Second in a series.
The craft brewing business is actively changing—not just growing in numbers, revenue and participants but undergoing a significant and fundamental metamorphosis. A strange blend of politics, pandemic, economics and shifting consumer preference is having its effect on the local brewery business model. A small brewery can still open and survive under the old rules but their future growth, success and scale may be limited.
To some degree, the brewery as destination has already become part of this calculus. The days of craft brewers providing a simple bar-equivalent through their taprooms (or tied house, for those familiar with the British phrase) are fading. Consumers are requiring “beer-plus” from their locals, a suitable environment with added features or draws to accompany the frosty beverage. Many breweries choose food or entertainment options in addition to partnering with local causes, organizations or services such as pet rescue, voter causes, fitness clubs or gaming groups.
Dallas’ Pegasus City Brewery chose a different path, that of opening an entirely separate second brewery. “While our first location continues to grow and expand in its production capabilities, expansion of our Design District taproom, the Tiny Tap, was a different story,” said owners and brewers Will and Adrian Cotten, regarding their original industrial-park site. “Not only would it have been a long, uphill battle (re: parking spaces), but the idea of adding another taproom in a different part of the city altogether was very intriguing.”
Brewers are beginning to choose a new and interesting path for expansion, one less than commercial franchising but more than simple expansion of capacity. Satellite brewing is gaining ground as an intriguing alternative to physically increasing the footprint of the original, established brewhouse. In some cases, these new sites are only branded taprooms; for others, they are essentially clones of the original concept in a new (and commercially removed) locale. But like any evolutionary process, sometimes you get a novel variant that shows something new to the world.
Downtown Dallas is an entirely different scene, with its own distinct vibe that we were eager to introduce to our beer and brewery atmosphere.
Pegasus City Brewery opened their second brewery location in late 2020 in the ground floor of the historic Dallas Power and Light Building. The interior of the 1931 structure on Commerce Street was restored to its classic black-and-white Art Deco grandeur, and a small pilot brewing system installed inside with a wraparound bar servicing downtown foot traffic and an expansive corner patio about a block away from the new AT&T Discovery District. “Downtown Dallas is an entirely different scene, with its own distinct vibe that we were eager to introduce to our beer and brewery atmosphere,” says Cotten. “The building itself was an opportunity that made us feel like all of the Pegasus stars were aligned.”
The original Noble Rey Brewing was the first to stretch the traditional craft brewery business model locally when they opened The 2nd Tap in 2016, a small branded space (i.e., no brewing on-site) in the then-newly renovated Dallas Farmers Market. This allowed the brewery, also once physically buried in the industrial neighborhood of the Design District, to present a more visible public face to a consumer sector they might have previously missed, as well as opening an additional storefront for retail sales. Noble Rey closed in 2019 but The 2nd Tap was subsequently purchased and survives today as an independent craft beer bar.
Fort Worth’s Cowtown Brewing opened a branded taproom in Southlake’s Town Square late last year, following Noble Rey’s model. The satellite taproom scheme seems to be the lowest threshold for remote operations, as replicating brewing operations can involve significant capital as well as specific additional staffing and overhead. This commitment of resources makes the move by Pegasus City Brewery all the more interesting, establishing a second source for original brewing rather than just an additional retail outlet. Cotten again: “While it would have been be nice to have all of those things within one space… we just went about obtaining all of the types of spaces we needed and wanted in a different way, a decision that we are very thankful we made.”
PCB is unique in this respect, but they are not alone. Rowlett’s Bankhead Brewing essentially replicated their Main Street brewpub in Fort Worth, taking over the short-lived Funkytown Fermatorium in the West 7th area. Deep Ellum Brewing attempted a similar move in 2019, first opening the Fermatorium as a second brewery and separating the Dallas brand slightly as they focused exclusively on popular kettle-soured beers. Perhaps mercifully, the pandemic restrictions of early 2020 ended the poorly performing Fermatorium after about 16 months of operation. (Bankhead’s Fort Worth location is still going strong.)
Along these lines, both Cedar Creek Brewery (Seven Oaks) and Wild Acre Brewing (Fort Worth) have successfully launched separate branded brewpubs each with independent, on-site brewing, one in Farmers Branch and one in west Fort Worth, respectively. Both are also actively looking to open third locations in Fairview and McKinney, with both still pending development. Malai Kitchen now has three of their Thai-and-Vietnamese restaurants with in-house brewing in Dallas, Fort Worth and Southlake. However, these places tend to operate more along lines of branded restaurant/brewpub models instead of purely satellite breweries or taprooms, and may be subject to (or benefit from) different economic and consumer influences.
With regard to expansion via a franchise model, Hoffbrau Brewing had some limited success with their Dallas-based German brewpub/steakhouse concept in the late 1990s (which to a degree still survives today, minus any brewing ops). Likewise, BJ’s Restaurant & Brewhouse and Gordon Biersch Brewery & Restaurant, both California enterprises, have expanded nationwide with both including multiple North Texas locations; however, these are all a very different and more expansive scale of business than any independent local craft brewery.
As it stands, the Cottens have so far been successful brewing in two places operating in tandem, using their downtown location to experiment and debut beers that may eventually find their way to the Tiny Tap. The space is unique, elegant and popular, and hopefully will prove a successful experiment for years to come.