BY JOSH FEIT
jfeit@wweek.com If there were a baseball card for Portland, the McMenamins empire of homebrewed beer, burgers and Grateful Dead poster art would be a vital stat--right up there with Rose Festival princesses, jogs through Forest Park and the surplus of homeopathic gurus. It seems as if you can't spill a hefeweizen in the metro area without hitting one of the McMenamins pubs. From a converted poor farm in Troutdale to an old elementary school on Northeast 33rd Avenue, there are 37 McMenamins locations in Oregon--and six more in Washington--serving more beer and veggie burgers than any other restaurant chain in the state. Taverns are typically small operations run and owned by barkeeps who have their hands full with one location. In contrast, McMenamins, which expects to gross $50 million this year, opened four new places in 1997--with more on the way. What's more unusual is that McMenamins' success has not generated hostility among smaller entrepreneurs. Many of them actually seem grateful for the way the company has established a beer culture in Portland. "Every morning, every beer drinker in Oregon should bow to the East and say a prayer to Mike McMenamin," says Don Younger, owner of the Horse Brass Pub. "He's the single most important player in the whole movement." Kurt Widmer, co-founder of Widmer Brewing Co., says, "McMenamins has been really good for our industry. In those early days, none of us had the dollars to do advertising, and they gave us an opportunity to put our beer on tap." Fred Bowman, founder of Portland Brewing, adds, "They're a boon to our community. I think they've helped define our city." McMenamins' relevance to Portland culture is even recognized by national industry observers. Bill Owens, publisher of American Brewer, fawns over the chain. "There's more brewpubs in Portland than any other city in the country," Owens says, "and it's because McMenamins made it a mainstream concept. They created their own beer culture." Still, there's trouble brewing. Two of the trickiest periods for any company are when it first gets started and when it begins to grow too fast. McMenamins is sprouting like a plant in time-lapsed photography. The rapid growth is causing the company to change its culture, earn some passionate critics and even create doubts in the mind of its founder and leader, 47-year-old Mike McMenamin, a gentle giant who looks like Abraham Lincoln in Asics. "It's getting tougher and tougher to manage," McMenamin concedes. "When you're so big, you lose the close-knit family thing that provides energy for a company. Ten years ago I knew everybody in the company. Now I have to go to these goofy manager things where I speak to a whole room full of people I don't really know--just to make contact." The growth of McMenamins parallels the growth of Portland, and it raises many of the same questions: Will success spoil the very thing that made it special? Does Metro need to step in and throw an urban growth boundary around the sprawling chain? Discussions about growth management take place all over the city--in urban planning task forces, over lunch among academics, in the e-mails sent back and forth among city enviros. The theme is always the same: How does Portland retain its soul as it gets bigger, richer and more populated? For Mike McMenamin the questions are similar, though they surface in different ways--like last month, when he decided to hire spies. Not spies, really, but "secret shoppers"--people who visit taverns to make sure that employees are dressing appropriately and providing good service. It's a tactic McMenamin says he is somewhat ashamed to have used. "Who in their right mind would want to hire an outside firm to watch their own employees? It's kind of sick," he says. "It's the kind of thing you don't want to do." But it's the kind of thing McMenamin says he now must do, simply to manage a company that, since 1983, has grown from a two-room hippie tavern on Southeast Hawthorne Boulevard to a 43-location beer, wine, pasta, cigar and movie-theater empire that stretches all the way from Eugene to Seattle. The man responsible for this Portland success story grew up in Northeast Portland on 12th Avenue and Fremont Street. The eldest sibling by several years, Mike has two younger sisters--Maureen and Nancy--and a brother, Brian. (Brian, a vice president at McMenamins, is often portrayed as Mike's partner, but the older brother is clearly in charge.) McMenamin's father, Robert, worked as a lawyer for the local Catholic church, handling everything from land deals to child-molestation cases. (Today he handles business contracts for his sons' business.) Mike went to Jesuit High School, where he started on the football team as a tackle--just as his father had done--and worked at his grandfather's auto dealership, Wentworth Chevrolet, after school. Mike went to Oregon State University on a four-year football scholarship and married his college sweetheart, Mary Alice, right after college in 1973. The kink in the fairy tale came during Mike's second year in Corvallis, when he quit the football team. "I told him that was fine," Robert McMenamin says today. "But hell, without the scholarship, you're going to have to go to work." Mike quickly got a job at Togo's sandwich shop in Corvallis. When he graduated from college, looking for work, he realized the sandwich shop had taught him more than his poli-sci degree. ("It's all I knew how to do.") Along with an old pal from Jesuit and a college buddy, he bought Produce Row Cafe in Southeast Portland. Produce Row, along with two other places McMenamin soon bought--Bogart's Joint and the Stockyard Cafe--weren't profitable. Mike sold out to his partners, took out an $18,000 loan at 22 percent and started a wine-distribution business. He came up flat again. "Mike had gone broke," his father says. "I lent him about $15,000 to buy the Barley Mill, and this time he got it right." They quickly began opening new spots, such as the Greenway Pub in Tigard. In 1985, Mike, along with Brian--who had bailed out of a failed pizza shop--made Oregon history by adding an on-site brewery to their tavern in Hillsdale, the first brewpub in the state since Prohibition. At the time, it was illegal to sell beer that had been brewed on site. The new brewpub formula was possible because a group of brewers including the McMenamin brothers had worked the Legislature in 1985 to draft a law that would allow brewers to sell their beer on site and supply that beer to one other pub. (Dick Ponzi, Kurt and Rob Widmer and Portland Brewing's Art Larrance and Fred Bowman were also part of this brewpub posse.) Hillsdale now brews beer for itself and the Barley Mill; the Fulton Pub brews for itself and the Blue Moon. Making their own beers from a cramped brewery in the back of the Hillsdale pub, the McMenamin brothers quickly realized that homebrews were a hit. Mike McMenamin's other strategy was to get in the microbrew business without getting into the bottling and retail market. Rather than making beer and selling it--through a distributor--to a retailer, McMenamin kept all the profits in-house. Business smarts wasn't all there was to the McMenamins mix. Early on, McMenamin hired his first manager--Mark Whittlesey, an old Jesuit High School acquaintance. Whittlesey was a Jesuit High School icon, a brainy football star who--legend has it--avoided the Vietnam draft, twice, by gaining hundreds of pounds. He's also rumored to have taken the SAT for several friends. Described by current and former employees as a "cartoon character," Whittlesey quickly became a McMenamins legend. Its cultural emperor (he's the Dead fan), Whittlesey, a heavy drinker and drug-user, is credited with fermenting a sense of fun and spontaneity in the company's philosophy. (People still remember the time he locked his keys in his car and tossed a chair through the window to get them.) With their template in place, the McMenamins took off, opening such Portland standbys as the Mission Theater and Pub, the Fulton Pub, McMenamins Tavern & Pool on Northwest 23rd Avenue, the Blue Moon Tavern & Grill on Northwest 21st Avenue and the Cornelius Pass Roadhouse in Hillsboro. Over protests from nervous managers like Whittlesey--who thought as early as 1990 that McMenamins was expanding too fast and moving away from its commitment to taverns--the company established its crown jewel in Troutdale. In 1991, Edgefield, the former Multnomah County poor farm, was transformed into a winery, microbrewery, movie venue, bed and breakfast, concert venue, herb garden, picnic ground, restaurant and hotel extravaganza. "When you go to Edgefield, you have arrived. You are in heaven," says Owens, the publisher of American Brewer. Late in 1996 the company resurrected the Crystal Ballroom, an early 20th-century dance hall on West Burnside Street, where you can do the foxtrot to the music of the Cherry Poppin' Daddies. "He is truly a pioneer," says Oregon Restaurant Association spokesman Michael McCallum. "He found a niche and it just exploded." Last year was no exception. The company took out an estimated $3 million loan from Key Bank to revamp the Kennedy School, an abandoned elementary school on Northeast 33rd Avenue. You often have to wait at least an hour for a dinner table, but you can happily kill time sipping a freshly squeezed grapefruit juice-and-vodka in the Detention Room. Last month, the chain announced that it's setting up shop in McMinnville, converting a vacant four-story hotel into a restaurant, brewery, pub, hotel and cigar bar. For McMenamin, expansion is the lifeblood of the company. "When I bring up new projects I hear this silence, and I know what it means," says McMenamin. "[My managers] are like, 'What are you thinking?' But now folks have learned to live with me. It's a game I play. It's kind of a test: Can you pull this off?" "He's aggressive without seeming so," says McCallum. "You talk to him and he's so easygoing, but he gets things done." The McMenamins won't say how much they'll earn this year, but the Oregon Restaurant Associationsays a 2 percent net--about $1 million for the Brothers M (who own 80 percent of the company)--is standard for a successful chain. McMenamin isn't flashy with his money. He drives a '92 Chevy. Mostly he uses the money to buy up real estate for the company. Despite his success, McMenamin is concerned. On a recent afternoon, sitting in the back of the Mission Theater as a parade of job applicants interviewed at the surrounding tables, he suggested that the size of the business is challenging the fundamental core of the company: its off-the-cuff creative spirit. "That's the big question," he says. "It's getting harder and harder with all this bureaucracy building up--leading us to do things we never would have done, like making general rules on dress code. I can see now what happens to big companies." McMenamin isn't the only one who is uncomfortable with his company's expansion. With success has come its share of critics. Carl Simpson has a theory about McMenamins. He thinks McMenamins is the Microsoft of the local brew biz. And if you sit down and drink a beer with Simpson, owner of the Dublin Pub--one of West Portland's most successful independent tap houses--he'll kindly draw his theory for you on the nearest napkin. The way Simpson sees it, brewers, distributors and retailers are supposed to be separate businesses, held at arm's length to preserve fair play. It's the same reason the FTC wouldn't take kindly to the idea of a film studio owning a chain of movie theaters or an oil company owning an auto dealership. Simpson doesn't have any problem when McMenamins uses one brewpub, like Hillsdale, to supply another pub like the Barley Mill. Simpson is riled because the McMenamins Edgefield brewery funnels beer (through Mount Hood Distributors) to all 43 of the McMenamin pubs--setting up what Simpson calls a vertical monopoly. Only the big fish can practice this type of business, he grouses. "What prevents a Miller from coming in and opening up 500 pubs, leaning on distributors to distribute Miller only and putting us all out of business?" Simpson asks, looking up from his diagram. "The McMenamins don't care what's going to happen in five years. But micro pubs are going to disappear." Managers of other taverns, including the Horse Brass and the Bar of the Gods, say they aren't concerned about the potential of a McMenamins monopoly. Other brewers--such as Bowman and Widmer--wouldn't comment on Simpson's McMenamins-as-Microsoft theory. "Both Carl Simpson and the McMenamins are great customers," Widmer said. McMenamin says Simpson's theory is only relevant if someone abuses their control. He says he just wants to manufacture and sell his own beer, and he points out that the McMenamins locations carry other local brews as well. Although Simpson thinks McMenamins' expansion is hurting the local brew scene, others think the company's binge is hurting McMenamins itself. Mike Raleigh, who left the company after 10 years of managing some of its most successful venues, thinks McMenamins has strayed from its mission, expanding too fast and destroying the company's core values. "I never thought the day would come when I would want to leave McMenamins," he says, "but I didn't see what I used to see in the place. "The family feeling has definitely disappeared," Raleigh adds. "Maybe that's just part of a normal business, but I thought McMenamins was supposed to be different." Raleigh lays the blame on McMenamins' hyperexpansion, saying employees are stressed because they are stretched too thin. Symbolically, he says, the first thing he did after quitting his job as a general manager for McMenamins was to throw away his pager. According to Raleigh and a handful of other former McMenamins managers, Mike McMenamin has fallen out of touch with the "pulse" of the pubs and isn't sensitive to the pressing problem he's creating by taking on project after project. "Expanding so fast sucked up the talent," says former GM Paul Hehn. "Mike didn't realize that, because he wasn't involved in the day-to-day operations, but we realized it." Today, Raleigh and his business partner, James Newport--also a recent McMenamins casualty--can be found waiting tables and serving drinks at their own tavern, the Low Brow Lounge. They have vowed to open no more than five spots. McMenamin himself acknowledges Raleigh's criticisms. "When you get bigger you definitely lose a little bit of that close-knit feel," he says. Still, McMenamins is hardly McDonald's. In spite of secret shoppers and Mike McMenamin's addiction to expansion, the company is still rolling out one-of-a-kind places such as the Kennedy School. And despite the inconsistent service, adequate food and middling beer, Portlanders--who are generally adverse to "big business"--seem to love it. And let's face it, McMenamins is hardly a fine-tuned corporate machine. The company has only now started to experiment with a computer system to track restaurant sales (boxes and boxes of paper sales slips still crowd the central office) and professional training is minimal at best. Says one former manager, "At McMenamins, they just hand you the keys and say, 'Here's your pub.' There's no management training." More important, the company is still attracting and hiring creative folks like Jon Greene, the 24-year-old reigning champion of the Hillsdale Pub's annual brewing contest. Each year, McMenamins' 14 head brewers submit their best hop concoction. Greene, the current brewer at Hillsdale, won this year's taste-off with his licorice treat--Jabba the Porter. Standing outside by the pub's dumpster on a recent lunch break, wearing shorts and knee-high rubber boots, rolling a Drum cigarette and sporting a full beard, McMenamins' star brewer could be mistaken for a Wisconsin dairy farmer. He's also the prototypical McMenamins employee. Greene loves '60s music--he named one of his brews Voodoo Chile after the famous Hendrix song. He's also a bit of a free spirit. He skipped off to Portland after high school, he says, because he liked the way Mount Hood looked in a photograph. Rather than getting a fake ID, Greene opted to become a homebrewer. He realized he went over the edge when he found himself staying up late at night reading the meeting minutes from a Prohibition-era brew club from Vermont--a rare book he uncovered at Powell's. He started modeling his home concoctions after those in the book. Greene is also a typical McMenamins employee in a more significant way--he's a talented misfit who has risen quickly in the company. Greene was offered a job at the McMenamins Thompson Brewery and Public House in Salem as a waiter. It didn't take long before he was training in Edgefield under the company's head brewer, Keith Mackie. Brew training is supposed to take six months. It took Greene six weeks. After learning how to clean the fermenters and make a mean batch of Hammerhead, Greene was put in charge of the company's historic Hillsdale brewery. He's responsible for brewing up three different beers a week--12 barrels of each. "It's trial by fire," Greene says. "They just throw you in, and if you're good it all works out." It certainly seems to have worked out for Greene, who's never been to college or brew school. He's making $12 an hour. McMenamins has a tradition of promoting people quickly and placing an enormous amount of leadership and trust in relatively new hires. Greene, along with every employee we spoke with, even disgruntled ex-employees, praises the company for this as well as its competitive pay and benefits package. Waiters start at minimum wage, but can be quickly bumped up to Greene's level. GMs can earn as much as $50,000 a year, says a former GM. There's also a 401(k) plan, full health care and profit sharing. The 1,100 employees might not know one another anymore, and they might not tie one on with Mike McMenamin, but McMenamins is still a rare company. Whether or not expansion is in its best interest, McMenamin is possessed by the idea. In the same breath as he's responding to questions about the serious burdens of growth, he's back to thinking out loud about some real estate he's got his eye on. "We just went out to look at this great hot lake resort in La Grande. Here we go! We're getting on the phone and getting every bit of info we can. I'm so wrapped up in that." For better or worse, his company is, too. |
