Brewery/Restaurant separate ownership?

[yap]

Long time lurker, short time poster....

Along with many others in this forum, I seem to be in a perpetual startup phase (and have been for a while).... I am looking for advice from anyone who works or has worked in a brewpub setting where the restaurant and brewery were handled as separate businesses. Here's the scenario (hypothetically):

I have a friend that owns a restaurant/bar with a full liquor license (state of Ohio). He happens to have some spare room in the back (or room to add on to the building). I would be looking to rent this space from him to start a small brewery. I would in turn sell the beer to him (Ohio self distribution is legal). The outward appearance to the customer would be a traditional brewpub operation, but the businesses would legally be separate.

Anybody had experience with something like this? If so what are the pros/cons? If I am totally off base let me know that too. I plan to run this through TTB for their opinion, but wanted to start here first.

Thanks,
Scott (yet another dreamer...)

[tsewong73]

On the surface, your plan seems fine. For the TTB, I think you'll need to have complete physical separation from any adjoining tenants - whether it's a restaurant or a car wash. That means no doors between the brewery space and the restaurant space and restaurant staff will not be allowed access to the brewery.

As for Ohio, look into whether breweries would be allowed to lease space from a retail licensee. Here in PA, there are laws preventing overlapping interests among licensees including real estate leases. It's kind of an obscure thing, but one that could screw up your plans if you don't look into it now.

[einhorn]

It's obviously a questionable situation, but Mike has has on some good points. Tied-house laws will come into play, and you will technically be subletting from him. Does his lease allow this? Also, I assume you will have to charge fair-market prices, as you are starting a business with your name on it.

Really, your best bet is to contact the local alcohol board & TTB. Depending on who you speak to, there may be different interpretations of laws in such unusual situations.

[yap]

The building is owned not leased so subletting is not an issue, but you bring up a good point on the state licensing. State alcohol board is on my list to talk to, but as you mention, they are very bad about giving differing opinions depending on the time of day. I also think zoning could be a concern so I need to check that as well.

The issue of price is also valid, since the brewery would be self distributing, the beer could be sold to other venues, but would probably be priced lower to the immediately joining pub due to lower "transportation costs".

Thanks for your help. Anybody else out there familiar with this type of setup?

Scott

[einhorn]

Re pricing: Here in CA one must post prices with the ABC, meaning that you must charge everyone the same price for beer in a certain region (county). Your state's laws may be different, so you need to talk to the people who will be enforcing these laws.

[banjolawyer]

I have also considering having some type of relationship with an existing (or start up) restaurant, with the possibility of having the brewer's entity and the restaurateur's entity form a 3rd entity as a joint venture. Then it would be the joint venture entity that would apply for the relevant licensures, with all operating issues specified in an internal operating agreement. But it's just something I've only thought about as I have other preferences.

[jesskidden]

Pretty sure that that's how Stoudt's Brewing Company began, due to PA laws at that time (since changed to allow brewpubs attached to full breweries).

The brewery was in the same building/complex as the pre-existing Black Angus Steak House, but the restaurant (with full liquor license) was owned by husband Ed Stoudt and the brewery by wife Carol Stoudt.