Another Brewpub Startup Post...

[Butcher Scott]

Jason,

Thanks for the response, best of luck in Japan!

My original plan was to overbuild capacity to allow for growth. I’m very optimistic about my city’s reception to a brewpub in the part of town I am targeting. On second thought, however, I think it’s a wiser decision to build more appropriate to my current level of demand and expand down the road if necessary. Based on where I think my current demand is, I think a 7 bbl system would be sufficient.

As for size, a very good friend of mine who is an architectural engineer is working some mock-up layouts for me, and then I think it will finally hit me how much size I really need! Right now for a 7 barrel system (skid mounted) with 6 fermenters I’m thinking 750 sq ft. What do you think?

Thanks again!

Scott

[einhorn]

My two cents...

I must admit, you seem to be on a mission. That's excellent - stay on course!

As a rep for a large macro (operating in a mature venture market as a very small player), I can only give you this advice for the on-trade business: you are opening a restaurant with a brewery attached. Do NOT forget this. You MUST get a restaurant manager who knows what he's doing. Sure, the beer is important and your main focus, but the daily problems (staff/manager reporting, cleaning, training, controlling the staff, ordering, waste, repairwork, organising, booking bands, taking reservations, bookkeeping etc.) will be your main problems, not the bitterness of your beer.

Good luck!

[Moonlight]

What makes a good plan? Every duck both in a row and in crosshairs. If you were to get money from an institution, and you were to underperform, the person who approved you would likely be canned. He will be thinking CYA as he nitpicks any possible crack in your plan. If you can allay any fear he/she may find on your paperwork, you may have a chance. If you are not the most qualified candidate for your job, my point is that regardless of your projected P & L's, you gotta wow them here. I rarely think of banks "banking" on passion alone... (Ever met a banker passionate about anything besides pessimism?).
I applaud you homework as is visable here, and from the numbers, your demographics look very promising. Doesn't help if they all drink Coors Light, but still very promising.
If a 7 barrel system looks enticing from a sq ft/rent basis, please do the numbers for labor costs. Been there on that and there are time/exhaustion factors once you cross, say, 100 brews a year. Curious where other brewers feel that threshhold is.
I have always felt that the most difficult part of opening any brewery is raising money. Good Luck...you will need it regardless.
PS, to einhorn, I say amen!

[harr]

What About A Harrington's Brewery Franchise Instead?

Good afternoon. Harringtons is New Zealand's largest, independent brewery. Founded in Christchurch in 1991 it has built up an enviable reputation for its extensive range of national and international award winning, full flavoured, naturally brewed beers. It has also built a similar reputation for the unique method by which it sells its beers, making them better priced than the 'big boys' brands so consumers receive world class, batch brewed beers at mass manufacturer's prices.

Harringtons is now offering franchises throughout the U.S.A. and Australia. Each franchise will incorporate a territory in which a brewery will be established in a suitable location. The brewery will have an attached shop and small bar (tasting room) should demand and/or local laws require (no food - lower costs!) for additional sales. The territory will have sufficient space to allow for satellite shops to be established as demand allows.

Some experience in running a small business is desirable however full training is given at the main plant in Christchurch. A considerably lesser level of capital is required than your proposal and the returns should be excellent. All GENUINE inquiry is welcome to awboats@ihug.co.nz

[evanevan]

I can only give you this advice for the on-trade business: you are opening a restaurant with a brewery attached. Do NOT forget this. You MUST get a restaurant manager who knows what he's doing. Sure, the beer is important and your main focus, but the daily problems (staff/manager reporting, cleaning, training, controlling the staff, ordering, waste, repairwork, organising, booking bands, taking reservations, bookkeeping etc.) will be your main problems, not the bitterness of your beer.

Good luck!

Hi Scott!

There is much I can't comment on, since I'm more-or-less in startup mode too, but under different circumstances then you. However, I can relate a story which could help a little. I have to agree that einhorn is right on.

I took over an existing restaurant without any previous background, and the staff came with it. Lucky for me, they turned out to be extremely loyal, hardworking, and most of all-- expert in their jobs. This is now my third season here, and I can tell you with sheer honesty that my business would not run without these qualified folks in their key roles. Sure, I have learned, and can personally do almost all the jobs in the shop, some very well, and some not so well-- but to see the level at which my staff performs their duties is truly awesome. To use my kitchen manager as a good example, she is expert at knowing what/how much to purchase when, minimizing waste, and so on. My kitchen percentages are excellent as a direct result of her experience. Ditto my restaurant manager with her responsibilities. and so on.

Because I can count on these people, I get to spend my time focused on the things I am best at and have the most passion for-- for example, our expansion to include a brewpub!

In any case, I wish you the best of luck. Sounds like you are 110% passionate with good business skills to back it up. Rock on!

[Valleybrew]

I applaud your passion and wish you the best of luck in the adventure. My initial thoughts on your numbers were in the volume and beer % section. The 60% of sales from beer in a seems high to me. I'm not sure of the industry average but my personal experience is seems to be closer to 40-45%. Have you checked with the other pubs in the area to see what thier beer to food ratios are. This as you know makes a large impact on bottom line COS. Also the first year 1000 BBL asumption might be too aggressive but again a start up done well does attract a large influx of business. If treated well and done right they return. Just my 2.3 cents worth of advice.

[Butcher Scott]

evan,

Thanks for the encouragement! I will definitely be taking yours and einhorn's advice to heart. Because of your feedback and that of others, I'm revamping my plan a little to add more experienced restaurant management. I know business, but I don't know it in the ways that necessarily makes a successful restaurant or brewpub, so people with experience will help my baby be a success!

Thanks again!

Scott

Hi Scott!

There is much I can't comment on, since I'm more-or-less in startup mode too, but under different circumstances then you. However, I can relate a story which could help a little. I have to agree that einhorn is right on.

I took over an existing restaurant without any previous background, and the staff came with it. Lucky for me, they turned out to be extremely loyal, hardworking, and most of all-- expert in their jobs. This is now my third season here, and I can tell you with sheer honesty that my business would not run without these qualified folks in their key roles. Sure, I have learned, and can personally do almost all the jobs in the shop, some very well, and some not so well-- but to see the level at which my staff performs their duties is truly awesome. To use my kitchen manager as a good example, she is expert at knowing what/how much to purchase when, minimizing waste, and so on. My kitchen percentages are excellent as a direct result of her experience. Ditto my restaurant manager with her responsibilities. and so on.

Because I can count on these people, I get to spend my time focused on the things I am best at and have the most passion for-- for example, our expansion to include a brewpub!

In any case, I wish you the best of luck. Sounds like you are 110% passionate with good business skills to back it up. Rock on!

[Butcher Scott]

I applaud your passion and wish you the best of luck in the adventure. My initial thoughts on your numbers were in the volume and beer % section. The 60% of sales from beer in a seems high to me. I'm not sure of the industry average but my personal experience is seems to be closer to 40-45%. Have you checked with the other pubs in the area to see what thier beer to food ratios are. This as you know makes a large impact on bottom line COS. Also the first year 1000 BBL asumption might be too aggressive but again a start up done well does attract a large influx of business. If treated well and done right they return. Just my 2.3 cents worth of advice.

Thanks Valleybrew. I got the 60% from ABT's literature on their website, but the more research I've done the more I see how wrong that was (for the better, really). Right now my plan puts beer at about 32% beer, 63% food with Liquor/Wine and Merch filling in the rest (mostly liquor).

I've also scaled back my year 1 demand figures - right now I'm going with 500 barrels, which will still be more than the other brewpub in town but I feel strongly about this market and the 3 keys of restaurant success (Location, Location, Location) being able to top their demand. Even then, I'm optimistic that 500 is on the low side (if it weren't for optimism, I wouldn't be pursuing this dream!).

Thanks again!

Scott

[beertje46]

Thanks Valleybrew. I got the 60% from ABT's literature on their website, but the more research I've done the more I see how wrong that was (for the better, really). Right now my plan puts beer at about 32% beer, 63% food with Liquor/Wine and Merch filling in the rest (mostly liquor).
Thanks again!

Scott

While the ABT info. is okay, it has not changed much since 1991 when I first saw the info. (then called BRD). The business has changed in the last 15 years and has not been reflected on most online sites.

[Butcher Scott]

An update of sorts... I've spent the last few days meeting with commercial real estate developers and my local Small Business Development Center and my project is picking up massive amounts of steam!

For anyone reading this who is in the process of putting together a brewpub project (and doesn't know this already), I cannot stress what a great resource your local Small Business Development Center is. These guys are awesome!

Right now I'm still on track to go to the banks and ask for money in October... it's looking good!

[Butcher Scott]

To anyone who is doing there own business plan...

I found some great info that (surprisingly) A-B publishes on Sales trends in certain areas. What it showed for my area is that the Macro's (what they call "Premium" beer) are losing sales and market share just like the nationwide trend... but more importantly, Import and Craft Beer sales are up more than 20% each!!!

Here is the website... go down to "IRI Market Overviews" and select your area and there are some great stats. They have it broken down by $ sales and cases sold and then by company or category (micro, import, etc).

This, of course, is the info that banks and investors like to see!

http://www.myaccountoverview.com/scripts/MarketOverview.aspx

[bndooley]

This is fantastic information. Thanks for putting it up!

Best,
Ben Dooley

https://www.oldcrankybrewers.com

[nwcw2001]

hey butch,

You have a PM

John

[Mike Eden]

Interesting Thread

Interesting thread here, Scott. Would like to help also....

-Didn't see anything about interest/debt service if you're going to be financing with an SBA loan. (By the way, most banks hate brewpubs....)

-If your projected start date is in 2007, you shouldn't have your start-up funds in the stock market.

-One of the guys on here has an awesome spreadsheet that he created for his start up plans. Check some of the older threads I'm sure you can find it.

[Butcher Scott]

Mike,

I didn't include anything on on the loan servicing in the thread, but it is definitely not forgotten. I believe I'm looking at 11.5-12% these days.

Startup is actually now 2008. I am negotiating a lease as we speak for an interesting new development that won't be done until then.

I'll definitely search for that spreadsheet - thanks for the headsup.