Beer Creek Brewing Company in Santa Fe County, N.M., is considering taking more pricing to navigate higher-cost, compliant packaging.
Beer Creek Brewing Company is located along the famous Turquoise Trail just outside of Santa Fe, New Mexico, in a historic building surrounded by a stunning mountainous backdrop. The concept features sandwiches, pizzas, wings, a signature green Chile cheesecake, and beer made with local ingredients. It was started by a group of friends who are ranchers and electricians by trade, but who quickly became enamored with the idea of creating food and drink showcasing New Mexico’s bounty.
They morphed into restaurateurs somewhat accidentally about 10 years ago and have navigated countless challenges since – including and especially the pandemic. Co-owner/COO Rich Headley said the concept wisely pivoted its brewing business to include retail in 2020, while promoting its spacious patio. The moves helped Beer Creek weather the unprecedented storm and now the owners are preparing to open a second location “sometime this year.”
They’ll do so while navigating even more challenges, however. While much of the industry is focused on California’s AB1228 raising the states minimum wage to $20 an hour, other ordinances are popping up throughout the country that are also impacting restaurants’ bottom lines. In March, for example, New Mexico’s Santa Fe County approved a ban on single-use plastics. The ordinance covers plastic bags, straws, condiment packets, and more. That said, by no means is this an unusual regulation; there are currently more than 500 citywide ordinances, including Santa Fe proper, throughout the country banning plastic bags. Indeed, newly introduced regulations in this industry in general are also not unusual and, in fact, more than 50 new food regulations have been enacted or introduced in the past five years alone.
But these constant changes underscore the nimbleness required to operate an already complex business. Though Santa Fe County’s single-use plastic ban doesn’t go into effect until October, CEO Matt Oler said it will likely require some pricing actions. That’s because biodegradable alternatives are materially more expensive, especially when considering that nearly 40% of Beer Creek’s mix is to-go.
“We are a pizza place, we do a tremendous amount of business to-go and that takes packaging and all of the things we’re not going to be able to use,” Oler said during a recent interview.
And though there are exemptions to this ordinance, they complicate things even more, Oler said. Take, for instance, the concept’s cups for sauces or salad dressings. In-house, the plastic cups are now considered non-compliant. The instant a lid is put on the cup for a to-go order, however, it’s exempt.
“But we can’t have two (cups). We can’t try to distinguish between the two in the back of house, so our only choice is to go with the non-plastic cup, which is 60% more expensive,” Oler said. “That, times 10 or more orders, adds up fast.”
There are other exemptions tripping up operations, as well. Beer Creek can’t provide straws or condiment packets for orders unless they’re explicitly requested by the customer. Plastic bags for to-go orders are never allowed. And, as is the case for the salad dressing/sauce cups, some things are exempt in-house versus to-go.
In addition to increased costs for compliant packaging options, Oler said there will also be costs incurred for additional training and marketing, as it’ll be on the employees to remain compliant, and it will be on the restaurant to educate customers about asking for things like straws.
“I don’t know how to manage this yet, but I know we’re going to have to find some kind of way to recoup the costs this is adding,” he said. “There’s going to be training in-house to handle the products and the element of training the public. Are we going to need labels to show them that our cups are compliant? These are the questions we’re asking now. There are challenges to come.”
Beer Creek is currently shopping for a new point-of-sale provider, not specifically because of this ordinance but because of the swift pace of changes in the industry overall. Oler said older systems aren’t as equipped to handle credit card fees or to-go fees, for example.
“There are new forms of monetary compensation that older systems can’t handle,” he said. “We’re going to incur such a hard expense from this plastic ban and there’s a good chance we’re going to have to relay that charge onto the customer. Our current POS system doesn’t allow us to do that.”
Oler makes it a point to note that Beer Creek has always chosen “as many biodegradable options as possible,” but up until now, the business has been able to do that without passing those expenses on. This time is different as it applies to most consumer touchpoints.
“We’re being forced to use a more expensive, inferior product across the board to save the environment. We’re totally for that, within reason, but this does throw a lot of expense on an industry that’s been getting its ass kicked since Covid,” he said, pointing to higher wages and food costs.
Santa Fe County raises its minimum wage every year and is now just shy of $15 an hour, he notes. To manage these incremental costs, Beer Creek has already taken pricing and tightened portion sizes.
“There are realities in this industry that we can’t eat a lot more. If they’re going to make us pay higher wages or use different products, there’s no choice but to relay that onto the customer. We’ve eaten everything we can since 2020 on and we can’t continue to do that,” Oler said.
It's worth noting that, despite the continued pressures, Beer Creek is eyeing growth. Oler adds that the restaurant’s brewery aspect provides a significant margin and retail buffer. That’s not to say it’s easy, however.
“This industry is not for the faint of heart. Things like the plastic ban … it’s not the end of the world. It’s not going to tank the company, but it sure overcomplicates a complicated industry,” he said.
“We’re a duck on water – placid on top, but underneath, we’re spinning. With labor, inflation and the public getting grumpier and grumpier, that’s what we’re trying to do in this industry, hold it all together.”
Contact Alicia Kelso at [email protected]
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