Episode #589: From Backpacking to Beer Baths-The Journey Behind Oakwell Beer Spa

0:01 This is Pete Moore on Halo Talks NYC. I have the pleasure of bringing a new invention to the modern spa experience straight out of Denver, Colorado. Husband and wife team Damian and Jessica, we're going to talk about Oakwell Beer Spa. That's right, you heard it right, Oakwell Beer Spa. Words that have never been put together before this podcast and before they started this company. Welcome to your first Halo Talks. Thanks, we're excited to be here. Awesome. So you guys started this about 5 years ago, and from the research that I was doing on your new business, that you guys visited, I think, 25 different countries and kind of came home and decided that this is what your play was going to be. So kind of talk us through that journey and how we got to this, and then, you know, why you thought that there was a fit with what the market was looking for. Yeah. So our story starts in New York City. We were both working corporate jobs at the time. Damien's background is in sales and marketing. My background is in operations and HR. So New York is where we met. We fell in love. We got married. And although we were living the, the life in New York, enjoying everything that the city has to offer, we really felt professionally unfulfilled. We've both been entrepreneurs at heart.. So we find ourselves when we got home from work, we would have a pint of beer or a glass of wine and talk about different business ideas. And we knew that we didn't want to reinvent the wheel, but we also didn't want to do a restaurant

1:33 or a coffee shop or something that's been done a million times before. So, you know, at the time we were still young in our twenties, and if we were going to do something crazy, we figured now is the time to make a big move before we have a mortgage, kids, all of that stuff. So we made a decision to both quit our jobs at the same time, sell everything we own, pack two backpacks and travel the world indefinitely looking for interesting business ideas that we could bring back to the United States and scale. So although we had a lot of fun on the trip, the purpose was to find a unique business idea that didn't exist in the United States. So we ended up backpacking for 14 months. We went to 25 countries. We saw a lot of really interesting things, a lot of them not so scalable, like Mario Kart racing in the streets of Tokyo, hedgehog cafes, a lot of interesting animal cafes, cooking classes.

2:30 But really what we love is hospitality and wellness. And so when we found ourselves in Zakopane, Poland, which is in the Polish Alps, at a beer spa, we thought, okay, this is interesting. Americans love beer, we love wellness, we love hospitality. This really merges everything that we're passionate about into one. Um, you know, in Eastern Europe there are a few beer spas that exist, but they're very different than what we ended up doing. So in Eastern Europe, the, the vibe is very rustic. You're always in kind of a log cabin type of environment. Um, you have a free-flowing tap next to your tub, so it's like all-you-can-drink beer, which is illegal and likely dangerous in the United States. In Eastern Europe, you have a bed of hay that you lay in after your beer bath, which we didn't find particularly enjoyable, so we decided not to do that. But we thought it was really cool, the idea of mixing, using beer for wellness, creating a social wellness experience. So we continued exploring spas around the world. We went to jimjibangs in South Korea, onsens in Japan, wine spas in Spain, and realized that all around the world you have these social wellness experiences where people go with their friends, with their families.

3:44 They're big facilities with saunas, with different tubs, with different amenities. And then there's also a cantina where you can drink beer, you can have a bowl of ramen or noodles. And it's something that everyday people go to. It's not just for the healthy and wealthy like in the US. The spa industry is really catered towards a certain demographic and is really catered towards women more than everything. So we realized that this is something interesting that we could do and something that the US was missing. So we put together our business plan and financial models as we continue traveling. Although we love New York City, we knew that, you know, New York is oversaturated when it comes to tourism activities. It's a bit expensive. We didn't want to have any investors up front. So we were searching for what city to put this in. We were looking for a beer-centric city, wellness-centric city. And all of our research pointed to Denver being the best location. So we moved here with still our, our backpacks on and just our business plan in hand. We'd never been to Denver before, but started pitching banks and looking for commercial spaces and ended up opening the first location in February of 2021. So we're just celebrating 5 years in business. Amazing. So a couple of questions. One, those 25 countries is clearly a business expense according to tax purposes. If you're looking to to start a business, I hope. So I would encourage all entrepreneurs to expense your travel if you're looking at new ideas while you're on the road. Let me ask you a question. When you were in Poland and when you were in some of these

5:16 other cities and going to these experiential places, did you spend a lot of time kind of talking to the staff, talking to the business owners, like get access to, you know, hey, who's running this place? Like, what's the unit economics? How deep did you go there? Were you really just looking for what's the experiments? Do we like the experience? And then we'll figure out what the business model is based on your background. But, but actually we're very analytical by nature. So there's the experience part where it's all about the hospitality and we actually would take the time to really enjoy the experience when we were experiencing all of those new concepts. And then we'll just sit down around a beer or a glass of wine after the fact, have a debrief with all of our notes, putting notes on paper and really take the time to analyze a business model. We are very familiar with the hospitality industry. We've worked within that industry for a long time. So that was very natural for us to just sit down and look and really split every single step in that process, in that concept, and being able to analyze it. The size of the tub, the size of the room, is it a private room? Are we running this as a hotel, more as a restaurant because you need tables turnover? So we would ask ourselves all of these questions. Of course, for

6:47 any fellow entrepreneurs that are listening to us, be a little bit like, you know, go above and beyond and maybe Maybe give a call to that business 2 or 3 days later and ask them specific questions. Maybe you have some allergies and you need to know a bit more about the ingredients. Maybe you are about to create the best anniversary ever for your wife. Do you offer this type of package? Do you have anything, you know, in your, in your bag for— we would always try to question and find out questions and answers that we didn't have. From her experience. But overall, um, it's— it was just you and I.

7:33 Yeah. This is Pete Moore. I want to let you in on a little secret. There's this company called Promotion Vault, and what they do is they give out rewards from retailers that allow you to incentivize your members without having to do zero down and one month free, or giving away shakes, or giving away t-shirts, What you want to do is build a rewards program that lasts, that people value, and that doesn't discount your own products and services. So here's the deal. There's something called Rewards Vault. The Rewards Vault is going to allow a member to set up their own profile. They are going to answer questions. You are going to get those answers. You're going to be able to target those members and you're going to reward them inside your club, inside your spa, and outside of the club and outside of the spa. To get them to become loyal, to get them to pay their monthly dues, and to be rewarded properly for the actions. A lot of companies are cutting back on rewards. You shouldn't be. Promotion Vault's your answer. Trust me, this is real. You know, one of the things, and I might be wrong, but I'm just going to make a statement. When, when I traveled around Europe and it's been a while, I didn't see like the density of people when I went to a restaurant or when I went to a spa or like a health club that, I mean, I'm a little bit dated from when I went on tour, but I was kind of sometimes amazed by like, how's this restaurant stay open? There's only like 3 or 4 tables of people that are eating here. You know, like I was in like Milan or like,

9:05 you know, somewhere in Italy or in like Switzerland. I was like, what is there like, do they have a marketing problem? And I felt like sometimes like maybe that business just kind of gets by. So did you kind of get a sense for like what the volume, what the demand is, or did you not really think that that was necessary? Because if I put this in a high-density city in the US, kind of like I know what the behavior, you know, typically would be of people that would enjoy this type of, you know, place to go. Yeah, we didn't look too much at the occupancy of the spa experiences that we were at around the world because we know that the market in the US is really different, right? There's more disposable income here. Salaries are higher. This is a type of concept that we were going to put in mid to large size cities, typically in the downtown area where you have a lot of tourism traffic. So it wouldn't be an apples to apples comparison looking at, you know, oh, this spa is kind of dead here. We're really just looking for, you know, what type of experience, what type of services, the hospitality we wanted to provide, really more around the operations side than we were looking at the occupancy side. We would look at the number of reviews. If you have a space with 3,000, 4,000 reviews over the last 4 or 5 years, that was actually a good indication that they had enough traffic to show us that that specific business model, a part of it was viable. Gotcha. Yeah, we're invested in a company

10:35 called HigherDOSE, which does infrared saunas. And they do, you know, yeah, we did actually a lot of research into HigherDOSE when we were first opening because HigherDOSE was one of the first saunas, infrared sauna spas. So, we're familiar. If you need any of our products wholesale, happy to hook you up there because that's a big $50 million revenue business now, all e-commerce and products. The reason why I was bringing that up is because when I first got involved, there was an education process that needed to be put forward to consumers related to what is infrared and what is red light and different frequencies. How does this differentiate from what you know and how does the science proliferate? And now, it's kind of like I don't have to explain to somebody what infrared sauna is, but 8 years ago, I did.

11:27 So, what's the background and the history of this whole beer spa concept that was out there? And, how did you kind of check off your own boxes since you both seem to be very educated and like aware of like, hey, there's like shticks and there's like science. So how did you kind of go back and, and do that and get comfortable with it? This is such a good question. Yeah. So when we first decided we wanted to do a beer spa, our biggest thing is we don't want to be a gimmick. We don't want to be something that's hot and it's trendy and it's cool and then all of a sudden fizzles out a few years later. We wanted there to be real wellness benefits behind it, right?

12:08 So we had to look into what are the benefits of hops? What are the benefits of barley? And just for everyone that's listening, you don't actually bathe in beer. That is the number one question that we get. So we're not pouring a PBR Coors into a tub, right? So the water, it's hydrotherapy that's infused with hops, malt, and then we have different herbal blends. So hops is a natural sedative. It's a cousin of marijuana, and the aromatherapy from hops is really relaxing. So if you've ever drinking a really hoppy beer before and gotten tired afterwards, that's from the aroma from the hops. And then barley is a grain. It's really similar to oatmeal. So we've all heard of taking an oatmeal bath before, how it's really hydrating and nourishing for the skin.

12:52 So that's the same thing that malted barley does. So those are the two main ingredients of beer, and that's what we use in our hydrotherapy tubs. So we did quite a lot of research into making sure that there's real therapeutic holistic benefits in bathing in these ingredients. And then we also worked with herbalists to come up with the other herbal additions for the bath as well. We have 3 different herbal infusions that you can infuse into your bath. So we have an energizing IPA. So that's in addition to the hops and malt, we also have lemongrass, lemon verbena. So those again have a lot of energizing properties. We have a calming amber bath that uses sage and peppermint, and then we have a muscle-relaxing lager that has arnica in it. So hiking, snowboarding, skiing is really popular here. So you can come take a beer bath with the hops and malt and then arnica in it as well. So we took a lot of time curating those blends. And then we also have infrared sauna, to your point. So basically, we have private spa suites. Inside your spa suite, there's an infrared sauna, a rain shower, and a hydrotherapy tub.

13:57 So you're very familiar with HigherDOSE, with the benefits of infrared sauna. So we don't need to go through all of that. But that's something at the time we were building this business model, it was relatively new. So we did a lot of research making sure that, okay, there are actually scientific benefits behind this.. And then we use zero gravity massage chairs as well. So instead of using massage therapists, we have high-tech robotics-enabled massage chairs. And again, did a lot of research into the benefits of those. And then as well, from a business perspective, you know, having a spa that doesn't rely on licensed professionals is a big game changer. We talk to a lot of people in the spa industry and hiring and retaining massage therapists and estheticians and then also dealing when one of them calls out sick, then you have to cancel all of their appointments for the day. So we wanted to be able to create a spa that had all of the wellness benefits, but also address a lot of the pain points that you see in the spa industry. And adding to that, yes, the culture of educating a market, an audience that is not aware of practices abroad from our takeaways from travel around the world.

15:12 Japan, South Korea, Eastern Europe, or even France, people bath in those herbal baths since centuries. From France originally, we have wine spas, you know, south of France and north of Spain, and Eastern Europe has all of those beer spas. So we didn't reinvent the wheel. And actually, Jessica, you have a good point on investing, creating something is not gimmicky for the longevity of the business model. And the really the most amazing thing in your concept is offering that private spa suite that is very similar to a luxurious small hotel room. And within that room, the main, the cherry on the top is actually that big giant tub. And the culture of bathing in the US has been here for a long time, actually hot tub. Is something extremely popular in the US. We've tried to— we— you can educate about the infrared sauna, but it didn't matter. What really people loved about our concept at the very beginning that we didn't have to explain is you're soaking in a bath. Everything else is pure bonus with your favorite drink in hand, with your favorite drink in your hand. And combining the best of both worlds has actually created a lot of Oh my gosh, is that what I hear? Is that what I read?

16:36 A beer spa? Can you tell me more? So that was another advantage. Yes, then you're right. How do we break the stigma that day spa is meant to be only for specific audience? In the US, often women are going to day spas. So Jessica and I has actually worked a lot on sensory marketing. The music, the smell, the way everything is designed, the way we greet you, the way whenever you step in, in the spa, you're not intimidated by, you know, specific colors. Can be pink, it can be light blue. We've really done a lot of research on making sure that both men, women together are feeling not intimidated. So now the beer aspect took a long time and still as of today is it takes a lot of education. It's like, no, you're not bathing in beer. You're not sure it's not real beer. Yeah. Okay. I've got a write down like a list of questions. So this might be a longer podcast than I anticipated to all of our listeners here, but this is intriguing to me. First question, in no particular order, is there anyone that ever gets allergic or like has an out, you know, like any kind of reaction to, to hops and barley? Yeah. So in the history of 5 years being open, we've only had one person that told us they were allergic to hops. Some people are more sensitive to the

18:07 smell of hops, like they'll sneeze. But in terms of having like an actual topical reaction, the hops is relatively limited. Barley, on the other hand, has gluten, right? So people that have celiac disease or have topical sensitivities to gluten, we have worked with a gluten-free brewery that provides milled millet instead of the barley. So we use the same ingredients that you would find in a gluten-free beer. It provides all the same benefits for your skin, but without the gluten. Wow. Okay, next question. Okay. When you have a hot tub full of hops and barley, do you need in between sessions to actually have kind of some kind of filtration system? Yeah. So we completely drain, clean, and refill the tubs after each use. It's very similar to a bathtub more than a hot tub. Like, we're not putting— there's no chemicals, right?

18:59 We wanted this to be a very clean experience for your skin. So the tubs are, you know, big enough to fit 3 people in them. So we're not wasting too much water, but we do completely fill them, infuse whatever hops, barley, and herbs that you've selected for your experience, and then at the end of your session, drain, clean, and then refill. Okay, third question. Okay, how many people have said afterwards, hey, can I get a, like, a gallon of this for my house and I can use it for my own tub? And we have Oakwell Cosmetics, which is our sister company. So we do beer— there we go— body products. Um, so we do have, uh, smaller sizes of our bath infusions that you can bring home so you can have a beer bath at home. So it's like a concentrate that, like, you You put it in the water, a bit of powder. Yeah. So they come in essentially giant bath tea bags, right? And so if you could picture a tea bag, but it's more like— Okay. And then it has all the hops, the barley, and the herbs infusion inside. And then we have miniature versions that you can hang from your tub spout to do it at home. Gotcha. Okay, my last question is, you come back from your trip, you decide you're on backpacks, you move into Denver, you walk into like your first bank and say, hey, I'm opening up a beer spa. How did those conversations go?

20:17 You seem very, you know, like people that, you know, are passionate, educated, thorough, want to finance. But I got to assume there's a couple of banks that like, you know, this couple's like out of their mind. Like, there's no way they're getting approval. It's an investment committee, right? Yeah. Yeah. That's funny. We pitched over 40 banks, so we went through all of them. The Chase, the Bank of America, the Wells Fargo, like all big, small, regional. It doesn't matter. They love it. They would love it. They want that you buy a gift card. They loved it as a consumer, just not as a client. I'm not going to loan you any money. So yes, we learned a lot through pitching all of those banks. You know, by repetition, we got to understand what the questions they were asking. I mean, we had a really detailed business plan and financial model, but still, it's like unproven concept. We didn't have 2 years worth of P&L. And so they're like, come back to us later on when you're ready to open your second location. But we ended up getting funding from the city of Denver. Has a small business loan program for people that cannot get traditional funding. It's like excellent interest rates, like we're talking 1.5% interest, 10 years. And so they ended up funding it because we were able to prove that, hey, we went to 40 banks, they all said no, but we have this great idea. We're willing to go into a neighborhood in Denver that's in need of economic development. So they have different target areas within Denver. And so they ended up lending us the money, but it was only because all of these

21:49 other banks said no. Just a question, if you're comfortable answering this question. If you're not, then go ahead, go take a beer, beer, beer, so on the tub and, you know, come back. Do you have to personally guarantee something like that when it comes to like a government-related loan? Yeah. Yeah. So it was a personal guarantee. And actually there was— we got the funding from two different places. The city of Denver did half and then the other half came from a local nonprofit lender. Similar thing, SBA. Backed loan, but to businesses that are, you know, we're a woman-owned business, right? So that gave us an advantage. We're able to qualify for certain loans that other businesses couldn't. But yes, they all were personal guarantees. And then same with the commercial spaces as well. You know, it was funny, we thought that we'd be able to find a commercial space pretty easily but had a hard time finding the money. It was quite the opposite at the time in Denver. This was in 2019 when we moved here. The vacancy rate for commercial spaces was only 2%. There was a lot of landlords that didn't even want to talk to us because again, they thought like, what the heck is a beer spa? Who are these kids like pitching this weird idea? We'd prefer to go with a 7-Eleven or something that's proven. So we ended up getting the funding relatively quickly but had a really hard time finding a commercial space and of course had to put a personal guarantee on those on the lease. Yeah, gotcha. So as you were going through this, for the average entrepreneur listening here, what was the chirping from friends, family, parents,

23:21 grandparents, so on and so forth of like, hey, we know they're in love, that's awesome, they want to work together, but like, you know, this sounds like a crazy idea. Because my parents say that to me all the time about several things I've done in the past. So I just wanted to see if there's any, you know, I love that type of company, if I can get some. You know, I think we don't really ask people for input, right? Like we are each other's— That's even better. It's like we also don't believe in taking money or hiring friends or family. So they were kind of like, here's what we're doing. This is the plan. You know, I feel like they're all pretty supportive. Like they know that we're, we're fairly capable people. We'll figure it out. Of course, I'm sure in the back of their mind they're like, all right, well, good luck. This sounds a little strange, but at the end of the day, we just didn't really ask for anyone's opinion. We just charged forward. This is Pete Moore. Here's the last tip for you of the podcast. We are partnered up with a company called Higher Dose, higherdose.com. They are the leader in workout recovery products, infrared technology, LED light masks, neck enhancers, and other products such as PEMF mats and sauna blankets. If you have not gotten on the workout recovery train yet, Your time and your stop is now. You gotta get these products in there before these workout recovery and spas end up saturating your market, having your members walk out of the club and going into one of their locations for $200 per month where they're paying

24:54 $39 to you. Let's become an expert in workout recovery if we are already an authority in workouts. Higher Dose, check it out. There's a wholesale code. And we look forward to helping you augment your products and services to meet the demands of your members. And hey, let's get people happy, healthy, and sweating. And the recovery should be just as good as the workout. How important was working at a corporate job, understanding processes, understanding financials, understanding sales and marketing, You know, how important was that for you to run a business successfully the way you're doing now?

25:37 Yeah, yeah, yeah. And you say, I mean, you know, we were younger and I think we've taken is like learn, make mistakes with the P&L of someone else. And this is helpful for us to take risks without seeing the, you know, without any, any specific issues that could happen to our job or the business itself. But it was for us. All about training. I mean, I remember it was like, oh, worst case scenario, we lose a bit of money or market share, but it's okay, I'm learning. And I think creating this business for us is the results of all of our learning and big takeaways of our corporate jobs. Yeah, yeah. And in my job before, in my corporate job, you know, I worked in sales for some time, and, you know, our clients were mainly Fortune 500 companies. And so I'd be meeting with, you know, I was in my 20s, and I'd be meeting with VPs and directors of different departments, you know, Fortune 500 companies in New York City, and just gaining that confidence and also the verbiage and how you interact and how the hierarchy works. It really made us more confident then when we were in our late 20s going and pitching these banks and different people. Like, we knew what to say, we knew what they were looking for. If they asked, you know, use some acronym or, or said something, you know, our experience in the corporate world definitely gave us a big leg up. Yeah. And then, you know, as you look forward, is this something that you see as, hey, we want to add these locations,

27:09 you know, as we feel it's right to grow corporately, or is there some kind of franchise model here? Do you kind of like what you're doing? Sometimes people define success too broadly in my mind of what they think they want to accomplish, and then they realize, hey, I kind of like my life the way it is, and I'm going to grow at my own pace that I don't need outside private equity or venture capital or friends and family or somebody, you know, that's gonna put pressure on me. 'Cause I'm doing something, I love it and it's working. Yeah. When we were traveling the world looking for business ideas, we wanted to find something that we could scale. We never wanted to be mom and pop business owners that just kind of run one or two stores for the rest of our lives. That's fine for some people, but we're just a little bit more ambitious than that, I think. So we, You know, really early on after opening our first location, we had to decide, do we want to go the franchise route or do we want to go the corporate-owned route? Because we are the first in the market and because someone that has deeper pockets can come in and quickly open more than these, more of these than we have, we knew that franchising was the route to go because there's only so many that we can, you know, construct and open by ourselves at the same time. So we just opened our second corporate-owned location in the South Denver suburbs called Highlands Ranch. You know, we opened that one and are operating it as a franchise.

28:29 So we designed, you know, construction blueprints and prototypes and interior design package. We implemented a new appointment management software and POS where we're now paying royalties and a brand fund to the mother corporate company. We hired an entirely new team and trained them from scratch because we could have used people, you know, our employees that have been with us for 3, 4 years from our existing location. But franchisees aren't going to have the luxury of doing that. So we wanted to see what the, the hiring and training process was like with a totally new batch of employees. So, um, that location's been open for almost a year now, um, and then we just launched our franchise sales cycle last month. Um, so we've also spent the last 2 years putting together our ops manual, FDD, franchise support system, um, and we've been collecting leads of, you know, our guests that have been interested in franchising over the past few years. And so we're working them through the sales cycle now. That's awesome. I'm glad to hear it. Well, that's a great story. Sounds like an awesome experience. I'll try to come to Denver. Thanks for coming on Healog Talks. And this is to the, to the new experiences hitting the market, 25 countries, back to Denver and getting loans to put this together. It's an awesome story. So congrats on what you built.

29:49 Thanks so much. We're excited for the future. Thanks. That was fun. This is Pete Moore on Halo Talks, your captain speaking. I am the founder and managing partner at Integrity Square. We've been around now for 15 and one half years. We have been helping people like yourselves get capital, do mergers and acquisitions, consult helping strategic advice in the health, active lifestyle, and outdoor halo sector, trying to help as many entrepreneurs as possible get to the next level, take that inflection point, and be the force behind your growth. We are helping companies that have at least $3 million of EBITDA, around $10 million of revenue, and we are positioned to help get institutional growth capital or to negotiate deals with strategic partners. If you go to IntegritySQ.com/ISQ, you can see our capabilities deck. Happy to set up a consultation at any time. That is free of charge, and we look forward to helping solve obesity, loneliness, and diabetes. Go Halo!