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Brewery Startup in Killeen, TX (outside of Fort Hood)

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  • Brewery Startup in Killeen, TX (outside of Fort Hood)

    Hello everyone. I have been racking my brain for many months trying to make plans in a bubble, but I think I really need to start seeking the advice of the pros here. I have been lurking for a while and taking numbers and projections to help guide me but I feel comfortable now with sharing. To start out with, as the title says it, I plan on starting a brewery in the town right outside of one of the largest Army installations in the states where the surrounding population (between the base and the touching three cities) comprises upwards of 150k drinking age adults. Surprisingly the closest brewery to us is a 30 minute drive. Currently I am pending medical retirement and will soon have a whole lot of free time on my hands, but also my wife and I own the only homebrew supply shop that services several counties.

    We are about to close (we're owner financing) on a building in the downtown area that is in all, over 7,000 sq feet that will be divided between the new home of the LHBS, the brewery and taproom, a second floor that will have a classroom and private event room, as well as a rooftop seating area. When I first started planning I went from thinking I should go with a 3.5 to maybe 5 BBL system. Then talking to a friend who started a brewery in Waco (90 minute drive with roughly same serving population) with a 7BBL brewhouse and a mix of 7 and 15bbl fermenters, I thought this would work too. Three months in to his operation and he is wondering if a 15BBL operation would have been better. After taking measurements of the building and putting some thought into it, I determined that we absolutely could fit the following;
    • 15BBL Brewhouse (with 30BBL CLT)
    • 4x 15BBL Fermenters
    • 8x 7BBL Jacketed Brite/Serving Tanks (horizontal/stacked)


    I figured the serving tanks would be more cost effective than clogging up our space with hundreds of kegs, and we will primarily be taproom focused. If we end up getting contracts at local restaurants or bars then we can fill kegs from a brite. I am coming from a homebrew background and have never worked in a brewery so, like I said before, all my numbers are coming from forums and asking around. Also, I am a ground pounding soldier with no finance background and enough math skills to be dangerous. I have been working on some spreadsheets that I would like to share to see if I am crazy, realistic, or being really modest. Either way, feedback is appreciated.

    Starting simple:
    AVG Supply Cost Per BBL $150.00
    AVG pints per BBL 200
    AVG price per pint $6
    Potential Pint Income per BBL $1,050
    Growlers per BBL 60
    AVG price per growler 12
    Potential Growler Income per BBL $570
    With that data I was able to kind of plug in some numbers based on being open WED to SUN (to start), having some growler/crowler sales with a benchtop can seamer to make a few 2go packs we can keep in a fridge, and maybe a few places having a couple kegs a month. I also plugged in a few hundo for merch.

    Day/Time Est Clientele Est Pints per Client Avg Price Per Pint EOD Sales
    Wednesday 4 - 10pm 60 2 $6.00 $720.00
    Thursday 4 - 12pm 150 2 $6.00 $1,800.00
    Friday 4 - 12pm 300 3 $6.00 $5,400.00
    Saturday 12 - 12pm 300 3 $6.00 $5,400.00
    Sunday 12 - 6pm 150 2 $6.00 $1,800.00
    Pints per Month 10,080 4 weeks per month $60,480.00
    Taprom BBL's per Month 13.8
    Growler Fills 64 per Month 1 bbl per month $570.00
    Crowler Fills
    Team (6) Pack 2 go
    2go BBL's per Month 1 $570.00
    Facilities Kegs per Month Cost per Keg
    Draft Accounts 4 3 $150.00 $1,800.00
    Draft BBL's per Month 6
    Merch Sales $500.00
    Overall BBL's per Month 20.8
    Total Monthly Sales $63,350.00
    Once I got that put together I started figuring some salaries, estimated all the monthly expenses to include federal and state excise taxes. You might be confused about the $0 on business taxes but we are actually going to be able to get it waived for 5 years through a city revitalization program. If our sales numbers are as close as we estimate and my imaginary expenses are close, then this is where I'm head in terms of monthly profit.

    Direct Expenses Taxes and Interest
    Federal Excise Tax $48.27
    Monthly Lease $3,000 Business Taxes $0.00
    Avg Supply Costs $2,068.55 Property Taxes $125.00
    Building Insurance $300.00
    Brewery Insurance $1,000.00 State Excise Tax $84.65
    Licenses $200.00 Sales Taxes $4,276.13
    Cleaning Services $100.00 Taxes and Interest $173.27
    Cans $100.00 Sub-Total $4,707.30
    Equip. Loan Repayment $4,200.00 Expenses and Taxes $33,776
    Water $1,000.00 Net Profit $29,574.15
    Power $1,000.00
    Indirect Expenses
    Payment Processing $300.00
    Financial Services $200.00
    Internet $250.00
    Television Services $500.00
    Security Systems $300.00
    Association Memberships $100.00
    Advertising $100.00
    Business Dining $500.00
    Education $100.00
    Events $100.00
    Merch $200.00
    Building Maintenance $200.00
    Employee Salaries $13,250.00
    Expenses Total $29,069
    Last edited by igbrauhaus; 01-28-2020, 09:21 AM. Reason: Had a bad formula in pints per month

  • #2
    Continued

    So, now if all that wasn't enough, here is the next table. If we are able to maintain a steady flow and every month is about even to the example month, then I am looking at some sexy annual net income as such. I know some items are missing but they are somewhat unknown variables right now, but this is where I am starting to ask for advice if my numbers are looking reasonable or if I need to change some things.

    Revenue Year 1 Year 2 Year 3
    Beer Sold $725,760.00 $834,624.00 $959,817.60
    Draft Accounts $21,600.00 $24,840.00 $28,566.00
    Beer to Go $6,840.00 $7,866.00 $9,045.90
    Total Revenue $754,200.00 $867,330.00 $997,429.50
    Cost of Goods Sold $37,422.58 $43,035.97 $49,491.36
    Payroll $159,000.00 $159,000.00 $159,000.00
    Operating Expenses
    Advertising $1,200.00 $1,200.00 $1,200.00
    Vehicle Expenses
    Insurance (other than health) $15,600.00 $15,600.00 $15,600.00
    Legal and Professional Services $2,400.00 $2,400.00 $2,400.00
    Licenses $5,000.00 $5,000.00 $5,000.00
    Memberships $1,000.00 $1,000.00 $1,000.00
    Facility Lease/Rent $18,000.00 $18,000.00 $18,000.00
    "Rent/Lease - Vehicles, Machinery,
    Equipment (Co2)" $1,800.00 $1,800.00 $1,800.00
    Maintenance $2,400.00 $2,400.00 $2,400.00
    Travel, Meals, Entertainment $8,400.00 $8,400.00 $8,400.00
    Utilities & Services $42,600.00 $42,600.00 $42,600.00
    Miscellaneous $6,000.00 $6,000.00 $6,000.00
    Total Operating Expenses $104,400.00 $104,400.00 $104,400.00
    Income (Before Other Expeneses) $453,377.42 $560,894.03 $684,538.14
    Other Expenses
    Equipment Loan $50,400.00 $50,400.00 $50,400.00
    Vehicle Loans
    Total Other Expenses $50,400.00 $50,400.00 $50,400.00
    Net Income Before Income Tax $402,977.42 $510,494.03 $634,138.14
    Franchise Tax $0.00 $0.00 $0.00
    Federal Excise Tax $579.19 $666.07 $765.98
    State Excise Tax $1,015.74 $1,168.10 $1,343.32
    State Tax $51,313.50 $59,010.53 $67,862.10
    Net Income/Loss $350,068.99 $449,649.33 $564,166.73
    So there you have it, all my dirty secrets that I've been playing with while I am supposed to be working. The only reason I have questions about the validity and reality of my numbers is because I hear so many people talk about how this industry isn't lucrative and that you shouldn't expect to make any money. I want feedback. I want to be told I am wrong about this or that. Please hit me with your real numbers and get my spreadsheets looking realistic.

    Comment


    • #3
      How did you come up with this number?

      Pints per Month 3420 4 weeks per month $60,480.00

      Comment


      • #4
        Originally posted by AmbrosiaOrchard View Post
        How did you come up with this number?
        Let me go look at my sheet. But I think you're on to something

        Comment


        • #5
          Originally posted by AmbrosiaOrchard View Post
          How did you come up with this number?
          Just checked it. My formula for the pints per month was screwy, but the profit number was correct. I'll fix it but it should have been 10,080 pints per month based on EACH (day clientele x pints)x4. That would then be the 10,080 pints times $6 a pint coming out to that $60k number. Thank you for pointing that out.

          Comment


          • #6
            Originally posted by igbrauhaus View Post
            Just checked it. My formula for the pints per month was screwy, but the profit number was correct. I'll fix it but it should have been 10,080 pints per month based on EACH (day clientele x pints)x4. That would then be the 10,080 pints times $6 a pint coming out to that $60k number. Thank you for pointing that out.
            Ok great, glad to help. Have you adjusted your expenses for the now nearly 40BBL of beer instead of the 20BBL in the initial calculation?

            Also, to give you an idea of what your sales estimate would be in real life, every .96 Minutes, or about 57 seconds, a pint would need to be sold to meet those your numbers. That an average, so lets just say your busy times are 10X more busy than your slow times. Could you realistically sell a pint every 6 seconds?

            Comment


            • #7
              Originally posted by AmbrosiaOrchard View Post
              Ok great, glad to help. Have you adjusted your expenses for the now nearly 40BBL of beer instead of the 20BBL in the initial calculation?

              Also, to give you an idea of what your sales estimate would be in real life, every .96 Minutes, or about 57 seconds, a pint would need to be sold to meet those your numbers. That an average, so lets just say your busy times are 10X more busy than your slow times. Could you realistically sell a pint every 6 seconds?
              The formulas adjusted once I fixed that number. I'm curious how you are getting the pints per minute though? I'm working up some calculations on the side and my math is Pints per day * open hours = pints per hour, then that divided by 60. Is that right? Because that would give me less than half a pint on the slower day and almost two pints a minute on the busy days.

              Comment


              • #8
                Originally posted by igbrauhaus View Post
                The formulas adjusted once I fixed that number. I'm curious how you are getting the pints per minute though? I'm working up some calculations on the side and my math is Pints per day * open hours = pints per hour, then that divided by 60. Is that right? Because that would give me less than half a pint on the slower day and almost two pints a minute on the busy days.
                (160 hours/month x 60 minutes/hour X month/10080 pints) That gives me .95 minutes/pint.

                Like I said that is an average. I threw out that 10X more busy on your busy days because it always seems like most of the business happens in a few hours of the week, rather than spread out consistently through out each hour.

                Does that make sense?

                Comment


                • #9
                  Google is a good place to look at analytics of number of customers based on the times. Typically, it looks something like this.

                  4-
                  5--
                  6-
                  7--
                  8--
                  9-----
                  10-------------------------------------
                  11----
                  12---

                  Fun stuff, right?

                  Comment


                  • #10
                    Okay I got you know. I appreciate the help. It looks like I may have some more thought to put into all this and maybe break up the first year into quarters to adjust for a slow start and a ramp into full swing. May have been too optimistic in thinking that we would be immediately booming.

                    Comment


                    • #11
                      I would really reconsider buying the commercial property. Killeen is a very very hard market right now. Cap rates are trading at 12% and staying on market for longer and longer

                      Comment


                      • #12
                        I'm looking at your box thing there. I'm very concerned that you don't know how many pints are in a barrel of beer. Where the hell did you get 200? A barrel of beer is 31 gallons. One gallon is 128 ounces * 31=3968 ounces divide 16 is 248. There are 248 pints in a barrel, so 124 in a half keg. I like the $6 price point. You will lost 8 pints if your system pours kegs perfectly, so revenue @$6/ pint is $1440 per barrel. Do a weekly seller to clear inventories at $4 or 5. If you have $1000 TO INVEST, i WILL SELL YOU A MULTI-PAGE SPREADSHEET, shit damn cap lock, sorry.. that will track labor, expenses, beer tax, beer cost EBITDA, all that crap. You can adjust price and volume and it changes the numbers, shows the profit. I can advise on equipment with quotes as part of it.

                        I suspect you are counting too much on the military, but I could be wrong. I think you have no chance of selling $700K in beer. You do not need a 15 bbl. 7 is enough. You need $200-300K for a chinese new one, so hopefully you can find used and figure out how to re-assemble the piping and hope it all works correctly.

                        $25k in outside draft is probably more headache than its worth. You need at least 5 kegs for every draft account. 7 is better. Your margin will be Dick, small Dick. It wont pay for the kegs or your buddy selling them. Nevermind the wholesaler issues? Is Texas self distribute? I doubt it. Huge lobby by the distributors in that state. You're fucked as a little brewery. No distributor cares about your $25K in sales.

                        $18k for annual rent? or is that monthly. If thats annual, thats free. If its monthly, walk away now.

                        Cost of goods 5%? Possible. Low gravity beers, but in the ballpark I think. Your GP should be around 15% or 20. You will not net half of the 725 in sales. You are missing a shit ton of costs I think. Unless there's no debt. Owner financing? How much? How much is the building and how much is equipment and installation costs, buildout etc.. Need more info..

                        Comment


                        • #13
                          Originally posted by ATXbrewhub View Post
                          I would really reconsider buying the commercial property. Killeen is a very very hard market right now. Cap rates are trading at 12% and staying on market for longer and longer
                          You'd be surprised. I'm working several angles right now.

                          Comment


                          • #14
                            Originally posted by BeerBred View Post
                            I'm looking at your box thing there. I'm very concerned that you don't know how many pints are in a barrel of beer. Where the hell did you get 200? A barrel of beer is 31 gallons. One gallon is 128 ounces * 31=3968 ounces divide 16 is 248. There are 248 pints in a barrel, so 124 in a half keg. I like the $6 price point. You will lost 8 pints if your system pours kegs perfectly, so revenue @$6/ pint is $1440 per barrel. Do a weekly seller to clear inventories at $4 or 5. If you have $1000 TO INVEST, i WILL SELL YOU A MULTI-PAGE SPREADSHEET, shit damn cap lock, sorry.. that will track labor, expenses, beer tax, beer cost EBITDA, all that crap. You can adjust price and volume and it changes the numbers, shows the profit. I can advise on equipment with quotes as part of it.

                            I suspect you are counting too much on the military, but I could be wrong. I think you have no chance of selling $700K in beer. You do not need a 15 bbl. 7 is enough. You need $200-300K for a chinese new one, so hopefully you can find used and figure out how to re-assemble the piping and hope it all works correctly.

                            $25k in outside draft is probably more headache than its worth. You need at least 5 kegs for every draft account. 7 is better. Your margin will be Dick, small Dick. It wont pay for the kegs or your buddy selling them. Nevermind the wholesaler issues? Is Texas self distribute? I doubt it. Huge lobby by the distributors in that state. You're fucked as a little brewery. No distributor cares about your $25K in sales.

                            $18k for annual rent? or is that monthly. If thats annual, thats free. If its monthly, walk away now.

                            Cost of goods 5%? Possible. Low gravity beers, but in the ballpark I think. Your GP should be around 15% or 20. You will not net half of the 725 in sales. You are missing a shit ton of costs I think. Unless there's no debt. Owner financing? How much? How much is the building and how much is equipment and installation costs, buildout etc.. Need more info..
                            Hey thanks for your input. So that first page to my now massive spreadsheet didn't have any effect on the rest of the sheets. I don't know where I got that number from to be honest. I'm aware of pints per barrel. I can send you the link to my spreadsheet if you want to check out how far its gone so far.

                            For the counting on the military thing? What do you mean by that? Like I'm counting on them for my retirement to go through, or by counting on patrons from the base? Now, the reason I settled on a 15BBL system is because my buddy up in Waco just started about 6 months ago now at a 7 with a mix of 7 and 15bbl fermenters (doing a few double batches for some recipes), and he is already wishing he would have gone bigger. I don't want to make that mistake being the first brewery here, especially since his area is already sitting with now 6 microbreweries last I checked. I mean, sure I can go smaller and hope I don't have to regret it in a year, but wouldn't it be better to err on the side of caution in that regard? Now, the reasons I want to go new is A) customer service and install won't be a pain in my a. B) same dude I just mentioned had several large dollar fixes that needed to be made because of parts not being UL or have other certifications the city required. and C) I'm concerned that Papa Trumps tarriffs will also be a pain in my a. Feel free to change my mind in that regard. Seriously, if you know something I don't, spread that knowledge bro.

                            So... cost of goods you say. We own the local homebrew supply here and I've already checked that it won't break any laws or company policies, and our supplier said its not an issue to use our same account as long as we use a different set of billing to keep track of it. I was skeptical at first, but they said it was okay. I mean, I can fiddle with the spreadsheet to call it 15% to give me some flex if you think it will help. I know I'm probably missing a lot, which is why I'm coming here to ask for input. Please, point me in the right direction. The building is going to be owner financed if this plan works out the way it has been. 90 grand down to the owner, with the remainder lease to own. The money down is coming from a private lender who will get 5% ownership until that is paid off with 1% of that going to the broker at no interest (he's a friend that really likes beer). So the monthly lease is basically half of what we calculated out because the LHBS will occupy part of the building and were considering my wifes "side" will cover the other half of that.

                            I guess I didn't mention any of the equipment cost. Ive been talking to a lot of manufacturers and quoting multiple system sizes/options. High end i'm looking at just under 300k for 15BBL including install, down to a 5bbl at the 120k range. I've made a pretty good contact for a brewery finance company that is confident I could get financed, but Im hesitant to pull that trigger just yet. Other option is to buy my own nano setup and there is a bank here that has a relationship with the city in their downtown revitalization initiative that would feel comfortable dishing out a very low interest backed loan once I show profitability and proof of concept as a nano for a quarter or two. Im honeslty leaning towards that right now. I could also consider doing a veterans choice SBA, but I don't really understand them.

                            Do you want me to send you a link to my google doc on this? Much has changed since I posted the original and it may be looking closer to reality now.

                            Comment


                            • #15
                              Originally posted by BeerBred View Post

                              $18k for annual rent? or is that monthly. If thats annual, thats free. If its monthly, walk away now.
                              To clarify this again, its half of the annual. We will be co use between the brewery and LHBS. For simplicity in my numbers I factored half of total. Hope that makes sense.

                              Comment

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