Taproom, is it worth it?

[CasselBrewery]

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

Thanks again Bill for the great thoughts! Cheers!

[CasselBrewery]

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.

Thanks feinbera! something we haven't thought and it's a smart concept to get us going. The challenge though for us is Winter, although food trucks can run in winter I haven't any yet. IS it due to the weather or simply because they make their cash in the summer and work such long hours they just take a break. I will ask a few people in that industry to see!

Cheers!

[Junkyard]

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

So a snapshot is $300k per year out of a 1000 sq foot taproom. Then take that snapshot and open another location, there's your growth. Or add a restaurant and more seating to your 1000 sq ft place; there's your growth. Then you can turn 500-700k per year maybe out of each location. It's silly to think you can't grow without retail accounts. That's my point. The margins are always going to be way better selling direct to the customer.

I guess the difference lies in what you want to be, a production brewery or a taproom brewery or a brewpub. That's the question that needs answering first. If you choose production brewery, then a taproom may be a headache like Bill says, but for us, our focus is on our taproom, and that's how we plan to focus our growth in the long term.

[gcbeer]

Nothing to loose

You have nothing to loose by opening the taproom - in 18 months our taproom grew to be our main focus. We kept a few draft accounts that were large enough to make sense, but otherwise all of our sales are out of the taproom. Best move we ever made. Cheers

[Thirsty_Monk]

So a snapshot is $300k per year out of a 1000 sq foot taproom. Then take that snapshot and open another location, there's your growth. Or add a restaurant and more seating to your 1000 sq ft place; there's your growth. Then you can turn 500-700k per year maybe out of each location. It's silly to think you can't grow without retail accounts. That's my point. The margins are always going to be way better selling direct to the customer.

I guess the difference lies in what you want to be, a production brewery or a taproom brewery or a brewpub. That's the question that needs answering first. If you choose production brewery, then a taproom may be a headache like Bill says, but for us, our focus is on our taproom, and that's how we plan to focus our growth in the long term.

These are two valid perspectives that might be market dependent. In my area distribution channels are getting saturated.

[beerguy1]

We also are from a town about your size. The taproom has just exploded in sales with a nice 2nd story deck overlooking Main St. and the river and room for a small band on the lower patio. The locals have embraced us and during the winter Monday night is very busy with trivia night other nights have the usual sales and parties so it can sure keep a nice income during the slow months of tourism. As far as the food goes my opinion is stay out of it, with the increased health requirements and additional cooler space needed it can become a pain. More than likely you will find yourself dealing with more food issues and you will have less time to focus on the beer (I know this first hand). We have a free popcorn machine with about 6 toppings that customers can add there is no way to track increased sales with the popcorn but I would bet its substantial. We also encourage people to bring in what ever food they want in fact we have had crock pots and family reunions here we also have a food truck that stops by. If you are serious about food I would sub it out to someone that has experience but you will still need to provide minimum health department sinks coolers ect