Back from the brink: Mission’s 5×5 Brewing adds investor, staves off closure

Things were looking pretty grim for 5×5 Brewing Co. in Mission early this year.

The operation was saddled with old debt, its taproom wasn’t making any money, and expenses were high.

None of those problems were new; 5×5 had already grappled with them for at least two years.

The brewery tried — and failed — to renegotiate its obligations or restructure itself, and no new partners had stepped forward to save the day.

Finally, in January, 5×5 announced that it was throwing in the towel.

Its taproom would close at the end of February, and once the stock of the brewery’s beers on the market had sold, 5×5 Brewing Co. would be no more.

Short of someone buying the operation or some kind of miracle, 5×5’s fate was sealed.

They didn’t know it, but 5×5’s owners should have been looking for their miracle out by their dumpster.

Patrick Costello, a contractor and wagyu cattle raiser from McAllen, had been drinking 5×5’s beers for years. Eventually, he’d spent enough time at the taproom that 5×5 started letting him take their spent grain, otherwise trashed, to use as feed for his steers.

Costello wryly describes himself as the brewery’s resident dumpster diver.

The closure announcement left Costello sad and sentimental, but it also irked the businessman in him. 

5×5 closing wasn’t just sad, he thought. It was wasteful.

The beers were good. The brand was strong. 5×5 had a dedicated base of fans, diehards like Costello.

Letting the brewery die made about as much sense as throwing those spent grains away instead of feeding them to Costello’s steers.

“The brand and the beer lineup that these veterans created is just absolutely outstanding. And I was just devastated to think that it was going to go away,” he said.

So, behind the scenes over the past couple of months, Costello and the brewery’s other partners hammered out a plan.

Costello bought in as a partner. He declined to say how much of a share he bought in the company.

The partners, Costello said, went to work refining the brewery’s business plan.

“We had some very candid discussions about what I saw as the strengths of the business and also acknowledging and wanting to discuss some of the challenges we had,” Costello said. “And the guys were definitely open to looking at a pivot and to refining the business to whatever extent made sense.”

On Monday, 5×5 made it official. 

Its beers wouldn’t be pulled from store shelves and bars after all, the company announced.

5×5’s core four beers — which Costello says make up almost all of its sales — will continue being distributed by L&F Distributors.

“Every month you see another brewery closing,” 5×5 co-owner Stan Cummins said. “And for us to weather through that and to get some new life, I do feel good about that.”

For a company that’s been a hairsbreath from ceasing to exist since February, it doesn’t look like 5×5’s foothold in the Rio Grande Valley market has diminished very much.

Nick LaMantia, co-owner of L&F Distributors, says prior to the closure announcement there were probably 400 to 450 bars and restaurants that stocked 5×5.

After the closure announcement, he said, some places pulled the brand because they wanted to stock a replacement. Others bought up as much of 5×5’s beer as they could, hoping to keep it in stock as long as possible.

LaMantia said it doesn’t look like the shelfspace 5×5 has carved out at local retailers will be significantly diminished either. On the whole, he says the closure announcement probably diminished 5×5’s reach slightly, but not tremendously.

“I think it had maybe a little bit of a negative effect. But I think something nobody anticipated is the positive effect it that it had, bringing awareness back to it — to the point that it brought out a buyer. I think that’s really powerful to know that there were that many people behind the brand,” he said.

Consumers might not notice it, but there’ll be some changes in the way that brand operates.

Costello said in his view, the brewery essentially had two problems to fix: a supply problem and a quality control problem.

Small-batch brewing, he said, can lead to quality variations in beer.

5×5 is switching to large-batch through contract brewing at a large production facility — Abita Brewing Company in Louisiana — which, Costello said, should fix the quality consistency problem.

Bottlenecks in 5×5’s supply chain led to gaps in availability, Costello said. He thinks better inventory management has solved that issue.

The Valley’s beer drinkers will still be able to drink 5×5’s brews, but they won’t be doing it at the brewery itself anymore.

The taproom on Bryan Road in Mission remains closed.

That physical location was in many ways the beating heart of 5×5: decorated with the insignia and flags that make up the core of its veteran-owned brand, patrons sat inside, just feet away from vats where beers were brewing or on a big porch that saw many a concert.

But the taproom was also small, more production facility than bar. It had no kitchen to serve meals out of and overhead was high.

5×5’s next taproom will be a little grander, Costello said.

“We want to create a community-based gathering place,” he said. “We want to have a live music venue element to it. And we’d like to land in a location where we can help give back to the community through local events.”

Costello envisions a place that can serve food. Small batch brewing at a new facility would allow 5×5 to dabble in more experimental beers in-house while still selling its most popular brands Valley-wide.

Where will that taproom be? 

“At this point we don’t have any firm commitment,” Costello said.

According to Costello, 5×5 may make that decision in the next few months.