It's an age-old question: do you ride something out, or do you quit while you're on top? Walking away from something isn't easy, especially when that thing has come to define you for almost a decade. But that's what Phil McFarland has decided to do with Smallbar Division after nearly ten years of building the business, building his neighborhood, and building a culture around craft beer in Chicago.
While craft beer production seems to be blowing right past any plateaus, the retail side of things has gotten complicated quickly. And for Phil, he'd rather look back on the past ten years, than look ahead at what's likely to be a constant struggle to stay relevant. Phil chose Good Beer Hunting as an exit interview of sorts — "because there's only one chance to get the story right, and I know this will be done right." We just hope to do it justice, Phil. Godspeed.
So, Phil, I’m simultaneously shocked that we’re sitting here talking about this today, and at the same time I’m not surprised at all. It feels almost inevitable to me in light of the last six months or so. Your voice in the community, the tone you were taking, the things I could tell you were wrestling with as a business owner. You were one of the better craft beer bars in Chicago on a street that didn’t seem to really want it anymore, at least in the same way. And you were highly cognizant of that.
I think that’s fair. And it’s interesting to hear what you say about what I’ve been saying over the past six months.
You got cranky!
I did. Well, not just cranky. I didn’t want people to be surprised. I wanted there to be a moment where this news came out, and folks would look back, and be like “Yeah, you know what, now I see where this came from.”
So in your mind, was this inevitable for awhile?
We’ve been fighting it. I didn’t want to concede. I wanted to prove that what Division St. has become could co-exist with what we wanted to do. So we’ve been fighting hard to maintain a hold, and relevancy on the street. And we have, but I’m looking to have a business that’s growing, not fighting to survive.
Smallbar has gone through a number of iterations over the years in an effort to stay relevant. The Smaller we know now is very different than previous versions of Smallbar.
That’s certainly true. In the bar and restaurant world, to have the doors open for ten years is a long time. And no place is exactly what it was when it started. There’s other venerable, well-respected beer bars in town that look nothing like they did twenty five years ago. They’ve grown, they've evolved, they’ve rolled with the times. And they’ve gotten better at what they do. To me, if you’re standing still, you’re slowly dying.
Did you have an original mission for Smallbar?
I’ve always felt the need to have a mission that was pretty clear, which we had in 2004. Good beer, a variety of beer, kind of a fun beverage program.
At the time that was practically revolutionary. I mean, we’re talking nearly a decade ago.
And it was a lot of beer that we wouldn’t dream of carrying now, like Blackened Voodoo Lager and Stella Artois. They’re fine beers, but just not relevant.
Someone once told me that you were stubborn about that Stella handle. That you once claimed they’d never get you to change it because it just sold so well.
At the time it was wildly popular. The kids that are drinking craft pilsners now were crushing Stella in those little fancy chalices and thinking they were pretty hot.
How long has it been since you had Stella on?
Oh, nine years? It’s been awhile. It’s been awhile.
Describe some of the iterations of Smallbar over the years for people not familiar with it.
We started as a place with a wide variety of beers, with maybe 180 placements, 12 handles at the time, so the bulk of the variety was in the bottle list. And at the time, the bottle list had a lot of turn. That’s where people were playing and exploring. And draft was a lot of mainstays — you had your pils, your IPA, your white, your Guinness. A lot of the bottle list was import, a huge selection of German styles, and now we have one German Pils, and handful of things from Schlenkerla. So over time it’s really changed what it means to be a beer bar, which is driven by what’s available. The variety and price points, and local, domestic production is through the roof, which has changed what we look like from an offering point of view. We also always believed in better-than-average bar food. Going back to 2004 compared to now, what that means has changed a big deal. Probably almost more than the beer movement. What good bar food means has come a long ways.
I would almost describe your menu as chef-driven. That menu is seasonal, it’s thoughtful, but people still think of it as decent bar food.
Right. I think that’s true. That’s something that’s been a hard thing. Because our idea was to create this menu that was as serious about ingredients, and seasonality, and technique as the beers and beverages we were featuring. And you know, that’s where Justin came in to play. And I think the last four years, of what we’ve offered in terms of food, I couldn’t be more proud of. I’d put it up against any beer bar in town, frankly.
Somewhere in the middle of that development, Smallbar was something else. Five years ago, if you asked someone what Smallbar was, they’d say “soccer bar.”
Right. That’s one of the things, even back in 2004 when we had Gumballhead in bombers because that’s all you could get, we also showed soccer. My business partner and I at the time were both fans of the game. And there weren’t a lot of place you could watch it, so it sort of felt like we were just doing what we love to do. A lot of the things we used to cater to were niches at the time. Really small, specialty markets. Soccer was one of those, and we became known for it. At some point, and I don’t know entirely how it happened, that side of the business kind of grew to overshadow everything else. It came to be the most defining characteristic even though we had this dynamite, and ever-improving beer program. Soccer was what people knew us for. We had a lot of fun with it. It was always meant to be part of who were are, not who we are.
You and I had a conversation some time ago, maybe six or seven months, and you wanted to discuss what people thought about Smallbar at the time. I think you were interested in thinking about another iteration and wondering what that could even be at this point.
Yeah, with the ten year anniversary coming up, there was some real internal debate of whether I want to do another five or ten years here. Because at that ten year mark, if you stay and reinvest and renew the infrastructure and do the things you need to do to continue a business, you’re sort of making a commitment to another five or ten years. And I was asking “what’s a Smallbar that I want to be fifty years old and running? What’s that look like?" That was a debate I was having in my head, and with some of my partners. To me it was really about how far off that was. I was hoping to get a real gauge on whether these goals were something I’d want to do, or could do, or would even want to do here.
It seems to me that the biggest factor at play there was how Division St. itself has changed over the years. That was the gorilla in the room for you guys. Can you describe what Division St. was, and what it’s become?
Yeah, I do too. When we opened in 2004, there was Mirai Sushi, Inn Joy, Milk & Honey, maybe Moonshine. There wasn’t much. You had Rainbow Club, and Gold Star, some classics. There was a lot of boarded up storefronts, a lot of paper on the windows. There was not a lot of foot traffic. There was not this vibrant patio scene that there is now in the summers.
We had a pretty good reception from the neighborhood. And we were meant to be a neighborhood place. Not trying to hit a trend or cash in. Just a cool, fun place that reflected what Ukranian Village and Wicker Park were then. It was great, and has been for a long time. The street grew — a lot — and for awhile that was really great for us. It became more of a nightlife strip. And we had a role to play in the total mix.
Sure, there were a lot of new condos, and people moving in, and a lot of them had cash to spend going out at night. That was a big deal for everybody on that street.
There was a time, maybe three or four years ago, when it was one of the hottest nightlife strips in town. And what I thought made it great then was that it wasn’t Division and Rush St, people getting hammered on cheap booze and puking in the gutters. It was a bunch of businesses that were independently owned, independently operated, that had their own vision of a cool, quality offering. And doing something unique. I think we had a place in that, and we all grew and thrived together. I don’t think it’s untrue to say that in the last couple years the street made a definite pivot. And the direction it took started to cut against what we do, and what we offer, and frankly the types of guests that we appreciate what we do. Grown folks that want to eat and drink well and have a chat, and don’t need a TV blasting at them or a DJ. That’s become less and less desired. We get a lot of folks who come in that don’t know us on a Friday or Saturday night, and they’re like “Wait, you do what? You don’t have this?” As that’s gotten more common. It’s become obvious that the folks who do like what we do, don’t want to deal with getting there anymore. And that’s a hard thing for us.
Well that’s what the whole Rush St. area is for a lot of people. It’s a scene for a scene’s sake, and it’s really tough to be there if that’s not your thing. It’s a monoculture.
That’s the exact right word for what Division St. has become.
Recently it all came to a head for you when they announced they were going to do a holiday bar crawl in Wicker Park. They did it up in Wrigleyville previously, and it’s essentially been a blight on the city. But as long as it’s contained in Wrigleyville, no one will really notice. But to have it on Division St, with places like Smallbar, and now Intelligentsia, I mean these are places that are probably considering just closing their doors that day to avoid the chaos. You came out with a pretty strong voice of not wanting that event at all.
Yeah, to be honest, it was a marker of what we’re talking about. People have been complaining that Wicker Park is the new Lincoln Park. And maybe true. And maybe not all bad. But to me, what was starting to happen was that we were speeding past Lincoln Park and going directly to Wrigleyville. And I feel like that has more baggage that some of us business owners want.
Well, what happened in Lincoln Park happened slowly enough that there are still business that were able to maintain pockets of relative calm and respect. There was some integrity and a vibe, but you don’t get that in Wrigleyville. You’ve moved the bar before, and decided not to move it again.
We’ve done it in other locations, and we’ve opened and sold off. Division St. for me has always been the mothership. It’s always been, I think, what most people think of when they think of Smallbar. There have been other attempts to expand, but we sort of pulled back to just Smallbar Division. So selling that hasn’t been an easy decision. But ten years is along time — we had a good run.
So they’re buying the space, the infrastructure. But there will be no Smallbar Division at all anymore. So what is the legacy of Smallbar in your mind.
I would like to think, and I’m sure people will debate this openly, and maybe even heatedly, but I would think that we contributed a great deal to the growth of craft in the city. We were there in the early days, not as long ago as Maproom and Hopleaf and some of the real granddads of the scene, but a long time ago. We were one of the first draft accounts for Half Acre. We’ve been a Gumballhead Three Floyds account for a decade. So it’s my hope that we helped, as a specialty retailer, bring craft to the mainstream. And weather or not craft coming into the mainstream has been a little but of our undoing as a specialty retailer, who knows. But I hope we’ll always be remembered as a contributor to what beer in Chicago has become.
Let’s talk about that mainstream transition a bit. As more mainstream audieces started coming in to Smallbar and maybe not with the intention of it being a specialty retailer, how did that change the way you did business.
There was a time five or six years ago when we had let ourselves be pulled by the street. That what we meant to be had morphed based on what was happening on Division. And the changes we made to the beverage program and the chef, Justin White, really doubling down on craft and quality, that was sort of a recognition that we’re not just going to be one of fifteen places to get a burger and a pint, that we had to be the one that was doing it really well.
These guys that are buying the space and still attempting to do a craft concept, what would be your advice to them as someone who’s been there for almost a decade?
I think they have a different situation. This city is enamored with shiny and new. They love new bar and restaurant concepts. And that’s a thing that I wrestled with even during the meeting you and I had six or eight months ago, which is that being a ten year old bar or restaurant is a really difficult place to be. Because you’re either twenty years old, and you're a veteran and you’re not going anywhere. Or you're one to three years old and you’re so hot right now.
It’s the upside of being the Hopleaf, or Bangers & Lace, right? Both are benefiting from either that long-term success as an icon, or that freshness of a new concept that hasn’t worn off yet.
Absolutely, that’s a perfect illustration. And we find ourselves in between, not quite a veteran, and certainly not new, no-mans land. So had we stayed, I think we probably would have been looking at a renovation, re-concept, a re-packaging of what we love. And I think these guys are going to benefit greatly from being the operators they are (which I can’t say yet) but they do fantastic projects. And then, they’re going to have that opportunity for a fresh start, which I think the space needs. I’m excited to see it.
A few months ago you put out a press release when we launched the pop-up brewery taproom concept. And that worked because you did have those strong relationships with breweries. But part of that press release was that you were going to try and simplify how you were putting together your tap list. You said you “weren’t a cat chasing lasers any more.” Going forward, it wasn’t going to be about new hotness at Smallbar. What was happening in the market, or in your own experience, that gave you this revelation that you weren’t benefiting from chasing the new thing all the time anymore?
It was a explosion of opportunities, and sorting through them was becoming overwhelming. We were buying some things on criteria that I couldn’t articulate anymore. Almost picking at random at the fifty new options in front of me. And obviously tasting and quality is a factor all the time, but it started to feel like we didn’t have a game-plan for why we bought something. We bought it because it was good, and it was available, and frankly there’s too much that’s good and available to just buy that way. I felt like we needed to be more strategic and intelligent about who we do business with and how we make those decisions. So we did that, and instead of doing a little bit of business with 150 breweries, we do a more meaningful amount of business with 80.
And why was that important to you
Because on one hand we have breweries that helped us build the business. Three Floyds and others we’ve been doing business with for ten years. We’ve grown together. And Firestone Walker, new to the market, but I’m an absolute fanboy. So I started thinking about it, and asked myself, “Am I going to buy one less barrel from Firestone? Or one less from Floyds and Allagash in order to buy something that’s just new that week?" It sort of felt a little untrue to me. They had been there for us, they make great products, they’re really well-known, and we were buying other things that were taking longer to sell though, and required more hand-selling.
That’s a balance that seems like every beer buyer has to strike going forward, which is how do I capitalize on the equity of these brands that I’m bringing in? You mentioned Pivo Pils in that press release, Allagash White, these are brands that people see all the time now, essentially replacing that Stella Artois handle that you guarded for so long. But still having to bring in new, interesting, exciting things all the time so that the conversation continues about what’s interesting in beer. Because that’ll never stop. You’re one of the few accounts in the city that brings in Transient from Lansing, IL, who makes almost zero beer. So you’re still looking.
Well their beers are great! I mean, you talk about chasing lasers, I will chase that laser. Those are good beers.
So it’s not like you were just deciding to close yourself off to what was happening and becoming a cranky old man. You were looking for some balance. You were looking for a gameplan.
Yes. A gameplan, and a reasoned explanation of why “no.” Because it just got to a point where I couldn’t say “yes” all the time. It was just too much beer, too many options. And there were some people, some hard meetings, where people were like “what do you mean you won’t take this in?!” And I just had to tell them, “we can’t.” We’ve got the volume of liquid that goes out the door every year, plus or minus 15%, but it’s pretty fixed, and when you start splitting that down more and more ways, everybody feels it.
Yeah, you're kind of a numbers guy that way. You look at volume, velocity, things that most bar owners should be looking at, but many don’t bother because they just see the excitement that’s in the air and assume everything will work out. Are there trends on the retail side that concern you? Beyond just the number of breweries available in your market?
To some extent. The things that will be hard for the industry will sort themselves out. There’s been all these articles about the downfall of craft, and I don’t think the issue is a drop in quality with newer breweries. I don’t think that’s going to hurt craft broadly. I think it’s going to hurt those breweries specifically. To me there’s not a big canary in the coal mine that we’re all missing with craft as a whole. I do think there’s getting to be, probably, more beer than maybe there are handles and capacity for. But that’’ll sort itself out.
Well, as shelves start to buckle, and handles become invisible, I wonder if it’s a saturation point issue, or an infrastructure issue. Because the structures we have in place are based on a really old, and different model of what beer is. It starts to sound to me like we need new concepts for where and how we can drink beer.
One of the things I feel like may happen as we've slowly become more American craft focused, we stopped dealing in imports that were more expensive and slower moving. So I feel like what you may see is craft accounts that become more specialized. More curated and more brand loyal. Like “We’re a Firestone, Floyds, Allagash, Surly house.” And you’ll be guaranteed to find beers from all those guys on, maybe two.
I feel like consumers want to know to expect. Every single bar you walk in to, the notion of a beer bar, there used to be eight or ten in town, not there’s I don’t know 120? It’s just become a matter of degrees in how intense, how hardcore are you. But I think people want to know they they can walk into a bar and get a pint that they can enjoy. Something they can count on.
I feel like that’s become important to me too, just a consumer of one here. It’s not attractive to know that someone’s going to have an endless list. That’s not a compelling reason to go to a specific place. Hopeleaf for example has one of the biggest lists in the city, and if I want endless variety that’s great, but that’s almost never the inclination to go out anymore. The inclination now is to go somewhere where they have a specific point of view on beer, they curate, places like Trenchermen, just down the street from the studio here, I often find myself stopping in because they only have six or eight beers, with variety, and it changes a lot. There’s often a couple Off Color beers there, a couple other locals, and a couple special things from farther way. And that’s it! It’s a modest list. I kind of love walking in to a smaller set.
Variety at a certain point can be intimidating.
Or just exhausting, even if you’re not intimidated. I don’t want to look at a list with a hundred beers on it anymore. It just doesn’t help me.
The thing with that too is when you look at your iPod, whatever you’re listening too, I always feel like there may be a better song for that particular moment that I’m missing right now. And I start to feel that way with a list that size, where it’s like there’s a hundred drafts…should I be drinking that one? Is this the best one?
Music is a great example. Spotify, talk about an endless resource, I don’t even have to own it — it’s just there. But in that moment when you’re in the car, you don’t want to have to search for something. You don’t want to rack your brain about what you want to listen to right now. So for the last month I’ve been listening to nothing but T.W. Walsh’s Blue Laws and I kind of love having that on repeat for awhile. Maybe in a couple more weeks I’ll move on to something else, but I don’t know if that’s just us getting older, and we’re sick of playing the game, or if it’s a fundamental issue with the maturing market with the number of options available.
I think it’s that. I think at their core, people want to have things they like and they can find them at a price. They want some control.
One of the things that we talked about when we met was trying to figure out who the competition was for a place like Smallbar. It’s not that you have to compete with neighborhood bars and dive bars anymore, because you elevated everything out of that. And then you have niche, or concept places that are coming from the other side. You can always be more timeless than those places. The real competition we realized you were up against was the breweries themselves. If a brewery has a taproom, there is no better place to drink their beer than in their own house. It’s not just access, some of these places are just rad. Half Acre is rad. Penrose is one of the most beautiful places to drink in the country. For you, there haven’t been a ton of taprooms in the city yet, but they’re coming. That was something that woke you and me up a little bit when we finally admitted that they were your biggest competition.
To me, as a specialty retailer, when craft was small, if you were really a beer lover, the only place you could get a variety, or try weird beers was at craft beer bars. We had There Floyds in Munster, which is close, but not that close, Two Brothers in the burbs, which was close but to that close. There just were’t that many breweries, period. Much less taprooms. And the shift that I’ve seen is that as beers become more popular, I feel like specialty retailers roll and distribution has degraded because so many more places are featuring craft — it’s become much more mainstream — and I don’t mean that in a bad way, it’s just kind of a fact. I mean, I go to places regularly where I’m surprised by their tap list.
And that sort of changes you position into market. At some point, there’s no such thing as a specialty retailer anymore.
Right. That’s how I feel. To me, a specialty retailer used to be the hub of beer nerd life in Chicago. That has certainly shifted to the producers. And there’s so many more now, opening great taprooms, doing great businesses, and people, and me too, want to go where the sausage is made, where it’s freshest, where the story is right there in front of you, real and compelling. You don’t have to hear it second-hand from a server. You can look over your shoulder and see the tanks. That’s the biggest challenge for folks in the craft retail segment. As more breweries come online, more taprooms with growler fills, and every neighborhood gets their local spot where you can do these things, I think it becomes harder and harder to carve out a niche and stand out as a retailer.
So, what do you want to do next. What things in this world are you suited for?!
I certainly want to stay in beer. That’s a fact. I don’t want to be on the retail side. I just think that’s gotten really crowded and difficult, frankly. For me, the growth and enthusiasm for beer is on the production side. So I see myself somewhere on the marketing, strategy side for a brewery, maybe a big one, maybe a small one, I don’t know. Honestly that’s going to be less up to me than it’s been for the last ten years. I’m going to have to see what comes my way. I had a career in advertising before I dove head-long into this.
Which is ironic to me, just because if I think about Smallbar, I don’t think about a guy with a lot of gimmicks. You weren’t out there seeking press constantly. You were’t advertising. It was a pretty humble, traditional place. How do those things connect?
I think the play with Smallbar for me was a brand that traded on authenticity. And we weren’t the shiniest, newest, best whatever. But we were reliable, comfortable, timeless, neighborhood place. And I feel like we communicated that in our menu, our offerings, how our staff approached you. I like to think that we have one of the friendlier beer bar staffs in town. Which was always something that was really important to me. To me, it was more that, how we carried ourselves and portrayed ourselves as opposed to pushing ourselves out there with print ads in Red Eye, and sort of beating our chest a lot. We let our product speak for itslef and hoped that people enjoyed it.
Now the other side of that is that you’ve been a self-employed entrepreneur for ten years. What is it going to do to you to work for somebody else? Do you have the capacity to be part of a larger organization again? Or are you one of those guys that’s forever unemployable?
I think I do. One of the things that’s happened in the last ten years is that I’ve had kids, they’re getting older, life’s changed a lot. What I need professionally has changed a lot. It’s been an absolute thrill to be running Smallbar, and have this role, but I’m sort of looking forward a little bit to a job that’s just a job. Sort of take it down a notch.
So describe to me what type of organization you would be excited to be a part of.
I want to work where I’m excited about the liquid. Thats’ something I’m hopeful for. And to me, these days that could be a lot of different things. It doesn’t necessarily rule out big breweries, like Goose Island would be a fantastic place to work. The AB ownership to me is a non-issue. It’s allowed them, if anything, to do more fantastic beer than they ever could before. And I’m all for that. It could also mean trying to find some way to convince some of the medium but quickly growing, longer-standing breweries in town that it might be time to start thinking about your growth and how you manage this from 20,000 barrels to 100,000 barrels a year because it’s a big change.
What’s the hardest, or saddest part about walking away? What are you feeling?
Like with anything, it’s just calling it. Really letting it be done. That’s hard.
It’s something that we’ve done with our nightlife properties, before I was a bar owner, we were promoting events that were weekly and monthly, people loved and flocked to, things we ran for six, eight, ten years, really popular. And there got to be a certain time when you could walk in and just sort of tell this thing is on a down-stroke. And to me it’s important that when you have something that’s been so great, to not run it into the ground. To let it have a proper closure. I feel like that’s where we are now. Letting it live on in peoples’ memories as this great place. That’s the way it deserves to be remembered.
And your favorite part about walking away?
My favorite part is going to be just the sigh of relief. Not having a small business hanging over me. Because it is hard out there. I’m a plumber, HR manager, accountant, dry waller, marketing and PR guy, beer buyer, beer educator, floor manager, bus boy — you name it and it gets done. I think it’ll be nice, whatever I do next, to have a little bit more focus, and be a little less personally invested. My personal identity is very much tied up in Smallbar.
How long do you think that’ll last? I mean, people still think of Smallbar as soccer bar. I have a feeling people are going to thinking of you, at least this generation, forever as Phil from Smallbar.
I don’t know, I don’t know, but I’d be good with that. I’d be fine. That’d be all right.
Beer is so much more than what's in the bottle for the men and women who make it and sell it. There are real livelihoods at stake, and they spend an inordinate amount of time thinking about the industry they serve. These are their forward-looking thoughts, and their critical thinking on what's happening now.See more Critical Drinking™ stories