Adding a Brewery: Effect on Restaurant?
I would like to add a nano-brewery to an existing restaurant, but need a way to prove to the owner that having a couple house made beers is going to add income to the total business, even though it will probably take away from the current keg sales. Are there any numbers out there that I could quote?
Don't forget to weigh any benefits/sales against the costs involved to get this concept off the ground, including permits, marketing, flooring, equipment, space requirements, insurance, etc.
I would propose a test. If you have a local brewery approach them about doing a couple different beers just for you. You'll have to commit to buying a certain number of kegs in advance but that will be considerably less expensive than the smallest of breweries.
If you see an increase in beer sales from these new "house" beers then I think an argument could be made that brewing in house would make sense.
I read somewhere, and I don't recall where, that adding a brewery to an existing restaurant is quite risky. Basically the logic was this:
a. if they're not currently successful, then adding a brewery won't suddenly make their food more palatable or popular, thereby increasing restaurant sales. (it won't fix what's broken in the existing setup)
b. If they're successful, then adding new variables to the mix could actually negatively impact the success.
I didn't really agree, but that was what they said. Maybe this is from the perspective of the brewer in a. and restauranteur in b.?
I think this came from Ian Day of NABS on the NABS site... seems like it was in the section where he was talking about viability of sub 7bbl systems
Originally Posted by Pompeiisneaks
YES! that's it exactly, that's where I read it.
Again, not sure I agreed, but that was his opinion. He also said that a nano brewery is guaranteed to fail. They no longer sell 3.5 bbl systems for that reason.
If you assume that you will continue to sell the same amount of beer you are currently selling but replace 2 taps with your house brew then you only need to know how much more profit will come from house made beers vs. those purchased from a wholesaler. Of course you need to factor in the cost of getting up and running (equipment, construction, permits....) and any extra rent and utilities you would pay on brewing space.
If your place already has a beer focus then I can't see how making your own would hurt you, provided your customers like the beer you make.
Make a business plan and present it to the owner, then he can say yes or no to real information.
Originally Posted by Pompeiisneaks
Based on personal observation, I would definitely have to agree with those statements.
And even if a couple taps were replaced with house brewed beer, the bar (as far as beer sales are concerned) will still be selling a lot more Bud, Coors, and Sam Adams (etc.) than anything else. If the house brew is premium priced, it had better be some pretty amazing beer to justify a higher price. After all, even so many of the microbrewery beers on the market seem to be overpriced already, with the price not always commensurate with the product quality.
However, I don't think a nano brewery is destined automatically for failure...I just would not expect it to be very profitable just based on the scale and the time involved (not to mention initial investment in setting up). Maybe over time, if it is done right and the beers are exceptional, it can be moderately profitable although I would think that if there was real demand for the product, some retooling to step up to a larger system would need to happen.
Given that I've seen two or three restaurant breweries (which, by the way, made phenomenal beer and had terrific food as well) go totally belly up in anywhere from 1 to 4 years, I think that "testing the waters" with some contract brewed "house branded" product is not such a bad idea to test local demand.
Just my opinion...and I hope sincerely that I'm totally wrong.