Craft beer crisis: LA County’s zigzagging regulations threaten to kill the South Bay brewery industry
by Mark McDermott
On June 29, when Governor Gavin Newsom announced that many businesses that had previously been allowed to reopen would once again face restrictions or closures due to a spike in COVID-19 cases, he likened the process of reopening California to a dimmer switch. The idea was meant to convey that the reopening process would not move in one direction, but instead be subject to changes in both directions in different industries and areas of the state depending on COVID-19 numbers.
“The approach is a dimmer switch, and that approach is different in each county,” Newsom said. “We don’t like the trend line.”
Newsom issued a watchlist of 19 counties that would face new partial closures. Seven of those counties, including LA County, were ordered to shut down indoor restaurants and bars. When the California Department of Public Health issued its order specific to businesses on July 1, it said all breweries would be shut down for on-site sales. It was a shocking reversal. Throughout the pandemic, breweries had not been closed outright but had been able to sell beer to go. Three weeks earlier, breweries were allowed to reopen under a “new normal” in which, like restaurants, they were able to open taprooms by adding outside seating and implement social distancing and other safety measures. Then, on July 2, the Governor’s office issued revised guidelines, saying breweries would indeed be allowed to remain open both for on-site sales and consumption under the “new normal” outdoor dining scenario.
Joel Elliott, the owner and head brewer at Strand Brewing in Torrance, listened to the Governor’s June 29 speech with a strong desire to reach through the screen and quiet him.
“He must have used the words ‘dimmer switch’ a hundred times,” Elliott said. “It may resemble a dimmer switch, but when you get up close and you’re the guy being dimmed, it’s not a dimmer switch. It’s a toggle switch. And we’re getting turned off and on in rapid succession with very little logic behind it.”
It reached absurd levels in July, Elliot said, when the LA County Department of Public Health released protocols for restaurants that went beyond the Governor’s guidelines.
“Brewpubs, bars, brewery and winery tasting rooms, and craft distilleries are to remain closed for onsite beverage or food consumption until allowed by the County Health Officer to resume modified or full operation,” the DPH statement read. “Brewpubs, bars, brewery and winery tasting rooms, and craft distilleries are prohibited from contracting with a food vendor to resume operation.”
Brewers were outraged. The new order came without warning after nearly every brewery — following the County’s guidelines released only weeks earlier — invested thousands of dollars to equip themselves for outside dining.
Tom Dunbabin, the founder of the King Harbor Brewing Company, said his business would have been better off if the County had never allowed them to expand to outdoor consumption.
“It’s definitely damaged us more than if we just kept the limited operations going,” Dunbabin said. “Because what happened to us is the coronavirus restrictions came down and we were limited to doing to-go and deliveries. And all of our customers got it, they were super supportive, and kind of got into this routine of like a ‘new normal.’”
King Harbor, almost miraculously, was able to keep all its employees through the toughest early months of the pandemic. KHBC has three locations — its brewery on 182nd Street and taprooms in Riviera Village and the International Boardwalk, all in Redondo Beach. When the County issued its reopening guidelines in June, the brewery not only equipped all its locations for outdoor dining and formed a partnership with Village Pizza, but also geared up for a nearly-normal summer — ordering more merchandise and brewing more beer. July 4 is typically the busiest weekend of the year, and a brewery can’t allow itself to run out of beer.
“We were set up,” Dunbabin said. “We were serving sandwiches and burritos and it was awesome. We’d had two weeks in a row of almost 80 to 85 percent of normal revenue. All of a sudden we’re like, ‘Hey, let’s start making some plans for what we’re gonna do the rest of the summer.’ And then all of a sudden, they just lop it off. They go, ‘Nope. Now you’re back to go over here….’ That puts me in a position where I might end up with a beer that’s just expiring, and I have to dump it.”
Instead of a big weekend, KHBC experienced a drop even from its worst weeks early in the pandemic.
“It’s turned away a bunch of customers,” Dunbabin said. “So those two weeks that people could sit down and eat, people got used to coming in and hanging out again. Now, with our Village location especially, they come in and they can’t sit down, but they can sit down in a restaurant. So then they go to a restaurant and have a beer.”
Laurie Porter, who runs Smog City Brewing Company with her husband Jonathan, said the “dimmer switch” approach was likewise doing real damage to their business.
“It feels very brutal for us because we spent a lot of time finding equilibrium in ‘the new normal,’ where we were surviving off those to-go sales and home delivery,” Porter said. “We kind of found a balance and then they told us we could reopen. We hired back all our employees, we trained all our employees, we purchased all the stuff to take care of our employees and customers. And then they took it away.”
“It was easier [before]. People had to stay home so we had home delivery sales that were doing well, California shipping, pickup and to go,” Porter said. “But now, with restaurants open and our taprooms closed except for to-go, it’s just not the same. We spent a ton of time and a ton of money preparing to reopen and follow all the protocols and guidelines. It took us well over a month to get everything in place to do so safely and then we were literally open for two weekends and had to close back down. I do personally believe in the safety of our community, and if we are called on to not open and that is actually for the better good of our communities, we will follow it. But we feel like we have the ability to create safe spaces for our customers.”
Elliott argues that few industries are better prepared to create safe spaces for their customers during the age of novel coronavirus. On a Zoom call with the Health Department, and in emails, he made a case that breweries could help everyone learn best practices for operating businesses during this pandemic. Elliott, in fact, early in the pandemic won approval from the FDA to make hand sanitizer at the brewery — and quickly discovered that he was one of the few people making sanitizer that actually adhered to FDA regulations, which require that the sanitizer be at least 80 percent ethanol.
“Look, we’re brewers,” he said. “We’re not bars, we’re not restaurants. We spent the last decade trying to prove to the community that we’re not bars.
And we’re having difficulty helping you curb the spread because you’re not looking at us for who we are. You’re grabbing a square peg and jamming it in the nearest round hole because you don’t know what to do with it. We are an industry of engineers, chemists, and microbiologists. It’s our job on a daily basis to deal with colonies of microflora and to mitigate, identify and control infection. And you have an opportunity here to work with us so that we can essentially create a shining example for the rest of the county, if not the rest of the state, if not the country and the world [in terms of] how the hell do we move forward out of this?”
What’s also unique about the breweries is the amount of space most have to accommodate social distancing. Strand Brewing’s taproom, for example, is 10,000 sq. ft., including 4,000 sq. ft. added to an existing outdoor area when the brewery complied with the County’s reopening protocol in June. Smog City has 16,000 sq. ft., including a 5,000 sq. ft. indoor taproom and roughly 8,000 sq. ft. outside. King Harbor’s brewery is 7,600 sq. ft. with a 2,000 sq. ft. taproom that has been expanded outside, as well.
Elliott says he’s uncomfortable making the argument that Strand should be open for consumption based on how much space the brewery has, because his argument that breweries can operate safely is industry-wide and not specific to Strand. But he added that his taproom is extremely well-suited for safety, as are most of the taprooms in LA County.
“If you include the outdoors we’ve got 10,000 sq. ft. and the ceilings inside are 20 feet high,” he said. “We’ve got big bay doors that provide exactly what the state and the county want, which is airflow. My indoors at times is as breezy if not breezier than the outdoors because it sort of creates a wind tunnel.”
“Anyone who works in a brewery on the production side is basically a glorified janitor,” Dunbabin said. “I mean, all we’re doing is cleaning. You can easily spread infection from one beer to another — you get one little souring infection in a keg, and before you know, that thing can spread and all your beer is completely ruined. Part of what these guys do all day long in brewing is making sure everything is spotlessly clean. On a chemistry level, it’s not just, ‘Alright, grab some Simple Green and wipe down.’ It’s heavy, it’s hardcore. So when all of a sudden they are saying, ‘Oh, we’ve got to set up social distancing,” we were like, ‘Easy. We’ve got a massive brewery, we can spread people out.’ And making sure that we’re clean? We have industrial-size drums of isopropyl alcohol.”
LA County is the only county in the state that has completely shut down their breweries’ on-site consumption. When queried for a rationale, a Department of Public Health spokesperson issued the following statement.
“We only closed breweries that are not permitted by us to prepare and serve food; the bars that are closed are permitted as a low-risk restaurant because they only sell pre-packaged food such as chips,” the statement said. “The Los Angeles County Health Officer Order was modified to close indoor operations for specific sectors which promote the mixing of populations beyond households that make adherence to physical distancing and wearing face coverings difficult.”
The LA County Health Department based its rationale on closing breweries on a study it conducted of bars and restaurants that found 49 percent of bars and 33 percent of restaurants in the county were not adhering to social distancing protocols since reopening June 20. Additionally, inspectors found that workers at 54 percent of bars and 44 percent of restaurants were not wearing face masks or shields. In the Zoom call with County officials, the brewers tried to find out if any of that data came from the 95 breweries in LA County, or more specifically the 75 breweries who do not have kitchens but instead use third party food vendors. They received no answer.
It’s this lack of communication, rationale, and data that particularly frustrates the breweries. More than most, they are science-based folk, and they believe they are potentially being driven out of business without so much as an explanation.
“I just feel like they don’t want to deal with us,” Porter said. “Because there’s only 95 of us in all of LA County, we can’t be the problem, right? But we are complicated. And so rather than deal with this more complicated business structure, they just cut us out of the conversation.”
Elliot said he understood why the Governor issued new restrictions, given the spike in COVID-19 cases. But he is baffled by the County taking those restrictions a step further.
“What Newsom said is we’re going to walk this back a little bit, and I understand where he’s coming from. These numbers are terrible,” he said. “The statistics, the growth rate of this infection, is horrible. It may have been a mistake to open up the way they did, as quickly as they did. So yes, walking it back is the right thing to do, unquestionably. And that’s not what I’m arguing here at all. But what Newsom said was that the state was going back a step to where if you guys can operate outdoors and require that alcohol is sold in conjunction with a meal, then you can keep going.”
Tom McCormick, the executive director of the California Craft Brewers Association, was able to communicate with both ABC and the California Department of Public Health (CDPH) after the release of the July 1 order, which completely shut down breweries. By the end of the day on July 2, the matter had apparently been sorted out, and a revised order was sent out that allowed breweries to stay open for on-site sales and outside consumption. Every other county but LA County followed this revised order.
“CDPH did revise those guidelines late in the day [last Thursday] so by Friday morning we were telling our members statewide that the guidance had been revised,” McCormick said. “Likewise, ABC also came out with an industry advisory clarifying that both ABC and CBPH did allow for breweries to reopen for on-site retail sales, as long as it was outdoor seating only, and that alcohol sales were in conjunction with them. So that’s where we sit right now with the state of California.”
The County, whatever its reasons, has not budged. Supervisor Janice Hahn’s office has inquired with the Los Angeles County Public Health Department to seek clarification for the brewers and better understand the public health rationale behind the decision.
Some breweries in LA County will go out of business if this continues. Craft breweries cannot survive without taproom sales. Even though SCBC is one of the most widely distributed beers emanating from the South Bay, Porter said 75 percent of Smog City revenues still come from the taproom. Elliott said Strand was at least 50 percent, but noted the pertinent issue is not revenue itself, but the profit margin on those sales in an industry that already operates on thin margins. Dunbabin said a month without taprooms will likely cause him to close both his Riviera and International Boardwalk locations. The South Bay brewing scene, which has burgeoned over the past decade, will likely be forced to greatly contract if the County restrictions persist. Newer breweries, such as Surfridge in El Segundo, will be particularly hard-hit.
“If it doesn’t end, it’s a lot of damage that doesn’t make sense,” Dunbabin said. “It’s really crippling the way they have singled out our industry. Especially in our Village location, it’s like, ‘Alright, everyone around here can serve beer on the patio, except you.’ It’s like, whoa. What did I do?”