I’m still toying with the idea of looking into starting a brew pub in my local town. There’s nothing like that around here so I’m sort of working on putting together a business plan.
What capacity would you recommend? My thoughts are a 3 bbl system would be adequate. I have no desire to sell commercially, just on-site. I know that this is too small for a commercial brewery to be profitable but for a brew pub would this be adequate? If I was to pursue this, I’d be looking for a used set up and I don’t believe it is necessary to be a fancy copper clad set up because I have no desire to create a viewing area.
Please let me know what you think would be an appropriate size.
Thanks
Just one tidbit…
while I understand not needing something fancy, I do feel it’s important to create a “viewing area”. To me, it engages the customer more and gets them invested in the process. A better feel for what’s going on.
Around here, even the brewpubs are mostly on systems bigger than that, but we (Denver) have a larger barrel to fish from I think.
profits are not determined by volume. What size population would you be available to? Some basic (local) market research goes a long way in determining how to align your business plan.
Interesting article with many valid points to consider before taking the plung. To reach the 500+ barrels with a 3 barrel system, you’d have to brew just about every other day. I believe you’d have to be willing to put in long hours at below minimum wage. I’ve pushed the pencil myself, but every time I come to the conclusion that I don’t really want to go through the pains of starting another business with even more regulation than the BS I put up with in my industry.
I’m very fortunate that my wife was behind me 100% when I started my business 21 years ago. I can remember several years of drawing a paycheck and not being able to cash it until funds were available. Thank goodness she had a job as a teacher! Do you have that kind of support?
If you decide to go ahead gmac, I wish you all the luck. I think it could be a lot of fun and rewarding.
BTW, I too think I would also consider the viewing area. I enjoy checking out brewing facilities.
Thanks. I’ve read that before and I do agree with much of what is in there.
My logic behind a brewing area is that the location that I’m looking at is fairly small and I would prefer to have the space devoted to seating and kitchen instead of brewery. And, I have to admit, I’m not the neatest guy you’ll ever meet although I take sanitation very seriously. I’d prefer to brew in the basement, out of sight but I do understand what you are saying about a viewing area.
The town I’m looking at is small, about 12, 000 people and there are bars and restaurants in the town already but they do not serve craft beer nor do I find the food to be very good. The buildings on the main street are standard small town store fronts and are mostly smaller stores. The downtown is still active. There are other towns nearby but again, there is almost no craft beer presence.
I have to admit, this is something of a mid-life crisis issue as well. I’m 40 years old and I feel I have to make a decision whether to try something new or resign myself to the fact that I’ll be working for someone else until I retire. Basically, what do the next 25 years look like. My wife has an income although it is not high and I would need investors to help get started which is why I am thinking of fleshing out a business plan. Basically, the beer I make is pretty good but the business end will need help which is what scares me and what will probably make me abandon this project but I feel like I have to at least investigate it and decide what my options are. And of course, it doesn’t help that I have others encouraging me to pursue this (friends who enjoy my beer). I know the reality is that you can’t support a business on the praise of your friends, no matter how sincere they are.
Detailed business plan is definately the way to go. I’ve read that soundbrew article before and always thought there should be some weight in how the beer is sold. After all, a keg of beer sold at bar prices could bring in $500-600 or more in revenue. FAR more than a keg a wholesale prices. That must make a difference in profitability.
At the Minneapolis NHC, Jay Wince of Weazel Boy Brewing said that he started with a 7 bbl system, and wished he had a 10 bbl.system once the brewpub was established.
One local place has a 7, and sells >1700 bbls a year. They are brewing 5 to 6 days a week. Crazy amount of work. The owners are talking about going to a 14 bbls system now.
Absolutely, I agree.
Selling your own beer onsite via the front door (i.e., patrons coming in to the taproom or restaurant) would be far more profitable than selling your own beer via the back door (i.e., via distribution to area restaurants, pubs, and package stores).
Do not underestimate how much time you’ll need to do non-brewing activities (e.g., cleaning kegs, tending bar, cultivating relationships and sales). Go with at least 7 bbl, minimum. Every start up brewery in my local area that started with a 7 bbl system quickly “outgrew” it within 6-12 months and had to make plans for extra capacity, extra brew days (or adding a second brewer), and bigger brew systems.
Running a kitchen is very, very expensive and carries a high operating cost. Lots of headaches. If you have no experience running a restaurant or being a cook, consider being just a brewery with a taproom and have food catered in to guests. Your start-up costs will be far less.
Have as few partners as possible–easier to get decisions made and less splitting of profits. You will have to carry more of the risk, though. Don’t quit your job. It always takes twice as long to get the place up and running, permits and licences obtained, etc. A lot of work needs to be done, but could be done after-hours, on days off, or on weekends. Even the brewing could happen after hours–you already do that. Having the job-security and income would help a lot and provide peace of mind until you are able to open your doors and assess the success or failure of your enterprise. Once you become a going concern with a proven revenue stream, it becomes a lot easier to expand.
One more thing, your friends who are encouraging you to open a place may also be great sources of free labor (in exchange for a few free pints later on).
First a few statistics:
You make money in brewpub on food.
Brewing beer is your differentiator.
From total sales your beer sales are about 10-15%.
You need about $1.5 mils to open a brewpub.
12,000 town should be large enough to support you (if you have appealing story, good food and good beer).
When you talk about a brewpub you talk about available seating first instead of brew system.
If you can not sell enough beer to justify the brewing expense, just buy the beer from distributor.
You could look at it the other way around.
For 7 BBL system how many available seats do I have to have.
Do I have enough people to fill the seats (is the market big enough).
Remember the Business plan is just the best guess at the time you are making it.
If you would know the industry you would be already working there.
Does that include buying a building? Not disagreeing but $1.5M seems high unless you’re purchasing a location.
Sorry, what did you mean here? Are you saying if I’m not in the industry now it’s too late to learn?
Thanks for the reply. As we’ve discussed, I’ll be out your way in a couple weeks, I may make more of an effort to get Eau Claire if you don’t mind letting me pick your brain for a few minutes.
I think 1.5 mil is money you would need for everything in loading building and operate for some time without profit.
The same statistic say that for production brewery you need to have $1 mil.
I open my brewery for much less than that but I do have large “home” made equipment that does not make me very productive.
I spend way too much time there and I compensate with my time for lack of money.
The same can be true with the brewpub. Difference is that you will deal with more people (emploeeys) in brewpub and you can not ask them to work for nothing till you become profitable.
My comment about business plan is just my own experience. If you are entering new industry and opening your own business there is not too many people that would share insider Info with you. so you read a lot, observe even more calculate possibilities and make the best judgment from I go you have.
Please stop by when you are in the area and ask away.
Running a restaurant is a whole different can of worms from running a brewery. I do think if you’re not really experienced with the food industry, a tap room partnering with a caterer is a good way to go. If you want to go the restaurant route, I would find a good cook for a partner. (I say “cook,” because I’ve never worked under a good “chef” that actually called himself a “chef,” kind of like the “brew-master” title in brewing).
I know a bit about what makes a kitchen run well, and what makes it run poorly. From working in the industry a bit, I’d recommend watching episodes of “Gordon Ramsey’s Kitchen Nightmares.” All the restaurants on the show tend to get pretty much the same advice (focus on fresh foods, have simple menus and decor) but it’s a good place to start. I’ve only seen the British version, so I can’t comment on the US adaptation.
I think this is an excellent point (& also made on the soundbrew page). If there is no craft beer presence in your area, it might be cheaper and cause less stress to just open a tap room that specializes in craft beer. Do that well and develop a reputation (offering great food too will help) and if you still want the brewpub, your reputation for knowing good beer might help attract investors.
A brewpub is a restaurant FIRST, a bar SECOND, and a brewery LAST.
You’ll make more cash selling food, higher margin selling liquor, and your beer is merely a differentiating factor from other restaurants. More than likely you’ll lose money on the craft beer.
You want to build your dining room as large as possible to turn over “plates”. How many plates per night (entrees) can your kitchen produce and that contributes to profitability. There are more people who are willing to eat food than those who will drink liquor or your beer. That’s the volume you want to maximize for maximum cash flow. The upsell at dinner is beer and liquor. You’ll make more margin on liquor than craft beer every time.
There are exceptions to this, but as a general rule it’s food and booze first, craft beer last.
Also – keep in mind that your brewing ideals should shine through in the first two sectors of the brewpub.
The same care that goes into every beer brewed should go into selecting the menu, sourcing the ingredients, and preparing each meal.
The bar should be a great beer bar that happens to feature your beer, but can also offer beers from breweries with the same ideals. If you’re serving liquor, it should ALSO be selected in the same manner as the rest of your pub’s offerings – sourced from distillers with your shared focus on quality. The cocktails should be unique and hand-crafted (and served by people who love beer and a well-made drink).
Your customers will be just like us homebrewers – willing to sacrifice a little more of their hard-earned dollars for quality products. This doesn’t just include your beer – but their entire experience while patronizing your restaurant. If your quality standards in the brewery shine through all other elements of the business, they will find value in your products and continue to support you!
I agree completely. The other thing this area is missing is a mid to high level restaurant which is also a factor in my planning. We have lots of burgers and such but something that fits into the “gastropub” style is no where to be found. If my wife and I want to go out for a nice dinner, maybe something special for a birthday or special occasion, we have to travel at least 45 minutes to find something a bit nicer.
I’m not naive enough to think that opening a brew pub will be a fun time hanging out with my friends and listening to them tell me how good my beer is. I know that the food has to be the primary focus and I’d also suggest that having a good wine list (again, not available around here) would be beneficial as well.
I’m finding it hard to figure out the red-tape and government bureaucracy around even getting licenses to brew for public consumption. Alcohol regulations here in Ontario are a real pain and may be a bit more convoluted than US regulations. In fact, I can’t seem to even find out where to go to get information. I’m hoping to get some help from an actual micro-brewery but I haven’t had much luck there either (although I’ve just started).
I don’t know if Canada has an equivalent, but there is a program called SCORE (partly funded by the Federal Small Business Association) that provides free business help for small businesses. Pros in different industries volunteer to answer questions for people. It’s something I’ve found really useful in my own self-employed adventures.
Have you tried contacting The Ontario Craft Brewers? An individual micro-brewery might not put it as a priority to get back to you, but the association that is supposed to be promoting the craft should (hopefully) want to help get other businesses up and running.
I’m far from any type of expert on this subject, other than a customer.
In my town, a local tavern owner installed a small 2bbl system. They always have three different beers of their own on tap, and usually more. They don’t sell outside the tavern. They also have the best tap selection in town of other beers. They installed this about 8 years ago, and they brew four days a week. This past summer, they began constructing a production brewery a few miles away. This will be a 20bbl system when operating.