When one thinks of an employee-owned company, a few stereotypes likely come to mind: a stuffy, artisanal shop, or a co-op grocery store that doubles as a cafe. Now, add breweries to the list.
The Kern River Brewing Company announced last week that it's now a 100 percent employee-owned business. It joins the nearly 7,000 U.S. companies — nearly 800 of which are in California — that are partially or totally owned by their employees.
According to co-founder Eric Giddens, this decision was made about four years ago. It was 2018, and since opening their Porterville site in 2005, they had grown exponentially from the original one bar operation. As their site grew, so did their staff.
“We looked at each other and wondered where this was all going,” Giddens said.
He and his wife/co-founder, Rebecca, when discussing a long-term plan, realized they wouldn’t have a successor when they retire. Giddens’ two daughters made it clear that they want to be a forest ranger, and a writer, respectively; neither had any interest in running a brewery.
“We didn’t want to foist a brewery upon them, so we needed to figure out who was to take control of the company,” Giddens said.
“When we told them we no longer owned the brewery, the first thing they asked us was, “Do we still get to eat there?’” he added. “Yeah, we still get to eat there.”
The Kernville-based company has earned numerous awards for its various beers, and has earned acclaim due to national trends surrounding West Coast style IPAs. In 2019, it was named the Brewery Group of the Year, a national accolade, at the Great American Beer Festival. Giddens said this helped make their decision.
“We basically realized we had put a good team together, and whatever we decided we wanted to keep that team intact,” Giddens said.
What the Giddenses entered into is called an Employee Stock Ownership Plan, in which they transfer the total share of the company into a trust funded by the company.
“What it comes down to is we thought this was the best thing for our community,” Giddens said. “We felt like we could add to everything going on here in this beautiful place.”
Fred Clark, president of the Kern River Valley Chamber of Commerce, said: “As long as they take care of their people, there is nothing better in my opinion — I wish them well."
Eligible employees — they must work 1,000 hours a year — will be given shares of company stock each year, at no cost. In their first year, employees will receive 20 percent of their capable share, and in each year following, their shares will increase in grades of 20 percent.
Shares allotted are scaled based on how much money an employee makes, though it does not exclude roles like servers and kitchen workers.
“We just couldn't envision selling it to an individual or investment group from out of town,” Giddens said. “We wanted it to stay in Kernville, and this seems like the best option to move forward with that.”
Under the guidelines established, at least 30 of KRBC’s employees will qualify at first. Giddens expects more will be included in the mix as they figure out the process more.
“It’s not an easy process,” Giddens said. “‘It’s a government program with a lot of rules and regulations to figure out.”
The option to give the company to its employees, to Giddens, is a win-win. The stocks received cannot be sold or taken with you when you quit. ESOP is designed to keep stock with the company trust, at the benefit of workers who remain at the company.
“We’ve had people waiting tables here for years that will benefit from this,” Giddens said. “There’s not a lot of great career options for people here.”
A 2020 report from Rutgers University found that “ESOP companies were between three and four times more likely to retain staff.”
Any restaurant worker knows that the retention rate can make or break any business. It takes time to train and develop a strong staff, as they need to not only learn the job but also the community and clientele that surrounds it. The most reliable staff, like with any company, are often the first to go unappreciated and the first to burn out.
“I think it’s a great opportunity not offered very much in an industry where there’s no retirement,” said Noah Rose, a two-year cook at KRBC. “Now we can have something that gives us a chance to feel more involved… and at the end of the day what you put in you get back out.”
The trust is overseen by a trustee that the Giddenses and management will choose, who will be tasked with making sure ESOP rules are followed.
And while stock is retained by the employees, Giddens said decisions on hiring and expansion, at least for now, remain with the founders and management.
“I know we’re committed to see through a long transition to where we feel comfortable stepping away,” Giddens said. “Sometimes, you don‘t wanna step away… so it's a 10-year commitment and a lot can happen in 10 years.”