Announcement

Collapse
No announcement yet.

Taproom, is it worth it?

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Taproom, is it worth it?

    Hey!

    We've opened our brewery in 2012 in Casselman ON. We are trying to get more people to come to us. We are in a town of 4000 but we have the advantage of having a main highway running across so this brings a lot of traffic. We're 30 minutes from Ottawa and 90 minutes from Montreal.

    We have a few restaurant here in town but no night life whatsover, a lot of people are asking to bring some night life option here in town. We have only one patio which is at a family restaurant who is very busy.

    Our retail store is getting busier every year. Last year we bought the next door building to house our Lab, office, packaging and warehouse. The office space is well located in front of the building with nice big windows and a big canopy which could do very well for a patio. So, we're thinking about putting a taproom and our retail store in the 1000 sqft of space that was going to be for the offices.

    We're thinking of having live bands and also stand up comics. Finger food as well.

    For those of you who have a taproom, is it worth it? Or more of a challenge for the amount of money it brings in?

    Any thoughts?

    Thanks!
    Cheers!
    ______________

    Mario Bourgeois
    www.CasselBrewery.ca
    Casselman ON Canada

  • #2
    A taproom should be a main focus in our opinion. Best profit margin, you can create the experience you want your beer to be portrayed. Direct interaction with your customers. No distribution headaches. It's no wonder why so many breweries choose to be taproom only breweries. My advice would be, if you do a taproom, do it right and don't half ass it. Create a cozy environment that people want to seek out.
    Cheers!
    Dan

    Comment


    • #3
      Completely agree with Junkyard. To my opinion it is well worth it. Make it at least 99 seats. This will be your bread and butter.

      Comment


      • #4
        Originally posted by Junkyard View Post
        A taproom should be a main focus in our opinion. Best profit margin, you can create the experience you want your beer to be portrayed. Direct interaction with your customers. No distribution headaches. It's no wonder why so many breweries choose to be taproom only breweries. My advice would be, if you do a taproom, do it right and don't half ass it. Create a cozy environment that people want to seek out.
        Cheers!
        Dan
        Thanks Dan! May I ask where your taproom is located?
        Cheers!
        ______________

        Mario Bourgeois
        www.CasselBrewery.ca
        Casselman ON Canada

        Comment


        • #5
          Originally posted by Thirsty_Monk View Post
          Completely agree with Junkyard. To my opinion it is well worth it. Make it at least 99 seats. This will be your bread and butter.
          Thanks Thirsty Monk! 99 seats in 1000 sq ft will be a tight fit but could be fun during a ladies night ;-)
          Cheers!
          ______________

          Mario Bourgeois
          www.CasselBrewery.ca
          Casselman ON Canada

          Comment


          • #6
            Originally posted by CasselBrewery View Post
            Thanks Dan! May I ask where your taproom is located?
            We're in Moorhead, MN.

            Comment


            • #7
              Originally posted by CasselBrewery View Post
              Thanks Thirsty Monk! 99 seats in 1000 sq ft will be a tight fit but could be fun during a ladies night ;-)
              I said 99 because anything over 99 and your building needs to be sprinkled.

              Comment


              • #8
                Depends on when

                A taproom has a nice contribution margin, as you are internalizing the revenue that would otherwise be split throughout the distribution network between wholesaler and retailer. Especially during the startup phase, having a set number of taps that you know you will have is crucial to maintaining a production schedule and revenue stream.

                If you want to grow, the taproom can quickly become a liability. Managing a restaurant is insanely time consuming, and your growth is limited to the number of seats and the number of turns on those seats. Increasing sales at the taproom has a rapidly decreasing marginal return, and the harder you push to get butts in seats, the more you alienate your retail partners; i.e. the people you need for long term growth.

                Also, don't assume that you can just shove some seats at a bar and that level of execution will do. Avoid the mentality that beer retail is easy; everybody has been to that bar where nobody took the time to care about it, and it sucks.

                Having balanced goals for each operation in the brewery and its respective time commitment is what it takes to keep things ticking over.

                Cheers!
                Bill

                Comment


                • #9
                  Originally posted by william.heinric View Post
                  A taproom has a nice contribution margin, as you are internalizing the revenue that would otherwise be split throughout the distribution network between wholesaler and retailer. Especially during the startup phase, having a set number of taps that you know you will have is crucial to maintaining a production schedule and revenue stream.

                  If you want to grow, the taproom can quickly become a liability. Managing a restaurant is insanely time consuming, and your growth is limited to the number of seats and the number of turns on those seats. Increasing sales at the taproom has a rapidly decreasing marginal return, and the harder you push to get butts in seats, the more you alienate your retail partners; i.e. the people you need for long term growth.

                  Also, don't assume that you can just shove some seats at a bar and that level of execution will do. Avoid the mentality that beer retail is easy; everybody has been to that bar where nobody took the time to care about it, and it sucks.

                  Having balanced goals for each operation in the brewery and its respective time commitment is what it takes to keep things ticking over.

                  Cheers!
                  Bill
                  Thanks Bill! Great food for thoughts! Cheers!
                  Cheers!
                  ______________

                  Mario Bourgeois
                  www.CasselBrewery.ca
                  Casselman ON Canada

                  Comment


                  • #10
                    We are not yet open, but when we are, we expect our taproom to generate north of 75% of our revenue the first year, evening out over the next 3-5 years. The margins are just too high to avoid it:

                    1 sixtel to a retailer = $75 - $100.
                    40 pints in a sixtel @ $4/pint = $160.

                    1 half to a retailer = $175.
                    120 pints in a half @ $4/pint = $480.

                    It's really that simple. If you can hit that sweet spot where your most popular beer is also one of the cheaper to produce, it's even better.

                    Another bonus is that you can create buzz via the taproom by selling beers only available at the taproom at first. Got a killer new Brit Mild? Sell your first run only in the taproom and publicize the hell out of it. Then people will start looking for it elsewhere. You can use the taproom to create anticipation and demand.

                    AFA food, go the cheapest route possible. If you can do a concept that doesn't require a hood, fryers, exhaust fan, ovens, grease traps, etc. do it. Find a niche - hot dogs, deli sandwiches, whatever - and do it REALLY well, but keep it really simple. Do something ridiculously simple that customers can't get other places.

                    For us, the taproom will be indispensable.

                    Comment


                    • #11
                      Originally posted by william.heinric View Post
                      A taproom has a nice contribution margin, as you are internalizing the revenue that would otherwise be split throughout the distribution network between wholesaler and retailer. Especially during the startup phase, having a set number of taps that you know you will have is crucial to maintaining a production schedule and revenue stream.

                      If you want to grow, the taproom can quickly become a liability. Managing a restaurant is insanely time consuming, and your growth is limited to the number of seats and the number of turns on those seats. Increasing sales at the taproom has a rapidly decreasing marginal return, and the harder you push to get butts in seats, the more you alienate your retail partners; i.e. the people you need for long term growth.

                      Also, don't assume that you can just shove some seats at a bar and that level of execution will do. Avoid the mentality that beer retail is easy; everybody has been to that bar where nobody took the time to care about it, and it sucks.

                      Having balanced goals for each operation in the brewery and its respective time commitment is what it takes to keep things ticking over.

                      Cheers!
                      Bill
                      This is an interesting perspective on growth.

                      The way I see it.. You don't need retail accounts to grow. If you are planning to be the next Sierra Nevada then yes, you need retail accounts, but you can be a very successful company selling all your beer in house. There are many popular breweries with taprooms selling all their 10bbl system can pump our right in their taproom and making a killing, no retail accounts. There are also many brew pubs that have multiple locations and sell all their beer in house and are very successful.

                      I'd bet with a busy 1000 sq foot taproom open 7 days a week you could turn $300k per year pretty easily just out of the taproom. Your growth is only limited by your attitude, drive and creativity.


                      As for the restaurant being a headache: We don't manage a restaurant at all at this point, so I can't speak too much about how much of a pain they are, but we are planning to in the future (as part of our growth). In our opinion Keeping food simple/narrow is an absolute must, you want your customers to know you for your beer and not your food. While your food should still be very good, the focus is on the beer. The best margins will be on the beer.

                      Comment


                      • #12
                        Junkyard;

                        I think that's a sound snapshot of what a on-premise tasting room can be. If growth is not your primary goal, then I agree that can be a good short term model.

                        However, this isn't a static industry, and the consumer base that supports the 10 bbl system today is constantly evolving, increasing its expectations for quality and consistency. At $300k/year in gross revenues, how do you plan to maintain (let alone exceed) expectations? This is an arms race; you have to constantly improve in order to simply hold your relative position.

                        This is why growth over a long term plan is crucial. You have to have those dollars to dump back into QC/QA, physical capital, and human capital. As an owner, if you have split responsibilities between brewhouse and taproom, where is your human capital being built? Are you improving as a brewer as rapidly as you want to? What are you paying for staffing? Are those seats taking away cellar and warehouse space? How many times do you have to repair the urinal because someone was stupid? Questions like these will have different levels of application to your individual scenario, but I pose them here to highlight some of the hidden costs that with retail service.

                        I think that a tasting room is a crucial part of any startup; however, it's not simple, it's not cheap, and when you calculate all of the costs that go into each pint, and all of the costs that go into creating and retaining repeat customers, you find that the 2200% margin of a $5 pint quickly evaporates.

                        My point is that you shouldn't go in blind, and you shouldn't go in thinking it's an easy buck. Know who you are and what you want to achieve, and where your strengths and weaknesses are.

                        Best of luck, and cheers!
                        Bill

                        Comment


                        • #13
                          Has the food truck craze hit Ottawa? I see a lot of small taprooms stateside hosting a food truck as a way to have food while sidestepping the struggle to remain a brewery rather than "a restaurant that brews some beer," not to mention the expense/red tape of building out and licensing their own food prep area. Don't know if that's something you're into, or if there are even food trucks to host in your area, but it may be worth running the numbers on, anyway.

                          Comment


                          • #14
                            Originally posted by Chisholm Tavern View Post
                            We are not yet open, but when we are, we expect our taproom to generate north of 75% of our revenue the first year, evening out over the next 3-5 years. The margins are just too high to avoid it:

                            1 sixtel to a retailer = $75 - $100.
                            40 pints in a sixtel @ $4/pint = $160.

                            1 half to a retailer = $175.
                            120 pints in a half @ $4/pint = $480.

                            It's really that simple. If you can hit that sweet spot where your most popular beer is also one of the cheaper to produce, it's even better.

                            Another bonus is that you can create buzz via the taproom by selling beers only available at the taproom at first. Got a killer new Brit Mild? Sell your first run only in the taproom and publicize the hell out of it. Then people will start looking for it elsewhere. You can use the taproom to create anticipation and demand.

                            AFA food, go the cheapest route possible. If you can do a concept that doesn't require a hood, fryers, exhaust fan, ovens, grease traps, etc. do it. Find a niche - hot dogs, deli sandwiches, whatever - and do it REALLY well, but keep it really simple. Do something ridiculously simple that customers can't get other places.

                            For us, the taproom will be indispensable.
                            Thanks Chisholm Tavern! Very good idea on releasing a new beer in our taproom only and also the no fryer lunches like a deli which would be great and requires minimum investment. Good luck with your opening wishing you the best!

                            Cheers!
                            Cheers!
                            ______________

                            Mario Bourgeois
                            www.CasselBrewery.ca
                            Casselman ON Canada

                            Comment


                            • #15
                              Originally posted by Junkyard View Post
                              This is an interesting perspective on growth.

                              The way I see it.. You don't need retail accounts to grow. If you are planning to be the next Sierra Nevada then yes, you need retail accounts, but you can be a very successful company selling all your beer in house. There are many popular breweries with taprooms selling all their 10bbl system can pump our right in their taproom and making a killing, no retail accounts. There are also many brew pubs that have multiple locations and sell all their beer in house and are very successful.

                              I'd bet with a busy 1000 sq foot taproom open 7 days a week you could turn $300k per year pretty easily just out of the taproom. Your growth is only limited by your attitude, drive and creativity.


                              As for the restaurant being a headache: We don't manage a restaurant at all at this point, so I can't speak too much about how much of a pain they are, but we are planning to in the future (as part of our growth). In our opinion Keeping food simple/narrow is an absolute must, you want your customers to know you for your beer and not your food. While your food should still be very good, the focus is on the beer. The best margins will be on the beer.
                              Thanks Junkyard! Really interesting perspective here about chasing retail account which are becoming more and more a challenge with all the craft breweries opening up
                              Cheers!
                              ______________

                              Mario Bourgeois
                              www.CasselBrewery.ca
                              Casselman ON Canada

                              Comment

                              Working...
                              X