Specialty beverage retailer puts premium on space
Whether it’s more room to grow or how much product to buy, Rishi Makkar keeps close eye on business.
Rishi Makkar is in a state of never-ending expansion.
He is the owner of specialty beverage store Rishi’s International Beverage, 3835 28th St. SE, which recently wrapped up an expansion, doubling the size of the store to nearly 13,000 square feet.
The store carries more than 2,500 types of beer, 70 rotating kegs, 6,000 wines and 2,000 spirits.
The expansion started less than two years at the location the retailer had moved to from its original 2,800-square-foot 2675 East Paris Ave. SE location. Makkar also owns International Beverage, 6859 Cascade Road SE.
“That was a really nerve-racking move because we had been there for 17 years,” Makkar said. “We were literally climbing over things to get to other products.”
The piling of products that were drawing consumers’ interest and ever-expanding inventory from wineries, breweries and distilleries from across the globe made a move necessary, so when a former Hooters restaurant location opened up around the corner, Makkar jumped at it. The original space was approximately 6,000 square feet, but soon, that store was bursting at the seams, too.
Even with doubling the inventory space, Makkar said it already is nearly full again.
“We could have easily done another 5,000 more feet and wouldn’t have had a problem,” Makkar said. “The past 10 years, but especially the past three, we’ve seen an incredible influx of beers coming into the market with homegrown brewers expanding and a resurgence of cocktails, making a hotbed for vodkas, gins, tequilas and rums.
“And West Michigan has gotten really passionate about wines. So, we’re growing constantly on three fronts of inventory.”
A doubling of space and inventory doesn’t necessarily mean a doubling of company revenue, however.
During the expansion Makkar, said he was careful to look closely at the additional inventory overhead, as well as new heating and cooling, rent, insurance and employee numbers.
“It was tough to juggle all those numbers, because we don’t have assets and resources that big retailers have to know those numbers, so we really didn’t know them until we did it,” he said. “This business is interesting too, because we’re defined by the economy — we’re more high-end products — so we’re more susceptible to economic ups and downs.”
Just as the new costs weren’t predictable, Makkar said Rishi’s is not a good retailer for computer models when it comes to customers. He said because the store is on a main thoroughfare, near the airport, by restaurants and bars and many hotels, new customers come through all the time, in addition to a stable of regulars.
Revenue from products is fairly predictable, albeit unexpected, he said. Despite only making up 40 percent of the store’s footprint, 80 percent of inventory dollars are in wine and result in nearly 56 percent of the store’s sales. The rest of the revenue is a fluctuating mix of spirits, wines and items like mixers and corkscrews.
“Computers don’t tell you when all of a sudden you have a new customer coming in twice a week to buy a Macallan 12, a bottle not many people keep a lot of in stock,” he said. “We watch our numbers very fluidly. That’s a very challenging part for us, but it’s also the most rewarding thing for us, because we make it more about a personal connection.
“It’s more than we just carry three bottles and there will be three more bottles next week.”
Still, when it comes to beer, predicting how much a new brand will need is difficult, Makkar said. Five years ago, if a beer brand was entering West Michigan for the first time, Makkar said he would buy 25 cases of a new IPA, knowing it would sell.
Now, with so many brands growing and entering West Michigan, he said the case count will often get cut to 10 or even five.
Makkar also is already mulling the possibility of another expansion, this time into the taproom business. It would still be a part of the 28th Street building, but because of liquor laws, it would have to be separated. Makkar has submitted plans to the city of Kentwood.
“It just allows our loyal customers a place to come in and relax and try different things,” Makkar said.