The Power Up ⎯ SN.01/EP.03
Meet A Beer Store Relying On Wholesale During Construction
Every business wants to grow, but all too often they’re afraid of the growing pains that come with it. That didn’t stop Nick Wendowski, owner of Stone’s Beer & Beverage Market when they had to move into a temporary location in order to rebuild their retail location.
During their temporary relocation, Nick turned his focus to improving internal operations in anticipation of a boom in business when they move back into their permanent location. While also growing their wholesale business from 0 to 150 accounts in two years to offset the loss in business. Nick explains, “We knew that we had to pivot and have some other revenue source and wholesale was the obvious next step for us. Now there’s a ton of competition in that space but we really carved a bit of a niche for ourselves; we’re small, nimble.”
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About The Business
Business name: Stone’s Beer & Beverage Market
Purchased the business: 2019
Owner: Nick Wendowski
Location: Philadelphia, PA
Website: https://www.stonesphilly.com
Sales diversification strategy: E-commerce, retail storefront, wholesale, home delivery, local collaborations
About Our Guest
Stone’s Beer & Beverage Market has been a staple of the Philadelphia community since 1955 and was frequently visited by Nick. In 2018, while Nick was looking to leave his corporate job in healthcare, he visited Stone’s every day for 18 months. There he observed the business and spent time preparing to purchase it with his wife, Jen in the spring of 2019.
Prior to 2016 in Philadelphia, beer was only available for purchase in independent beer stores, like Stone’s. There was hardly a need for clear in-store pricing, the beer would practically sell itself since stores like Stone’s were the only places in the neighborhood you could buy it. However, after Nick purchased the business, he knew he had to invest in modernizing it to keep up with the competition. First, Nick started with operational improvements then transformed it into an influential part of the community, and is now honing in on their sales channel strategy.
To discover how Nick reinforced different sales channels during construction, listen to the whole episode on The Power Up.
Full Transcript
Sean (Thrive): Hello everyone, it’s Sean from Thrive with another episode of The Power Up where I meet with successful small business owners and operators to learn about their business strategy so you can take their insights and level up your own business. Once your business is ready to expand, knowing where to start can be overwhelming. Our guests have some creative solutions for how they’ve tackled tricky problems and turned them into growth opportunities. Now, let’s dive into today’s episode.
Our guest today is Nick Wendowski from Stone’s Beer and Beverage Market in Philadelphia. While Nick was planning his escape from corporate healthcare, he spent over a year visiting Stone’s every day before purchasing it himself in 2018. Nick’s goal was to transform Stone’s into a hub for beer lovers and a staple in the community.
Early on, he curated an extensive collection of beer you can’t find anywhere else, expanded to e-commerce, partnered with other businesses such as a local ice cream maker, and more recently launched a wholesale business, gaining 150 accounts in two years. They also temporarily moved into a new storefront while rebuilding a state-of-the-art beer store in their original location, ready for 2024.
Nick, are you ready to show us how you thrive?
Nick (Stone’s Beer & Beverage Market): You got it. Let’s do it.
Sean: Cool. Alright, so first question I have for you, I want to know more about the bio: escaping from healthcare, going to visit the liquor store every day for a year in 2018 before you purchased it. Tell me more about that whole process.
Nick: Sure. So, our neighborhood in Philadelphia is a city of neighborhoods. Our neighborhood is really kind of a hyper-local, hyper-local focus community. A lot of folks shop in the neighborhood; they like to walk to their stores because there isn’t a lot of parking in a big city. This beer store that I was a consumer at, somewhere I shopped at, kind of like through neighborhood rumblings, my wife and I learned that it might be up for sale. So I asked the owner who he was selling it to. I mean, I’d never bought a business before; I have no previous experience. I didn’t know what I was doing, but I asked who he was selling it to. He told me he was selling it to a real estate developer. So I figured out who the developer was and asked them what their plans were for the store. Are you going to build a new store? Are you going to buy the beer store and run it? The developer said he had no desire to run a beer store; he just wanted to buy the real estate.
I didn’t know anything about real estate, so that wasn’t my bag. I knew a little bit about beer, but I was interested in owning a small business that I frequented and that was in my community. That was the driving factor. I could walk to the store from my house. It’s been there since 1955; everybody knows it. It felt like a lifestyle play for me, to be like, “Hey, this seems cool. I could walk to work, be someone that serves the community, and make this store better than it already is.” I wasn’t really happy in corporate America.
So, I asked the owner and the real estate developer if I could potentially buy the beer business, and he could buy the real estate, which would be nice for him because it’s less money off the purchase price, and he’d have a tenant already built in, which would be me. He agreed. Then I had to gain the seller’s trust to be part of the deal. Like you said in the bio, I went almost every day after work and sat in the office with him and his wife. About 11 or 12 months in, he finally offered me my first beer while I was sitting there, and I was like, “Alright, maybe he’s going to let me be part of this.” Eventually, he did. That’s the long and short of it.
Sean: That’s great. Love that story. So you pestered him for quite a long time and he eventually caved?
Nick: Yeah, it was a pester in a way, but I think he grew to like me in the end. He probably would have sold it to me if he didn’t like me, but in the beginning, he was definitely skeptical. He was like, “This is another guy trying to come in and buy my business.” Like most business owners, you have to protect what you have, and he didn’t know me from anybody. Over time, showing up is like 90% of the gig in life, you just have to show up and do your best. It worked out.
Sean: When you were going through the process of purchasing the business, what kind of due diligence did you do? Did you know the customer volume the business was getting? Did you see a drop or boost in customer volume after the acquisition?
Nick: Just with my eyes, I could see, and I was already a consumer there, so I knew people in the neighborhood shopped there. When I was sitting in the office, as people got checked out over the year, I could see people coming in. But honestly, I never owned a business and didn’t know if 100 people a night made the business work or if I needed five times more. The previous owner kept overhead low; it was him, his wife, and two employees. They were willing to put in all the hours. I’m willing to put in a lot of hours, but I have two kids at home and don’t want to work seven days a week in the store.
Once he gave me his profit and loss statement, I could see the actual take-home, overhead, cost of goods sold, all things I had to educate myself about. I didn’t go to business school, so I Googled every term and had good people around me, accountants, lawyers, to guide me and say the business seemed sound. I knew enough about operations and my experience as a consumer to think that if I changed 10 things about the store, it could only get better. I had a quick list of things to change, and after the acquisition, revenue was up.
The store wasn’t the cleanest or most efficient or joyful operation; it was really just convenient and a legacy business in the neighborhood. Those two things were great: the convenience and legacy. I added basic retail joys, prices on shelves, a clean store, all the stuff we’re used to in retail, that didn’t exist before. It was low-hanging fruit, and the neighborhood responded well.
Sean: I’m hearing some tactical things: adding pricing to shelves and cleaning up the store helped. Anything else?
Nick: Yeah, I don’t want to sound obvious, but beer distributors in Pennsylvania had a monopoly on beer sales until 2016. There was no competition, so there was no reason for stores like ours to compete. That’s why the store fell into disrepair. Now there’s more competition. So the basic retail stuff was obvious.
More tactical was standing up a website, we’re the best beer buying website in the city, which is the fifth biggest beer drinking city in the country. Every product on the shelf is online with real-time inventory. If someone buys a six-pack in-store, it’s removed from the website within two minutes thanks to your company, Thrive, which makes that connection work.
We doubled down in the neighborhood, became more entrenched in the community, donated to local charities, had tons of events, beer tastings, samplings, and food trucks. Beer should bring people together, and Stone’s should be a conduit for that message. So tactics were basic retail, increasing technology, modernizing the business, and doubling down on community presence.
Sean: One last question on acquisition. You mentioned you never did this before. For listeners thinking about buying a business, what’s one piece of advice?
Nick: Understand the numbers. Knowing the numbers makes every decision less emotional. I bought this business because it’s close to my house and I like beer and the camaraderie. If I was more discerning, I could have looked deeper into the numbers or asked more poignant questions about why certain figures were the way they were. I might have negotiated a better purchase price.
Understanding ratios like labor to revenue is important. I didn’t know any of that going in. I just saw the owners making money and thought, “If I can make that, I’d be happy.” It probably wasn’t the wisest way, but it’s working out. There’s some luck involved.
If you don’t know the numbers, save enough money to pay someone who can help you analyze them, a good accountant or small business coach who understands finance. The $2,000 you pay them over a month is worth endless amounts of time and energy to make the right choice. Don’t wing it.
Sean: Alright, wholesale. You went from zero to 150 wholesale accounts in two years. Tell me about that process.
Nick: Our landlord told us about a year and a half ago that he was going to demolish the building, so we had to move out. The new location isn’t desirable retail-wise, nice spot, but not much foot traffic. We knew we had to pivot, and wholesale was the obvious next step.
You can sell beer out the door to walk-ins, deliver to homes, or sell wholesale to bars and restaurants. There’s a ton of competition in wholesale, but we carved out a niche. We’re small and nimble. Many wholesalers in our region are big with many brands and limited salesforces. They don’t provide the kind of service we want to provide to small business owners.
We focused on bars and restaurants that are small, scrappy, and maybe don’t have the capital or space to buy from bigger wholesalers efficiently. Those are people we know and maybe already drink at their bars.
We figured out how to stand this up internally. We needed to carve out space in our software to track wholesale inventory separately from retail. We created internal systems so sales reps can send orders to the home office or retail store, and the store processes, picks, and delivers orders within 3 hours, a differentiator with same-day delivery.
One of our marketing managers was interested in sales, so I promoted him to the first sales job. He and I partnered to build systems and processes together. I wasn’t out in the field; he was. I had to talk to the front desk and staff to understand how orders from sales reps were processed and how much time it took.
Sean: That’s awesome. So you built the wholesale business from scratch while also running retail. What were some of the biggest challenges you faced in scaling wholesale?
Nick: The biggest challenge was balancing retail and wholesale because they’re very different businesses. Retail is immediate gratification, someone walks in, buys a six-pack, and leaves. Wholesale is relationship-driven, with longer sales cycles, invoicing, delivery logistics, and credit management.
We had to build infrastructure to handle invoicing and collections, which was new for us. We also had to learn how to price wholesale accounts differently from retail customers to maintain margins. It was a big learning curve.
Another challenge was educating our wholesale customers about the products. Many bars and restaurants want unique, local craft beers, but they don’t always know what’s available or how to sell it to their customers. We had to become educators and consultants, not just suppliers.
Sean: Did you use any specific technology or tools to help manage wholesale orders and inventory?
Nick: Absolutely. We use Thrive to manage inventory across retail and wholesale channels seamlessly. The software lets us track stock in real-time, so we never oversell or run out unexpectedly. It also integrates with our POS and e-commerce platform, which is critical.
For order management, we use a combination of CRM tools and spreadsheets initially, but we’re moving towards a more automated system to handle orders, invoicing, and delivery schedules. Technology has been a huge enabler for us.
Sean: Looking back, what’s one piece of advice you’d give to someone thinking about adding wholesale to their retail business?
Nick: Start small and be patient. Don’t try to sign up 100 accounts overnight. Focus on building strong relationships with a handful of customers who value your service and products. Learn from them, refine your processes, and grow organically.
Also, make sure you have the right team in place. Wholesale requires different skills from retail. Having dedicated salespeople and operations staff makes a huge difference.
Sean: You mentioned earlier that you’re currently rebuilding the original Stone’s location into a state-of-the-art beer store. What’s the vision for that new space?
Nick: We want to create a destination for beer lovers, a place that combines retail, education, and community. The new store will have a tasting bar, event space, and a curated selection of rare and unique beers from around the world.
We’re also incorporating sustainable design elements and technology to make shopping easier and more enjoyable. The goal is to elevate the beer-buying experience and make Stone’s a hub for the local beer community.
Sean: That sounds amazing. When do you expect to reopen?
Nick: We’re aiming for early 2024. It’s been a long process, but we’re excited about the future.
Sean: Nick, this has been a fantastic conversation. Thank you so much for sharing your story and insights with us.
Nick: Thank you, Sean. It’s been a pleasure.
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