A Toast to Growth
Making An Iconic Investment Work: Frankenmuth Brewery
By Paul Natinsky
Two teetotaling, longtime investment bankers transformed and revitalized an age-old brewery in an iconic Michigan town.
Anmar and Haithem Sarafa, of Steward Capital Management, found themselves in a position to buy Frankenmuth Brewery in the midst of the 2008 financial crisis. When things went south for a client trying to buy the 19th century brewery, an opportunity presented itself.
“I’m going to call this the accidental brewery purchase,” said Haithem.
“Clients of ours asked us to negotiate the brewery purchase. Which we did. And after we acquired it for them, they came in to us and said we’re getting a divorce and are no longer interested in getting the brewery.
“So after we purchased this for them we had to decide what to do with it. The first thing we did was try to sell it as it was. That didn’t work so Anmar said what do we have to do to maximize the investment, and I said, what the heck, we have to open it. So that’s what we did.”
They thought about flipping the real estate, “but at that point in time nobody had any cash, nobody was going to get financing. It was a difficult market with real estate,” said Anmar. The pair decided to take a chance because the price was significantly less than what was paid to build it after a tornado wiped out the original building a few years earlier.
Anmar insists the property is strictly an investment and not a passion project. Neither he nor Haithem drink alcohol or have any connection to the town.
Haithem has hospitality experience as the former president of Domino’s Farms and handles operations for the brewery, including hiring personnel and managing the facility. Anmar oversees the financials and manages the property as a portfolio component.
Although they are not beer drinkers, Anmar and Haithem are committed to making any project with which they are involved first rate. The Dunkel, Hefeweizen and other varieties of beer, wine and spirits the brewery produces are first rate, says Anmar.
While great care is taken with the brewery’s libations, it’s the location and banquet facility that make the investment work. Anmar says Frankenmuth can’t compete on volume or for shelf space with ever enlarging and consolidating craft brewers and competing products such as hard seltzer. “If you walk in any grocery store…it’s an assault to the senses.”
The last two or three years Anmar and Haithem have focused a lot of their resources in the on-premise business in Frankenmuth.
“Why are we going to chase people around the state when they’re coming to us in Frankenmuth? We just have to push them up the hill and show them the brewery is there,” said Haithem.
“So, we’ve invested in the banquet facility, we’ve renovated it. We’ve invested in social media. We hired a digital content manager to handle our social media marketing. We are renovating the kitchen.
We enclosed our patio to make it all-year-round.”
Haithem said he was used to going to places like Roma in Southfield and later Shenandoah when he was growing up and felt they could turn the brewery into that kind of place in Frankenmuth. “We could give people something a little fancier than a chicken dinner.”
They invested heavily in the lower level to host weddings and other banquet events and answer a shortage in banquet facilities in the town.
“We can host events for up to 275 people, not big enough for a Chaldean wedding but certainly for Frankenmuth,” said Anmar.
“Hospitality is born in both Anmar and I. We worked in the store business for a while and just like anyone else who’s Chaldean we want to take care of our customers, whoever they are and that’s what we try to do with the brewery,” added Haithem.
So all the pieces are in place, but success remains an uphill climb. “It’s been a rollercoaster, a challenging business for many reasons,” said Anmar. “One of the primary challenges we have is trying to operate in essence a wholesale manufacturing business with a restaurant with a banquet facility. It stresses the building out a bit.”
Still, the investors plan to stay the course.
“Over the last seven, eight years it wasn’t investing in the brewery with the intention of selling it, it was investing in the brewery with the intention of improving our product, improving the guest experience for the customers,” says Anmar.
“I’m not looking to exit the brewery today,” he says. He wants to hear, “’Hey, Anmar, I ate at your brewery and it was great, the food was delicious.’ That’s why we do it.”
Anmar says he has done some research that reveals the existence of beer drinkers 6,000 years ago in the town of Tepe Gawra in northern Iraq.
Maybe there is a little passion in this investment.