Bauhaus Brew Labs opened in 2014. The establishment closed its doors one last time on June 27. Drew Hurst, president and chief operations officer, attributed the closure to cost increases, shifting consumer preferences and the economic impacts of Operation Metro Surge, as well as other factors. Above, the crowd on the final day, with a for lease sign as the taproom has left the space. (Davis Steen)
There has never been a twelfth birthday so bittersweet. Last weekend, Bauhaus Brew Labs, 1315 Tyler St. NE, celebrated its twelfth anniversary before permanently closing its doors, ending its run as a Northeast community hub.
Bauhaus Brew Labs, a Northeast brewery specializing in traditional European brews, joins the growing number of craft breweries, that have shuttered in recent years.
In their closure announcement, Bauhaus management lists “a number of serious challenges over the past few years, including substantial cost increases in our supply chain, shifts in consumer preferences away from craft beer, a global pandemic, and most recently, a surge in federal immigration enforcement.”
Bauhaus lost 50% of its income year-over-year from January to March due to the impacts of Operation Metro Surge, according to Drew Hurst, Bauhaus President and Chief Operations Officer.
“It would be irresponsible to say that that was the only reason we went out (of business) … but then having 50% of our margin fall out from under us during this lowest part of the year, that was kind of the straw that broke the camel’s back,” Hurst said.
Brewing in a difficult industry
Bauhaus Brew Labs is named for the 1919 Bauhaus movement in Germany, a school of artistic thought that encouraged creativity in the face of academic rigidity.
“Right from the outset, the idea was that this could be a place for creativity and expansion of what it meant to be a brewery,” Hurst said, adding that the business was “trying to expand within the beverage category and not be as beer-focused internally.”
Bauhaus was a pioneer in the non-alcoholic (N/A) beer industry, producing and distributing the first N/A craft beer in Minnesota since Prohibition: the Helles Lager in 2018.
Since then, the business, like many breweries, has shifted to also selling THC seltzers, an operation which faces its own issues with the federal hemp THC ban set to take effect this November.
“A lot of breweries, especially in Minnesota, have subsidized declining beer sales with THC seltzers and beverages, so the threat of that potentially going away has definitely also been a looming factor, even before this closure was announced,” Hurst said.
Bauhaus’ closure, despite these pivots, is a bad sign for the industry overall, said Hurst.
“You look at a place like us who on paper did a lot of things right: We saw the market go in different ways, so we adapt with THC, with N/A beers (and) with all this different stuff,” Hurst said. Yet “we still weren’t quite able to find a way to make it work, which to me, does feel a bit scary for the industry.”
The neon sign stating Gemütlichkeit, which is a German word wishing warmth, good cheer and friendliness to those who enter the space, sits just above the wall of taps. The crowd at the brewery filled the space for the final day of the taproom. (Davis Steen)
Disruption after disruption
The craft beer industry has faced significant headwinds, such as fewer young people drinking and competition from THC drinks, even as many consider the market oversaturated.
These headwinds have blown stronger in the Twin Cities. Minneapolis weathered the COVID-19 pandemic and Operation Metro Surge, which have made running a community hub more difficult.
During the pandemic, while alcohol sales increased overall, taproom economics still made business reliant on aid and loans to remain open.
“Our margins in taprooms are so astronomically better than margins on distribution,” in no small part because fewer individuals are needed in the process, said Hurst.
While buying craft beer at liquor stores undeniably helps breweries, when a consumer buys a six-pack at a liquor store, “the store has to keep their lights on and pay their staff, and the distributor has to pay their staff and keep their lights on, we have (to) warehouse it, truck it, all this different stuff,” said Hurst. Each step cuts into breweries’ margins, which aren’t a factor when consumers order a pint in the taproom.
Compounding these issues were disruptions to the supply chain that increased the cost of aluminum and grain. While supply chain issues lessened in the years after the pandemic, tariffs have renewed the issue.
“We certainly see that impact kind of carry over in the form of tariffs,” said Hurst.
Hurst describes the business “getting chipped away from both sides,” as brewing costs increase due to inflation, supply chain issues and tariffs while sales stagnate.
“We did everything we could to keep it alive and it’s always just fighting for that next day, and I think we just kind of ran out of tomorrows,” Hurst said.
A community legacy
Hurst hopes Bauhaus will be remembered for its hallmark concept of “Gemütlichkeit,” a German term for warmth, good cheer and friendliness — which appears in neon over the taproom.
“I hope people remember who we’ve been for the community.”
From weekly trivia to Bauhaus’ famous Art-A-Whirl celebration ‘The Liquid Zoo’ to simply being available as a community gathering space, Bauhaus has always been — as its website proclaims — “never just about the beer.”
Hurst cautions, however, that supporting the spaces residents want to remain open — especially breweries — is important.
“If there’s one thing I’ve learned about running a small business in the past 12 years is that you’re always closer to a floor than a lot of people on the outside ever realize.” While the taproom is closing, Hurst left the door open for those already pining for another pint of Wonderstuff.
“There’s certainly ongoing conversations around what if someone else were to pick up the brand … so I’m hoping there’s a future where some version of Bauhaus exists in the world.”