Realistic capital for a new 5-7bbl brewery + taproom

[bierkellerbrew]

I am in a similar situation. I have found a spot for $600/mo in an excellent location. Looking at a 5 BBL Stout system (currently brew on one of their 1BBL setups) and doing all the upfit (building benches, installing glycol plumbing, and building out a beer garden on an adjacent, shady lot using used German beer garden tables and clay mugs I purchase from over there...plus all the marketing and web site development) myself. My numbers so far are in the $150K range to get up and running. Plus I have some investors already committed to paying a good bit of $$$ per month in private dues for a separate, private area in the beer garden where they can smoke cigars (these guys drink pretty heavily, so I can count on some good revenue from drinks, too). I know I need some cash on hand for potential growth and/or emergencies, but so far I see this number as realistic for getting going...and ultimately growing. Some local friends who have run pubs in the same area have said to count on $17-20 per seat. At that rate -- and given the guaranteed revenue from the private group and the number of seats I'm looking at -- I think I should be OK. Would love to hear any feedback/thoughts. Things I may be overlooking? Unrealistic numbers? Cheers!

[a10t2]

If you don't need to do any construction, and you're able (physically and legally) to do all the work yourself, and you cut every corner you can on equipment costs (used equipment, dairy tanks, homebrew-scale equipment, etc.), and you have a free place to store it for 6-12 months while you piece everything together, and there aren't any delays in the licensing/permitting process (although you'll still be paying rent for a minimum of three months while you wait on TTB), and you won't be serving any food, and you'll only brew a few brands, served exclusively on-site, and you don't need to pay yourself or your staff, then you could probably get the doors open for $150,000 without any operating capital left over.

We're a little bit bigger, and we're building out a kitchen, but our initial budget was more than double that. Now that we're actually getting bids from contractors and shopping for equipment, even that seems optimistic. The minimum I'd consider to get any reasonably-sized brewery up and running would be about $250,000… By a crazy coincidence, that's the same number people who have actually done it have been throwing around for the past couple decades.

[bierkellerbrew]

If you don't need to do any construction, and you're able (physically and legally) to do all the work yourself, and you cut every corner you can on equipment costs (used equipment, dairy tanks, homebrew-scale equipment, etc.), and you have a free place to store it for 6-12 months while you piece everything together, and there aren't any delays in the licensing/permitting process (although you'll still be paying rent for a minimum of three months while you wait on TTB), and you won't be serving any food, and you'll only brew a few brands, served exclusively on-site, and you don't need to pay yourself or your staff, then you could probably get the doors open for $150,000 without any operating capital left over.

We're a little bit bigger, and we're building out a kitchen, but our initial budget was more than double that. Now that we're actually getting bids from contractors and shopping for equipment, even that seems optimistic. The minimum I'd consider to get any reasonably-sized brewery up and running would be about $250,000… By a crazy coincidence, that's the same number people who have actually done it have been throwing around for the past couple decades.

I believe that the $250K amount is reasonable. I'm really looking for where the "hidden" costs primarily lie. Don't need to do any construction save for cosmetic upfitting (built-in benches that I have already done in my brewing garage). The brewing equipment I am looking at from Stout costs around $65K for a 5 BBL electric system, comprising two 5-BBL FVs and four 5-BBL brite tanks (only plan to brew three different beers and serve exclusively on-site via glycol-chilled lines directly from the brite tanks). Not planning on having a real kitchen, just a meat slicer for some cured meats, air-dried sausages, charcuterie, cheese, and bread/pretzels (there is a great pizza place right next door that people sitting in the beer garden could get take-out from; plus I have already talked to a local food cart that will serve grilled sausages). Budgeted for a year's rent in the startup costs. Have already been in close contact with the head of zoning from the City and he has said, at least, that he'll do all he can to facilitate permitting, etc.

I know I am looking at 18-hour work days and a very small salary (if any at the beginning). I also have a very highly awarded local homebrewer who recently retired and has agreed to help for free (he has also worked as a BJCP judge and really loves our beers). Family have also agreed to help out with some back-up capital should we need it.

Really not trying to argue with your (and many others') numbers, just wanted to paint a picture and ask where the costs are I am missing.

[a10t2]

I believe that the $250K amount is reasonable. I'm really looking for where the "hidden" costs primarily lie.

That's a nearly impossible question to answer, and every situation is going to be different. Unless your facility was already (and recently) set up as a brewery, it probably isn't realistic to think you won't have to do ANY construction. Some potential issues in no particular order:

• Serving food will presumably make you subject to local health codes - HVAC, sinks and drains, prep surfaces, fire suppression… The compliance costs could be enormous.
• Likewise for ADA compliance. Outdoor seating also counts against your occupancy limits based on number and type of bathrooms.
• $65k all-in for the brewery would be a steal. I'd assume that's just the vessels and maybe some brewhouse equipment. Have you budgeted for your grain handling, pumps, heat exchanger, glycol unit(s), yeast management, hoses, etc.? Spare parts? Ladders, pallet jacks, tools… The list never ends.
• Have you gotten quotes on insurance? Utilities? I'm assuming air conditioning is expensive down there. Is your wastewater metered, BOD/COD monitored? Wastewater treatment could cost a fortune if you can't run effluent straight down the drain.

Can you turn a profit when you're maxing out at ~250 bbl/yr? Even if you can, when the thing blows up and you're running out of beer two months after opening, how will you finance an expansion? Will you have room? Spare glycol capacity? Getting the doors open isn't the end of the process, not by a long shot.

I'm not trying to discourage you, I just don't see how that $150k number could be realistic, let alone conservative enough to give yourself a good chance of success.

[Bainbridge]

Exactly. Our budget for our 10bbl and taproom was $500k and we still went a little over it. But just a little, because I'd calculated for $400k and then $100k in "Sadly I'm Not The All-Knowing Oz" expenses. Things come out of nowhere and sock you in the gut, makes you go *HUHHH!*. For example, our building permits and water/sewer hookup with the City ran $6000 before we could even start remodeling the space.

Could we have done the thing cheaper if I was less ham-fisted with a hammer, and knew how to Plumbing, well yeah. But I'm a big believer in 'do it right the first time', not 'let's constantly fix that bodged together solution to a problem that by all rights shouldn't even exist'. Regardless, most of that expense was materials for our improvements and our new US fabricated brewhouse and tanks, plus the van, pallet stacker, pallet shelving, air compressor, cold room, glycol chiller, glycol piping, taps, bar, tables, chairs, glassware, fridge, dishwasher, crap-ton of taphandles, several grand for initial malt, hops and yeast, upfront print runs in the thousands of keg collars, stickers, coasters, growlers, etc.. Things that, you know, cost money upfront.

Being plucky and thrifty and self-reliant will help you run a successful business, that is an absolute fact! But I'm not sure that's enough on its own to start one without sufficient capital to back it up. No brewery makes money right from the gate. With good business practices (and good beer!) you can become cash-positive pretty quick, but you've still got to float yourselves for a while. We were forced to delay our opening nearly a month due to a fight over a 12v wire with State L&I. Things like that happen. And you're going to need more capital-intensive gear faster that you ever thought. I remember sitting there looking at the first month's sales and saying "We're going to need a bigger boat..." So we have doubled our cellar capacity in two years and have had to buy hundreds more kegs in the last year.

At the very least, make sure you can arrange a line of credit somewhere, or the option for small loans with family and friends, for when you immediately (and probably unexpectedly!) need x, y, and z a month after opening. Better to have money and not need it, than need money and not have it.

[bierkellerbrew]

That's a nearly impossible question to answer, and every situation is going to be different. Unless your facility was already (and recently) set up as a brewery, it probably isn't realistic to think you won't have to do ANY construction. Some potential issues in no particular order:

• Serving food will presumably make you subject to local health codes - HVAC, sinks and drains, prep surfaces, fire suppression… The compliance costs could be enormous.
• Likewise for ADA compliance. Outdoor seating also counts against your occupancy limits based on number and type of bathrooms.
• $65k all-in for the brewery would be a steal. I'd assume that's just the vessels and maybe some brewhouse equipment. Have you budgeted for your grain handling, pumps, heat exchanger, glycol unit(s), yeast management, hoses, etc.? Spare parts? Ladders, pallet jacks, tools… The list never ends.
• Have you gotten quotes on insurance? Utilities? I'm assuming air conditioning is expensive down there. Is your wastewater metered, BOD/COD monitored? Wastewater treatment could cost a fortune if you can't run effluent straight down the drain.

Can you turn a profit when you're maxing out at ~250 bbl/yr? Even if you can, when the thing blows up and you're running out of beer two months after opening, how will you finance an expansion? Will you have room? Spare glycol capacity? Getting the doors open isn't the end of the process, not by a long shot.

I'm not trying to discourage you, I just don't see how that $150k number could be realistic, let alone conservative enough to give yourself a good chance of success.

I don't think you're trying to discourage me. I appreciate the advice. And of course there will be some construction; I have a good friend who is willing to help out there for food/beer.

With the food cart option, I may just opt not to serve food at all. Sounds like it may be more trouble than it's worth. Thanks for the tip.

From what I was told by the local head of zoning for the City, outdoor seating that is uncovered doesn't count toward occupancy totals. Could be wrong there, though, so I'll double check.

The $65K includes all pumps, hoses, fittings, clamps, control panel, etc. Heat exchanger is separate, but shouldn't be too expensive for a 5BBL system. I currently brew on a 1BBL in my garage, and can get a batch to the low 60s in 10 min with a Therminator. Also have grain mill that could be used for this scale (takes me about 15 min to mill enough grain for the 1BBL), and I already have lots of Stout spare parts for current setup. Still, I know there are some things I'm perhaps not considering, so I'm going to double/triple-check these numbers.

Insurance I have budgeted 7-10k per year for; electricity I have budgeted 12K per year. Not sure if these are way off, but I got these numbers from comparables I found on here and elsewhere.

Wastewater is BOD/COD monitored but not metered.

Your last point may be my biggest fear. Doing some lagering ties up tanks for longer than ales (although Koelsch and Kellerbier are often served very fresh, with the former needing 5 weeks total and the latter only 3 weeks). My initial plan if there is huge demand is to increase the amount of times I am brewing per week and add 2 more 5 BBL FVs. A recently passed bill down here now allows for brewpubs to keg/package and then sell to retail outlets and other bars through a distributor. This would allow me to free up FV and BT space by kegging and storing in the walk-in cooler. Still, I know this part of the plan needs some work, so, again, thanks for the insights.

Here's a look at the current brewing garage. We did this for around $500 in lumber and paint, and $250 or so in e-bay-sourced German stuff. Plan is to do something similar for this place, just on a larger scale.



EDIT: I have at least 2 friends in town who have started pubs with full kitchens, grease traps, hoods, etc. for $100-150K. Subtract those costs and replace with the $65K brew system and you could, conceivably, easily be in the same ballpark, no?

EDIT2: just looking at Bainbridge's place. Yea...we're not in the same league as that. Main focus will be beer garden. Think of the Czech place in Astoria Queens with a small brewery in-house.

[bierkellerbrew]

Brief update: I helped out on a brew day at a local brewpub yesterday. Everything was going great...until the boiler decided to die on us. Ended up with 3.5 BBLs of wort sitting in the BK unable to be heated. The head brewer ended up having to pump the wort outside to his old brewstand and boil it in separate, 26-gal batches, before pumping it back inside, chilling it, and pumping to the FV. Did I mention it was 95 degrees and humid as hell? I think the universe was trying to tell me something....

[SMiller]

150k is going to be very very tight.

I started with 120k, no taproom, pieced together system and saved money with a crappy contractor doing the buildout. We had negative 97 cents in the bank on our first brew day.

You're going to find that the little things you didn't budget for you are what takes you down. The stuff no one ever thinks of when doing this. Shelving, bulk co2, tools, extension cords, brooms, brushes, squeegees, shop vac, tables in the brewhouse area, water filters, buckets, trash cans, spray nozzles, co2 fittings, oxygen regulator, portable draft system for fests, rags, rubber gloves, clipboards, spare parts, brewers hose ($2k), first chemical order ($2k), glycol ($1k). The list goes on and on and on.

Individually these items are tiny, add them all up and you just spent 10-15k that wasn't in the budget.

[yap]

150k is going to be very very tight.

I started with 120k, no taproom, pieced together system and saved money with a crappy contractor doing the buildout. We had negative 97 cents in the bank on our first brew day.

You're going to find that the little things you didn't budget for you are what takes you down. The stuff no one ever thinks of when doing this. Shelving, bulk co2, tools, extension cords, brooms, brushes, squeegees, shop vac, tables in the brewhouse area, water filters, buckets, trash cans, spray nozzles, co2 fittings, oxygen regulator, portable draft system for fests, rags, rubber gloves, clipboards, spare parts, brewers hose ($2k), first chemical order ($2k), glycol ($1k). The list goes on and on and on.

Individually these items are tiny, add them all up and you just spent 10-15k that wasn't in the budget.

+1000.

I will echo every single word of this comment. It is the little stuff that adds up. Think of every case of paper towels you buy for the bathroom as one more keg of beer you have to sell. Apply that same mentality to all the other little bits and pieces and suddenly it comes out in terms of LOTS of kegs worth of beer that must be sold to recoup those costs. If you can't magically sell all those "extra" kegs on day one, well you better have some money in the bank to carry you...