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5 Restaurant Chains Banking on Craft Beer

PORTLAND, Ore. (TheStreet) -- When the first big microbrewing boom began in the late 1980s and early 1990s, one of the first items many brewers found themselves learning to make wasn't a brown ale or IPA, but a hamburger.

At the time, it was tough to get folks to simply try your beer. There weren't a whole lot of small brewers around and shelf and tap space that's at a premium now was basically nonexistent then. Your best bets were to pound the pavement and hope some bars and shops would be kind enough to pick up some kegs and cases or to get the people to come to you. That meant food and entertainment, which meant you had to open brewpubs.

As of June, the beer industry has ballooned to nearly 3,040 breweries, according to the Brewers Association craft beer industry group. That growing community includes 1,237 brewpubs nationwide, which is up from 1,020 in 2009 and includes 82 new brewpubs added within the past last year alone.

The brewpub's looking fairly robust for an establishment that only came into vogue little more than 30 years ago. Prohibition knocked out American brewpubs and brewing taverns that dated back to the Colonial era, but early craft brewers saw them as a means of getting their beer directly to the drinker without going through middlemen such as distributors, bars and liquor stores. In 1982, Scottish import Bert Grant opened Grant's Brewery Pub in a train depot in Yakima, Wash., to brew and promote his pale ale, IPA and Scottish Ale. Though it closed in 2005, Grant's brewpub showed other small brewers the way and is as much a part of the American small brewing legacy as growler fills and heaping helping of hops.

It was only a matter of time before some enterprising individuals took that relatively simple idea and began scaling it up to a full chain. Mike and Brian McMenamin were restaurateurs as early as 1974, but opened their first brewpub -- the Hillsdale Brewery and Public House in Portland, Ore. -- in 1985. Today, McMenamin's has grown into a chain with more than 60 locations including brewpubs, hotels and movie theaters throughout Washington and Oregon. The company brews at two dozen of its sites and helped make the Northwest fertile ground for brewpub chains including The Ram and Golden Valley.

From the Karl Strauss Brewing brewpubs that have expanded throughout California since 1989 to the popular Iron Hill Brewery brewpubs that have swept through Pennsylvania, New Jersey and Delaware since 1996, the chain brewpub has been a key portion of the craft beer movement and has helped bring craft beer to diners who might otherwise give it a pass on a casual dining beer list.

Since the recession, however, brewpubs and beer-based restaurant chains have succeeded where their all-you-can-eat, 2-for-$20-meal dishing competitors have fallen short. Since 2009 casual dining traffic has dropped 2% percent each year, taking roughly 7.1 million visits off the table during that span. In the past six years, big casual dining chains relied on their promotional offers -- including 2-for-$20 meals -- so heavily that they accounted for 29% percent of all visits. As of February, visits to casual dining establishments including Olive Garden and Ruby Tuesday are at a six-year low.

People ages 18 through 47 have been shunning such establishments in huge numbers and have dragged down their sales every quarter since 2010, but the numbers get a little better once there's some beer involved. We took a look around the restaurant landscape and found five establishments that are making either the brewpub or taproom model work, with craft beer as a whole benefiting from their efforts.

BJ's Restaurant and Brewery
Locations: 148

BJ's started cranking out deep-dish pizza in Santa Ana, Calif., back in 1978, but didn't start its brewing operations until 1996, when the chain had just seven locations.

Today, the chain has 150 locations in 18 states and will make 75,000 barrels of its own beer this year through in-house and third-party brewers. While the majority of its locations are in Western states (California, Oregon, Washington, Nevada and Arizona account for more than 80 locations), it's found comfortable niches in Texas (32 locations) and Florida (18) while creeping its way east.

So far this year, BJ's has seen profits rise 4.4% after opening three restaurants in the past quarter. The chain plans to add six locations within the next year, including its first location in New York. Though comparable restaurant sales slid 1.1% last year, they've risen 13.5% for BJ's in the past five years as the chain has added locations and revenue.

What about the beer, you ask? Well the taps are stocked with inoffensive light lager, blonde ale, witbier, amber ale, brown ale, Hefeweizen and semi-bitter Hopstorm and Field Day IPAs, but BJ's still manages to throw in an occasional gem. Its Goliath Imperial Red is as strong as its name claims at 9% alcohol by volume and its Brewmaster's Reserve Double IPA is a nice introduction to the style. A lot of the credit goes to BJ's Director of Beer Operations Michael Ferguson, who also splits time as the host of the nationally syndicated beer show Beer Geeks.

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