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  • The Brewpub Business Model

    So I spend most of my time lurking on this board, but would like some of your thoughts on the brewpub business model. I've been able to garner some different data and think I can model an "average" brewpub.

    Let's start by assuming you have seating capacity for 100. One statistic I found suggested that the amount of beer you will sell through your pub is equal to 5-10 bbls times your seats. For simplicity sake, let's assume 7. So that means one would sell 700 bbl's per year. This would translate to roughly 164,000 pints per year (with 7% spillage / loss). Assuming you can sell an pint for $3.50 on average, this means you would sell $575,000 worth of beer per year (using some rounding).

    Another statistic I read was that 55% of total brewpub sales will come from beer and the remaining 45% from meals. This would mean that you would have $470,000 worth of meals revenue annually.

    Using backwards math, if you are turning your seats 1.2 times per day, that means you will serve 42,000 meals per year, or an average of $11.20 per check.

    So my question to any of you out there, does this sound right? Is this consistent with what you have seen?

    Appreciate the comments.

  • #2
    brewpub buisness model

    Hi ,It sounds like you have it made -on your Papers ,it all will depend on your Location,your Product ,your competition and once more on your location.Your numbers sound ok.Are you aware at not all your customer will drink beer ,your place might average just 75 % of the 100 seating ,I am for example in a small town with seasonal tourism ,my beersales average only 35 % and in my first year it will add uo to around 150 bbl and i got 150 seating beergarden meetingroom ,german food and i got so far the best buisness in town ,but it isent easy to do the math like you have done it in a smalltown so your location is important and your product too
    Harald Mois

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    • #3
      Sharpen you pencil a bit

      Harald is right on............

      When we do the math to convince ourselves wether or not to get into the industry, it always looks that way..........all seats filled, all drinking our beer, all eating a meal. Everyone's happy, and you're walking from table to table glad handing.

      It really isn't that way at all.

      Weekly Cycle
      After having been in the "Brewery with an Alehouse" business for over 6 years, I would say that you really have to build a cyclic model based on where you are at geographically and your services. At our place, Sunday and Monday nights are kinda light with a build-up on Tuesday and Wednesday to our cask night on Thursday (good night). Friday is our BIG night, and Saturday is variable.........between a Thursday/Friday in sales or a Wendesday/Thursday, depending on the moon.

      Daily Cycle
      During the day, if you open early, say at 11 am, you could get a lunch rush that might fill 1/2 you place, depending on the location. If you're downtown, it could be at full capacity. Then, it dies off until the after work ("Happy Hour") croud comes in around 4pm - 6 pm. Ideally, this should transition into a dinner rush that would peak around 7:30 - 8:30 pm and drop off at 9:15 pm. If you're in a good spot, second shifters should start trickling in at 11 pm, but generally don't spend a lot since they've already eaten. At this point, they're paying just to keep the doors open at that hour. You should have transitioned much of your staff off by this point as well to keep labor costs down.

      HOWEVER.........this really all depends on where you are located, local competition, and any surrounding businesses like factories, restaurants (their closing staff make up some of your second shifters), and shopping complexes. It depends on your staff, your atmosphere, and the quality of your products.

      Seasonal Cycle
      So........within a year, there are many factors that will add or remove business opportunity from you. Have you mapped those, yet? Oftentimes, evenings just prior to extended holidays (Thanksgiving & Christmas breaks) can be real cash if promoted and staffed correctly. If you're located near the water (as we are), summers can be pretty nice as well. If you're located in an area where it rains a lot, then sunny days will be a hit to your business since many folks are working on their houses, mowing lawns, going to places with decks, or hosting at their house. Halloween has ALWAYS been hard work to drum up business due to all the parties. Superbowl is good for 3 or so hours, and college games can be good if you're in that area.

      Just a few thoughts...........

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      • #4
        brewpub model

        Brian exactly what i wanted to say i wish i could write like you but i am just a "German with few computer skills " Very professionel explaind ,are you the Manager there ?i could use somebody from your caliber Cheers H.Mois www.edelweissbrewery.com
        Harald Mois

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        • #5
          Thanx, Harald!

          Thank you for the kind words...........

          I looked up your website...........beautiful place you have there. Yes, I am one of the owners and founders of Diamond Knot Brewing Co. I'm also a Manufacturing Engineer, and tend to dissect things a bit to see how they tick..........which applies very much to our business operating plan here at DK.

          Sorry, though, with two Breweries to oversee up here in Washington, I have to sadly decline the offer to drink real German brews served with fine food in a great atmosphere.

          However, if you should ever visit up here in Washington State, please look me up and I'll buy you dinner over one of our fine Hefe-Weizens up here!

          Thanks, and Regards........

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          • #6
            Brian / Harald,

            Great feedback. I certainly can appreciate that the local market will influence how close to some of these statistics a brewpub will actually be.

            A few comments. I realize that not every patron will have a beer and much of the time the pub won't be at capacity. I am hopeful the statistics I found already accounted for those factors. So looking at the restaurant turns slightly differently, assuming the same 100 seat establishment, 1.2 turns means you would serve 120 meals per day, or 840 per week. This would include lunch, dinner, and late nights on the good days and the slow days. Does that sound accurate?

            Thanks a bunch, I appreciate the input.

            Jeremy

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            • #7
              Hi Brian thx for the offer- same here .just had Gene Muller President/Owner from Flying Fish Brewery & Rick Green from the Fredricksburg Brewery coming through on her way to the Big Bend National Park (80 miles south from my Location ) for a short Get Away From Brewing .Later Harry Mois
              Harald Mois

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              • #8
                Originally posted by Dogwonder
                Brian / Harald,

                .....................So looking at the restaurant turns slightly differently, assuming the same 100 seat establishment, 1.2 turns means you would serve 120 meals per day, or 840 per week. This would include lunch, dinner, and late nights on the good days and the slow days. Does that sound accurate?

                Thanks a bunch, I appreciate the input.

                Jeremy

                Jeremy,

                Without looking at the specifics of where you're at, what the business will "feel" like, or if you indeed have a menu that will keep them coming in, I would say that guess is as good as any. I would say your average guest check may be a bit low at $11.20. Our pizza's here start at around $10, and with a couple of beers we would expect a higher average check. We have menu items that come close to breaking the $20 mark (steaks & fillets).

                The average check depends on your menu. Not every person will buy a meal, though, and I would expect them to have at least 2 beers if you're a little off the beaten path location wise (if you are a "destination").

                Regards,

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                • #9
                  Nra

                  if you are really looking to put together a model don't overlook the NRA stats on restaurants. also, i work for a company that has 5 brewery restaurants, and 70% +/- of our sales come from food. Food will drive your business, beer will drive your profit (+/- 20% of our gross sales)

                  also, 100 seats is small.....what's the square footage like? 700bbls for 100 seats is a ton of beer.

                  anyway...
                  Larry Horwitz

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                  • #10
                    Also never over look the fact that not all the beer you sel will be YOURS! True there will be a lot of customers that come in for beer, but they might want what ever macro or popular micro you have on taps as well.

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                    • #11
                      Why would you sell anyone's beer but your own? That's your best cost of sale item. We sell no one's beer but our own. Some people don't get it, but that's our opportunity to educate.

                      i've heard lots of people say they have to sell outside beer....BS. My company does 20 Million a year at 5 locations and we sell only our own fresh brewed hand crafted beers. Besides, if you sell someone elses beer you are cutting into your own overhead. You already bought the brewery and every month you pay rent on the space it sits in, make it pay for itself!
                      Larry Horwitz

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                      • #12
                        Originally posted by Larry Horwitz
                        Why would you sell anyone's beer but your own? That's your best cost of sale item. We sell no one's beer but our own. Some people don't get it, but that's our opportunity to educate.

                        i've heard lots of people say they have to sell outside beer....BS. My company does 20 Million a year at 5 locations and we sell only our own fresh brewed hand crafted beers. Besides, if you sell someone elses beer you are cutting into your own overhead. You already bought the brewery and every month you pay rent on the space it sits in, make it pay for itself!

                        Respectfully, Larry, we do sell other Brewerys' beer and even wine. It makes us good neighbors with the Breweries we select to have a guest tap. We also hold Brewer's nights to allow them to promote their products, and we get a strong turn-out. We also only choose local Washington Breweries. I'm not so egotistical to think we make what every customer is looking for, and still have Bud in the bottle in our reach-in cold case. It works for us, and business models vary. DK products account for 94+% of all beer sales, but if a party of 5 comes in and one doesn't like microbrews, then we'll carry a macro.

                        Of course, we don't make $25M a year, either.

                        Just my $.02

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                        • #13
                          Yes, I have found the NRA to have quite a bit of information, some relevant, some not. You just have to pry it from their cold dead hands.



                          Scott

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                          • #14
                            Originally posted by Larry Horwitz
                            if you are really looking to put together a model don't overlook the NRA stats on restaurants. also, i work for a company that has 5 brewery restaurants, and 70% +/- of our sales come from food. Food will drive your business, beer will drive your profit (+/- 20% of our gross sales)

                            also, 100 seats is small.....what's the square footage like? 700bbls for 100 seats is a ton of beer.

                            anyway...
                            I have been looking at the NRA but as Sir Brewsalot has suggested, it is a bit of maze trying to get to the good information.

                            I would have to dig up the source, but the article I saw said that if you are planning a brewpub, a good rule of thumb is 5 - 10 annual bbls per restaurant seat. I split it and said 7.

                            I have seen another planning statistic that suggest one should plan 30 - 50 square feet per seat. So a 100 seat restaurant would occupy say 4000 square feet total. This would include kitchen, storage, all other non-revenue bearing space.

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                            • #15
                              Originally posted by hmois
                              hey larry ,ever thought about at you company might make 25 million if they had other beers ,i am sure there are customers who drink water just because they cant ger her " Bud or whatever " and i am sure there People they dont come back after they found out at your company is so "arrogant " and make everybody drink your beer ,heck its a free country give the customers what they want ,just price it right and you make more profit of a Bud as of yours but at least you would have it available.Is your companys beer so bad at they have to fear everybody would drink Bud ?
                              Not arrogant, just working the program. We are craft brewers. We make and sell craft beer. That is what makes us different from Red Monster and TGI McSchratchie's. If we weren't different, why would people come to us? I don't know if you've eaten at a TGI McScratchie's lately, but they are good at what they do. Also, don't be mistaken, we are competing with these restaurants and they will eat your lunch if you don't do it differently and better!

                              also, COS on a house pint +/- 3.5%....COS on a bottle of Bud +/- 25%... you do the math. You might make 25M selling bud, but you'd be giving a whole lot of it to AB.......
                              Larry Horwitz

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