The iconic brewpub chain has successfully brought new money and new partners into the fold as the company adjusts to the evolving restaurant landscape.
There has been minimal respite for McMenamins brewpub since the onset of the COVID-19 pandemic. The social unrest in downtown Portland has also caused sales to suffer.
And the recent wildfires raging across the Northwest has caused some of the chain’s restaurants to evacuate or shut down due to air pollution.
With few people being comfortable inside and poor air quality outside, a successful capital raise was what McMenamins needed to stabilize the company amid a rapidly changing restaurant scene.
After debating bringing investors into the business, founders Mike and Brian McMenamin say that COVID-19 was the “kick in the pants” they needed to sell part ownership of the company.
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The capital raise is now complete. Armed with investors and $20 million in new capital, McMenamins has resumed operations.
There was no guarantee the capital raise would be a success. Nearly 5% of restaurants have closed doors permanently due to the pandemic.
Once a staple of Pacific Northwest nightlife, the bar-restaurant chain has had a bumpy road as any since the onset of COVID-19. The company laid off 3,000 employees, nearly its entire staff, and financials took a 50% dive.
Brian McMenamin (right) speaks alongside brother Mike at their Edgefield brewpub
But an upswell of community members who believed in the brand came together to raise the funds, and with it the ability to hire back around two-thirds of its staff.
“Our employees are all we got. That’s why COVID was such a gut punch,” says Brian McMenamin. “We were laying off people who had been with us for 35 years, people who had become part of the family. Bringing them back has felt good.”
The capital raise has given the company breathing room, and the founders say that so far investors have been universal in their support of leadership. Mike McMenamin and brother Brian continue to strategize about where the business is heading.
Instead of pouring the investment dollars into their latest construction project, transforming the Multnomah County Correctional Facility at Edgefield into a hotel, a plan they had before the onset of the pandemic, the founders have used the capital to retire short-term debt.
The company faces a new nightlife scene, one in which the restaurant’s live music and community events are replaced by takeout, delivery and outdoor seating.
“We never really thought of ourselves as a delivery place before. Not really a ‘grab-and-go’ operation. Our focus was more about community and live music, but you adjust,” says Brian.
Sales are about 60% of where they were last year at this time. Brian says things are “moving in the right direction.” Customers have been coming back, but with no guarantee business will ever return to pre-pandemic levels, Brian says the company is taking things one day at a time.
“People are looking for a new normal. We’re all trying to get a sense of what that new normal is going to look like. I think until we get a vaccine, everyone’s going to stay a little nervous.”
The company will also have its eye on a business interruption lawsuit happening in Multnomah County Court, in which four companies are claiming undue denial of a business interruption claim by their insurance provider.
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If the judge rules COVID-19 qualifies as a business interruption due to property damage, it could provide another source or revenue for the beleaguered industry.
“We’ll see what happens with the case. We may file a claim but we’ll wait and see how things shake out. It feels like everything is still changing by the hour,” says Brian.
“At least the weather has cooperated, up until a few days ago.”
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