Preparing For A New Brewery Questions

[PolarisBrewing]

Greetings fellow brewers,

I'm here to ask for some advice on the basic plan I have in my head to open my own brewery and restaurant. Currently I'm looking at a 7BBL locally manufactured system.

Here's my thoughts

-I want to have 4-5 house ales and 2 house lagers
-I want to be able to do double batches of the lagers to make up for the extra time they take.
-I want to be able to do high-gravity ales including double IPAs and imperial stouts.
-I'd like to keep 80% of the beer in-house and distribute the rest.

What I'm thinking is having my manufacturer build me a brewhouse with a 10bbl mash tun, 7 bbl direct fired boil kettle, and 10bbl cold liquor tank. Fermenters would be 4-6 7bbl for the ales and 2 15bbl for the lagers. Hot liquor would come from a boiler and I would use the cold liquor to adjust to strike and sparge temps.

I know I'm forgetting a few things here. What sorts of things do I need to be aware of as I begin the design process of my brewery and cellar?

Thanks,
Jason

[poltz]

Well...that's all there is I think.... Good luck to you..

[Braxtol]

Bigger kettle

If you want 6.5 - 7 bbl of wort in your fermenters you will need to have a bigger volume in your kettle considering the evaporation rate during your boil.

[einhorn]

If you have room and money for 15 bbl fermenters, get all 15 bbls. The extra cost for double the size is nominal.

[ATB Consulting]

What are your production goals? Do you have a business plan? What is your experience in the brewing industry? How much beer will be sold onsite versus wholesale?

I recommend working with a reputable supplier or consultant to help you plan your project, which will save you money in the long run. I've seen many issues arise if time is not take to plan properly (not enough capital, system sized incorrectly, poor equipment quality, etc). If you are lucky enough to have a friend in the brewing industry then get their help since many brewers are very busy and often don't have time to speak with all the new brewery owners entering the market.

Good luck!

[mashpaddled]

You also need to think about state and local health and safety codes for design, safety functions and utility use.

[PolarisBrewing]

What are your production goals? Do you have a business plan? What is your experience in the brewing industry? How much beer will be sold onsite versus wholesale?

I recommend working with a reputable supplier or consultant to help you plan your project, which will save you money in the long run. I've seen many issues arise if time is not take to plan properly (not enough capital, system sized incorrectly, poor equipment quality, etc). If you are lucky enough to have a friend in the brewing industry then get their help since many brewers are very busy and often don't have time to speak with all the new brewery owners entering the market.

Good luck!

I'm working on my business plan as we speak.

My production goals are, for year one through year five, in BBL: 660, 770, 880, 990, 1100, and that includes a 10% loss for spoilage or bad batches.

Looking to do this with the seven barrel system, 5 7bbl fermenters, and 3 15bbl, with a 2bbl yeast propagation tank for the 15bbl lager fermenters.

Since I will be staying local with 80% of my equipment, especially the big and heavy stuff, that saves me a lot of money in shipping. The brewhouse manufacturer is no more that a half mile from one of my proposed locations.

However as I write this business plan, I'm working on my projected income statement and I'm getting some really big numbers. Is beer really this profitable? Or am I missing something huge?

Would anyone be will to share their projections or have a few minutes to look at mine and tell me what I'm missing?

Thanks,
Jason

[einhorn]

It's probably fairly easy to project sales, but the crux is in the costs which has a lot to do with your business model (packaging brewery vs brewpub). Why don't you tell us which costs you have accounted for and PB members can chine in as to what you may be forgetting.

[PolarisBrewing]

Under Brewery Operations I have:

Process Expense
Utilities
Brewery Payroll
Brewery Payroll Tax
State Excise Tax
Federal Excise Tax
Raw Ingredients (4%-7% brew, 70% of production)
Raw Ingredients (7%-10% brew, 30% of production)

Under Operational Expenses I have:

Officer's Salary, Combined
Supplies, Tasting Room
Maintenance
Rent
Cable TV
Liability/FF&E Insurance
Marketing/Advertising
Additional Utilities
Equipment Purchase (not applicable until year 4)

These are expenses with the fiscal year starting the day we open, not including the pre-opening losses, which would be in a separate document.

I'm thinking that I don't have the expenses properly costed out. Not sure on that though.

-Jason

[a10t2]

Offhand, I'd saying you're missing FOH labor, sales taxes, and processing fees if you're taking cards.

[yap]

distribution costs

you say you will distribute 20%. in that case you need to account for tap handles, tap handle stickers (if applicable). Sales/delivery driver, vehicle expenses for delivery/sales, other POS needs, cooperage.

I know some of these things may seem more like capital expenses but they are not things you only buy once. You will constantly be buying more every so often and sometimes the bill hits the same month as ten other things and you find yourself in trouble with cash-flow.

One of the big mistakes I made early on (that made my profits look better on paper than they actually are) was that I had all the costs accounted for but not nearly at the right level. I'm not talking about things like grain costs, it's pretty easy to determine that stuff up front. I'm talking more about hidden costs. It turned out that I needed more labor to produce x amount of beer than I thought. I overestimated my # of tank turns based on style mix so my initial production level was lower than expected. I overestimated how many sales could be made in a day by one sales/delivery person.....etc...

Granted I am distribution only and you are a pub so there are certainly some differences. If it seems like you have all the cost items accounted for, it may be worthwhile to double check the amount you have allocated to each expense and run some models under some "what-if" scenarios for the items that don't have true fixed costs (like raw materials) to see if you are still profitable under some high and low assumptions for labor etc..

[redlodgesam]

Have you factored in Depreciation? Repairs? Maintenance?

Sam

[einhorn]

Just to add: glassware, cleaning supplies, chemicals, dues/subscriptions, tools, spillage/waste, professional fees, credit card fees, telephone/internet, license/permits - just off the top of my head.

I also suggest you look closely at personal costs as they are the big chunks.

[ChxBchBrews]

I expect I'm too late to useful to the OP, but in case someone else comes across this thread... I've found that significant costs for start-up breweries arise with application fees, inspections, local & state gov't fees that you never would guess possible. This is a petty example, but my partner went to pay a $50 pre-inspection fee and there was a $6 tax on the fee!

[Bainbridge]

And stuff like "Oh you want a water/sewer permit? That'll be $1500."