Riff Raff Brewing Company will be downsizing to one location in September.

The Pagosa Springs brewery announced on Monday that it will be leaving its original spot at 274 Pagosa St. on Sept. 30 in favor of its “On the Rio” brewery along the San Juan River at 356 East Pagosa St.

After 11 years of business, the owners made a multifaceted decision based on their desire to only operate one location and the struggling state of the brewing industry nationwide.

Brewery President and co-owner Jason Cox said the industry is taking a hit right now because of the market’s oversaturation and the fact that Generation Z is drinking less alcohol in favor of consuming marijuana.

Twenty-four states have now legalized marijuana, and recent data from a 2022 survey conducted by New Frontier Data shows that of people ages 18 to 24, 69% prefer marijuana to alcohol.

The main issue for Riff Raff was location. Having two restaurants within a half-mile of each other is creating competition within the company, especially in servicing around 13,000 residents within the county, he said.

“I would characterize as a cannibalization of sorts. Just having these two brands so closely related and not hugely differentiated in the menu, we started seeing business go down at the original location,” Cox said.

It was a rough fiscal 2023 for the brewery, as it was the first year Riff Raff did not turn a profit. Cox said the consolidation of the two breweries is estimated to save the business millions of dollars.

Cox also said consumer behavior varies depending on which side of town a business is on, and recently it’s favored the “On the Rio” location.

At the business’ wholesale peak, it had around 50 accounts on the Front Range with a few locally, Cox said. But as more competitors enter The Front Range, it’s become difficult to compete, and that number has decreased in recent years.

Some breweries are also being purchased by large companies like Miller-Coors and Anheuser-Busch, which have much greater distributing power, giving those brands the ability to be dispensed at a higher volume.

“We've seen that on the wholesale side, for sure, where we just kept getting pushed down to nonprime facings and shelving (at alcohol retailers),” Cox said.

Plus, the cost of production started increasing because of the price of ingredients. At the beginning of 2023, beer manufacturing costs had risen by 30%. This, coupled with regional and statewide labor shortages, have also made it difficult for the brewery.

Riff Raff’s benefits of downsizing is its ability to streamline operations at one location rather than going between two operations.

However, Riff Raff has the benefit of owning both buildings. Cox hopes to lease the original location to a new restaurant owner who can move in a “turnkey” fashion.

Cox says the move won’t impact employment at all. Eighty percent of his staff already works at both locations.

“We're going to close Sept. 30. We've got a couple of people switching industries or moving out of town. But, we have no anticipation for any layoffs of any sort,” Cox said.

He said it’s been an emotional decision, but one the owners deemed necessary.

“This decision allows us to better serve our loyal customers and focus on the future of Riff Raff Brewing,” said Shelly Cox, co-founder and Chief Operating Officer at Riff Raff Brewing Company. “We're embarking on a brand refresh, and the riverfront location perfectly embodies the spirit of Riff Raff – vibrant, welcoming and community-oriented.”

tbrown@durangoherald.com