Invest with McMenamins

[savory]

Is anyone considering this? I have never made this type of investment. If you have any experience or thoughts, it would be appreciated.

Here is a brief summary. If you want more information, click the link below.

According to the proposal: In the coming weeks, the Company will make available to interested investors an Offering Circular containing important information about this offering, including risk factors, which should be reviewed carefully. Investors will be required to provide supporting documents proving that they are accredited investors.

This is a private placement of securities. Securities sold through private placements are restricted and not publicly traded. Shareholders may not be able to sell their Series A Shares even if a need for personal funds arises.

Information regarding documentation required to confirm accredited investor status, and the confidentiality agreement required to obtain the Offering Circular, are available in the Materials for Download.

Series A Shares will be available in three subseries: A-1, A-2, and A-3. The three subseries allow investors to choose the length and return rate of their investment. The three subseries are identical, except as to redemption periods and redemption price:
Suberies Redeemable in: Redemption Price:
A-1 Five years $1,160
A-2 Eight years $1,320
A-3 Ten years $1,480
All Series A Shares carry an annual 3% cumulative dividend. Dividends are payable when declared by the Board of Directors. Accrued dividends must be paid when shares are redeemed and on any liquidation event.
Shareholders will have the option to require that McMenamins redeem their shares at the times listed above for each subseries. Redemptions are subject to certain time and amount limits, as described in the Offering Circular -

Invest with McMenamins - Investment Details

 

[braumeister]

I really like McMenamins brewpubs and I frequent them when I'm out in that part of the country. But it's a low margin industry and not suitable for investment IMHO.

 

[Sunset]

Having seen just 1 private equity deal, I'm jaded as it turned out to be more like a private piggy bank.

I feel it's pretty risky for a 3% return, as since it's private there is nobody to sell your shares to at an appreciated price.
Your shares are to be used partially to pay off their short term debt, yet aren't interest rates at record low ? Basically you are buying out a portion of the founders investment.

I have to wonder, if Covid-19 has squeezed them so hard they need other peoples money to be saved.
It seems many of their businesses would be drastically affected: "

• including 12 historic hotels, 2 full-service spas, 6 soaking pools, 9 theater-pubs and more.
• 24 breweries, 2 distilleries, a winery, a creamery, coffee roastery, bakeries, and produce and flower gardens."

However, OP perhaps you are local, have been to these places, seen the daily usage ?

 

[LOL!]

Someone living near us bought a microbrewery to create a job for their son. Money loser to start with; money loser as an ongoing operation. It is in a nice mountain / national park area, so I guess visits there can be written off as Board of Directors meetings.

 

[ExFlyBoy5]

Having seen just 1 private equity deal, I'm jaded as it turned out to be more like a private piggy bank.

I feel it's pretty risky for a 3% return, as since it's private there is nobody to sell your shares to at an appreciated price.
Your shares are to be used partially to pay off their short term debt, yet aren't interest rates at record low ? Basically you are buying out a portion of the founders investment.

I have to wonder, if Covid-19 has squeezed them so hard they need other peoples money to be saved.
It seems many of their businesses would be drastically affected: "

• including 12 historic hotels, 2 full-service spas, 6 soaking pools, 9 theater-pubs and more.
• 24 breweries, 2 distilleries, a winery, a creamery, coffee roastery, bakeries, and produce and flower gardens."

However, OP perhaps you are local, have been to these places, seen the daily usage ?

I can't add much to this excellent post...but 3%? That's a lot of risk (in my opinion) for not much return. Anything that requires accreditation should be paying out at least 6% as far as I am concerned.

Someone living near us bought a microbrewery to create a job for their son. Money loser to start with; money loser as an ongoing operation. It is in a nice mountain / national park area, so I guess visits there can be written off as Board of Directors meetings.

They bought the whole freaking thing to give their kid a JOB? That is crazy!

 

[geeky_grrl]

The craft brewery business is pretty volatile right now. A good chunk of them are likely to go under in the next few months. https://www.brewbound.com/news/brew...y-they-may-be-forced-to-close-within-3-months

McMenamins is bigger than most and has more access to capital so maybe they can use this as an opportunity. But they rely pretty heavily on travel (all their hotels) and concerts (esp. at Edgefield) and I don't think they sell any of their beer at grocery stores. I'd want a lot better return for the risk than they are offering.

 

[Brat]

I really like McMenamins. They buy vintage properties and put them to good use, I don't think they made much money in the best of times. Frankly, if they established a go-fund-me account I would contribute some $. An investment - no, a community resource - yes.

 

[savory]

There is a new Mc near where we live. It seems to be very successful based upon a couple of visits and passing it on the highway and seeing lots of cars. That is prior to the lockdown.

What got me interested was the reputation they have in this area. It is a local go to place for a meal if close enough to home. Or a special occasion by visiting one of their properties. The operation is respected based upon consumer feedback.

 

[OldShooter]

I have seen many private equity placements and have invested in several small local ones. With an equity investment the upside is theoretically unlimited. With debt, private placement or not, it is a pretty simple risk/reward estimating job.

With any large deal like this one, you have to assume that they are down in the weeds hustling retail investors because the professionals have done the risk/reward thing and determined that the deal is unattractive. So you have to look at yourself in the mirror and channel Clint Eastwood: "...you've got to ask yourself one question: 'Do I feel lucky?' Well, do you, punk?"

One time I got a very nice 4-color glossy offering circular in the mail, then the follow-up call. I told the sales guy that I hadn't even opened it (white lie) but that any deal that had to be sold that way was guaranteed to be stinky. Thanks, but no thanks. That would be my assessment of this deal, too, without reading any details.

 

[braumeister]

Brewpubs are fascinating to many people and often considered as investments. They're popular places that attract a relatively free-spending demographic.

People also see the constant growth in the brewing industry that has been going on for decades and think it's pretty safe to expect more of the same.

But the hard truth is that it's a tough way to make a living for the vast majority. Last time I looked at the statistics, it worked out that for every seven breweries that open in this country, five close their doors forever. So even though there are always more breweries, there is also a higher percentage of new ones than you would expect. Very few new ones have to buy new brewing equipment because there is so much used equipment on the market.

Being a bit of an insider, I generally steer people away from investments like this.

 

[Helen]

I like visiting McMenamin's pubs, we live a mile from the Kennedy School and always take guests there, however their food sucks.

The McMenamin brothers must be worth a fortune in real estate alone. I saw one of the brothers ordering stuff at Hippo Hardware (that's a fun store.)

 

[Chuckanut]

I've eaten at a few McMenamen's and I was not impressed by their food.

They do offer unique environments for eating out which is a big deal for many people. The one near me has a lot of outside seating in a garden like environment and is certainly a pleasant place to have a beer with friends. But, as I said, I would not go there for a good meal.

 

[aja8888]

With any large deal like this one, you have to assume that they are down in the weeds hustling retail investors because the professionals have done the risk/reward thing and determined that the deal is unattractive. So you have to look at yourself in the mirror and channel Clint Eastwood: "...you've got to ask yourself one question: 'Do I feel lucky?' Well, do you, punk?"

^^^ This!

 

[Bir48die]

So, I live in the land of the McMennamin's. Frequented Produce Row when they first got into the business. They expanded. They tanked. Then they've slowly built this empire. They were the first kids on the block. Had import beers when others didn't. Started brewing when others didn't. Famously known for mediocre food and generally bad service. I can't comment on the price of beer since now it's ridiculously expensive in Portland.

From what I understand it's $100k minimum buy in and there are some qualifications in regards to your income and/or net worth.

I had looked at a couple similar models in the past. Both in wine: Willamette Valley Vineyards and St Innocent.

I'm not going to say whether they can make it or not. I will just say they are in the one major business that's in the tank and it's called Hospitality. They are in the two subsets of that which are food/beverage and hotels. Who knows how long both of those will take to recover.

I do love their models to rehab old properties. They are great for the most part if you like sharing a bathroom where you stay.

Good luck

 

[savory]

Thanks to all for your helpful comments! It feels right now there might be other places to look for investments.

 

[braumeister]

Good decision! You made the right choice.

Just for the record, I am actually an investor in some brewpubs and small breweries, and they are doing fine. But I've been in the brewing industry for decades and I know all the people involved extremely well and I know exactly what they are doing and what their chances of success are. There is no way an outsider could invest safely in this sort of business, which probably explains why the McMenamins are looking for outsiders to invest in them.

 

[neihn]

I really like McMenamins. They buy vintage properties and put them to good use, I don't think they made much money in the best of times. Frankly, if they established a go-fund-me account I would contribute some $. An investment - no, a community resource - yes.

+1.

We like McMenamins too. We used to hang out at McMenamins after a long day at work, it is a favorite place high tech workers here in Hillsboro OR. I bet if they have a go-fund-me account, many of us will contribute.

 

[Brat]

Hint, hint McMenamins!!!!

 

[OldShooter]

... Just for the record, I am actually an investor in some brewpubs and small breweries, and they are doing fine. But I've been in the brewing industry for decades and I know all the people involved extremely well and I know exactly what they are doing and what their chances of success are. There is no way an outsider could invest safely in this sort of business, which probably explains why the McMenamins are looking for outsiders to invest in them.

This is the right approach to private investing iMO. The deals I have been in, while my knowledge was not as deep as @braumeister's, were all small, local, and with people I knew or knew of. The principals that I knew the least, a successful local restaurant group, were also the ones in the only deal that completely bubbled, to the tune of $50K gone. But losses are part of playing the game; I knew that.

It is the large deals being hawked to retail investors that ring alarm bells for me.

 

[sheldon cornped]

Agree food is not that good. The McMen in McMinnville is pretty good and you can sit on top of the building and enjoy the sights and weather. McMen in Eugene not good for food or the beer last time we went. As an investment? Steer clear.

 

[brainsqueeze]

I recently saw the Mc solicitation and couldn’t figure out why they’d sell equity when interest rates are at all time historic lows. Why wouldn’t they just refinance their debt at ultra low rates? I can only figure that normal capital avenues have closed to them; translation: banks don’t like what they see and won’t offer them the rates they want/need. This doesn’t bode well. The low interest rates they are offering aren’t enough for the risk in question.

As an investor if I am buying equity, I want equity. I want ownership of the company, not just a dividend. A share that I can sell, even privately, with proportional voting rights and so on.

I want Mc to succeed because despite their overpriced food and average beer they have fun venues and a nice eye for historic properties, preserving our PNW history. But their business faces massive covid headwinds. They rely on intimate, crowded venues where people are drinking, listening to music, crowded into pools and restaurants and so forth. It’s hard to see when that world comes back.