our retail experience has changed completely due to the state-mandated need for table service and to have food available all the time. We have adapted our hours multiple times to accommodate difficulties with staffing and to stay open longer on the days people are coming out and close on the days they are not. We have had to add some surcharges to things like Growler refills because now we need to machine wash every growler, versus refill them like we used to. We had to cancel over 100 events when the shutdown happened, and while we have brought some events back it is nothing like what it was before.

We have been blessed with a young, energetic staff that now better understands that COVID requires that decisions are often made “on the fly” because no one expects them until they happen. We are also lucky to have great local business partners like BizChecks Payroll and Depaola Begg, who not only work with us but work together on our behalf to help us tackle things like reporting for PPP applications and PPP forgiveness, and to make decisions about which grants, loans and packages are appropriate for our business.

Why do you use a payroll service, and why a local one?

As a local producer we understand firsthand the concept of trying to keep money in our community. If people buy our beer, that means I can hire more people. Our employees will then go out to dinner, and shop at local businesses, keeping that money recirculating in our own community. Using a local payroll provider is the exact same thing. I would much rather pay BizChecks Payroll for my payroll service, and have them pay their staff who might order my beer when they go out, than pay a national payroll competitor who doesn’t have staff in the local community and 100% of the money paid to them will leave Cape Cod and has zero potential of coming back to us. The multiplier opportunity of “buying local” is a proven math concept. It’s more than just a good feeling that you are supporting your community. It has a bigger impact than most of us realize. And the more we do it, the more impactful it is.

So that is the primary reason to use a local payroll processor. We also chose a local payroll company because I can go see them, or they can come see me. We can have a meeting, they can train us on their new software, we can discuss strategy in person, etc. While we are surely a global economy, most consumers notice that the bigger companies often farm out their support and call centers, and that usually means that the experience will be more frustrating than anyone wants. When I call BizChecks Payroll someone in their office picks up the phone (on Cape Cod) and talks to me. That’s exactly what I want for something as important as payroll!

While we know that many local businesses do their own payrolls, we never once contemplated that. We have used BizChecks payroll since 2005, when we hired our first employee (other than Todd) and ran our first official payroll. We have run payroll with BizChecks every two weeks since 2005, and are happy to say that since that time the Dragos, and BizChecks Payroll have been one of the best business partners we have. They not only care about our company, our success and our employees, they do an excellent job at keeping up with all the regulations and state-mandated programs, like paid time off, PFMLA, healthcare regulations, etc.  With BizChecks Payroll worrying about our payroll and compliance needs, we can focus on what is most important to the success of our business – making and selling great tasting local beer!