Occupancy costs aren’t generally breweries’ largest expense by dollars. Lately, however, they’ve become what Chris Farmand calls “the silent killer.”
A certified public accountant, Farmand also is the founder of brewery consulting firm and financial agency Small Batch Standard. As many breweries’ revenues decline or flatline, leases may come up for renewal at a higher rent than what breweries initially paid. It can bump the per-square-foot rent on an industrial space into near-retail territory.
In short, bad leases can combine with lagging beer sales to set up a financial scenario that’s simply unsustainable. “Leases are coming up, and those are being marked to market,” Farmand says. “And breweries say, ‘Wait a minute, I was paying $10 a foot. Now you want me to pay $17?’”