Monthly Sales and Profit

[tirouj]

Hi guys,
This is a quick update on the post I had on 2/2/18. I ran through my numbers and wanted to get folks' inputs on this. I am considering a 10 bbl system and making 5 bbl batches of five different styles during our first six months.




So based on these numbers I need to sell 3475 pints to keep the lights on. I don't think that's realistic. Any thoughts?

Assuming I go with a 50 seats tap room open 6 days a week with the projections below (which are very conservative) I will only hit half of 3475 pints.

Day of the week / total guests per day / pints per guest / hours opened

Tue / 20 / 2 / 9 hours
Wed / 25 / 2 / 9 hours
Thur / 50 / 2 / 10 hours
Friday / 40 / 2 / 11 hours
Sat / 45 / 2 / 11 hours
Sun / 40 / 2 / 9 hours

(I am looking at a high traffic area, ideally a plaza that attracts 71K daily traffic but I still want to keep the numbers conservative...maybe sales will be better)

-----> Those estimates will yield 420 pints per week for a potential total of 1680 the whole month.

Do these look right to you guys?
Thanks

Tirouj

[tirouj]

Alright guys...am I as clear as mud on this post?...more than 90 views...I really would like some feedback on this one.
Help anyone...thanks again.

Hi guys,
This is a quick update on the post I had on 2/2/18. I ran through my numbers and wanted to get folks' inputs on this. I am considering a 10 bbl system and making 5 bbl batches of five different styles during our first six months.

[ATTACH]58730[/ATTACH]
[ATTACH]58731[/ATTACH]

So based on these numbers I need to sell 3475 pints to keep the lights on. I don't think that's realistic. Any thoughts?

Assuming I go with a 50 seats tap room open 6 days a week with the projections below (which are very conservative) I will only hit half of 3475 pints.

Day of the week / total guests per day / pints per guest / hours opened

Tue / 20 / 2 / 9 hours
Wed / 25 / 2 / 9 hours
Thur / 50 / 2 / 10 hours
Friday / 40 / 2 / 11 hours
Sat / 45 / 2 / 11 hours
Sun / 40 / 2 / 9 hours

(I am looking at a high traffic area, ideally a plaza that attracts 71K daily traffic but I still want to keep the numbers conservative...maybe sales will be better)

-----> Those estimates will yield 420 pints per week for a potential total of 1680 the whole month.

Do these look right to you guys?
Thanks

Tirouj

[Brandjes]

I think you’re in the ball park at $1000 per barrel profit. Now figure out how much your tap room costs will be and determine how much beer you need to sell in order to cover those costs. If it pencils it pencils. If it doesn’t, figure out what is breaking the bank and see if you can fix it.


Sent from my iPad using Tapatalk

[Springhill]

There are a few things that bug me about your numbers. With a 50 seat tap room I say you could easily sell well in excess of 100 pints a day if your beer is really good. I think the thing that bugs me the most is you expected monthly expenses in the neighborhood of $20,000.... Could you share where you came up with those numbers.... I think that is the biggest issue in regards to sink or swim......

[BrewerJake]

Revenue, not profit. Unless you're doing something very different than me.

I think you’re in the ball park at $1000 per barrel profit. Now figure out how much your tap room costs will be and determine how much beer you need to sell in order to cover those costs. If it pencils it pencils. If it doesn’t, figure out what is breaking the bank and see if you can fix it.


Sent from my iPad using Tapatalk

[Blu Dragonly]

For that kind of sales level, your system may be a bit large. The tendency is to want to have a system you can grow into but you have to weigh the debt service on larger equipment against the future costs of upgrading your equipment.

You didn't mention where you are located, how big the resident population is, nor the number of other breweries in the area. Are you in a tourist area or on a popular tourist route? What kind of promotions will you do? Will you serve food or have a rotation of food trucks? There is a lot of great independent beer out there, what can you do to stand out in a growing marketplace? What can you do that is unique that others in your marketplace are not already doing?

The hard part in all this is predicting consumer behavior as we are putting numbers on paper without considering all other variables.

And I agree with Springhill, your expenses seem high to me.

[Silva]

I tried to simulate the 5 bbls per batch and I came up with the following:

~$0.11 cost/oz and ~$713 profit/bbl

80% Pint ($6.74) ~$0.31 profit/oz
20% Growler ($16) ~$0.16 profit/oz

I know it all depends on cost of raw material, labor, ...etc and the simulation above is gross profit. (Fixed cost not included)

Like new "start-up", it is very difficult for us to forecast any flow cash. It would be nice that experienced folks doing the real business to provide some input in term of cost.

Cheers.

[Todd Hicks]

Not to directly weigh in on the costs and returns here, but here are my practical opinions.

1) If you have a 10 bbl system, then brew 10 bbl batches. Half brews will lower your grist utilization, throw off your consistency, waste man hours, and could lead to shortages. Just brew full batches and have the peace of mind that you have plenty of beer. You will also be establishing good baseline numbers for fine tuning the recipes.

2) With a 50 seat tap room, you probably don't need a 10 bbl system. Just save some upfront expense, get an efficient 5 bbl pub type system that you can brew 2 batched per day on easily. Later on, if you expand, add in a few 10 or 15 bbl fermenters and brights.

[renezig]

Hello,

Could you include a breakdown of your batch costs? I think it is too high. I am sorry for the metric, but I am in Canada, and I do have a similar system.

For a 10 hec batch, in raw material I spend less than 500 CAD, to brew a 20 IBU, 11 Brix basic Pale Ale, and CAD is weaker than USD. I am not considering labor costs, as I am the owner and I do most of my batches, however if you add a 8 hours full time employee, a 10 bbl batch should not cost 1000 USD.

I have a startup brewery and something that really helped me in the stage that you are now was attending the Business Of Craft Beverage course from Portland State University, it is online and tailored for small craft breweries.

Can you include any canning or bottling distribution? Here in Canada, due to the winter, it is important to have another source of revenue than kegs or taproom, during 4 months people just drink at home.

Cheers,

Rene

Hi guys,
This is a quick update on the post I had on 2/2/18. I ran through my numbers and wanted to get folks' inputs on this. I am considering a 10 bbl system and making 5 bbl batches of five different styles during our first six months.

[ATTACH]58730[/ATTACH]
[ATTACH]58731[/ATTACH]

So based on these numbers I need to sell 3475 pints to keep the lights on. I don't think that's realistic. Any thoughts?

Assuming I go with a 50 seats tap room open 6 days a week with the projections below (which are very conservative) I will only hit half of 3475 pints.

Day of the week / total guests per day / pints per guest / hours opened

Tue / 20 / 2 / 9 hours
Wed / 25 / 2 / 9 hours
Thur / 50 / 2 / 10 hours
Friday / 40 / 2 / 11 hours
Sat / 45 / 2 / 11 hours
Sun / 40 / 2 / 9 hours

(I am looking at a high traffic area, ideally a plaza that attracts 71K daily traffic but I still want to keep the numbers conservative...maybe sales will be better)

-----> Those estimates will yield 420 pints per week for a potential total of 1680 the whole month.

Do these look right to you guys?
Thanks

Tirouj

[tirouj]

Hi guys,
Thank you for the look, really the feedback. BTW...I am in Massachusetts. I priced all my ingredients on the high side just be safe. I do need to make a few corrections, I quadrupled my malt cost instead of doubling it by accident...so I shaved about $5k off. I also bumped my quarterly bond payment to the first month to be on the safe side. This is gonna be a long so here we go:

I priced five different style of beers (for numbers only...not necessarily what I will brew): Dunkel, Stout, Pale Ale, Dark, Ale, Dark IPA

-----------------------------Dunkel------------Stout------------Dark IPA-------Pale Ale-------Dark Ale
Item
Malt ($1.50/lb)--------$549--------------$592.50---------$507-------------$450-------------$676
Hops ($20/lb)---------$70.40------------$134.00---------$280-------------$21.35----------$210
Yeast -------------------$5.00--------------$5.00------------$5.00------------$5.00
Water--------------------$2.79--------------$2.79------------$2.79------------$2.79
Filter---------------------$40-----------------$40---------------$40---------------$40
Electrical---------------$14.24------------$14.24-----------$14.24----------$14.24
Gas----------------------$3.23--------------$3.23-------------$3.23------------$3.23
Chemicals-------------$10-----------------$10---------------$10---------------$10
Labor ($25/hr)--------$150----------------$150--------------$150------------$150
Federal ($7//bbl)-----$35-----------------$35----------------$35--------------$35
Taxes ($3.31/bbl)---$16.50-------------$16.50------------$16.50---------16.50
----------------------------------------------------------------------------------------------------------------
Total --------------------$926.21-----------$1,033-----------$1,093-----------$968---------------$1192.81
Total cost: $5213.02 (my previous total cost of $6272 was projecting 50 transactions of each style of beer daily, which is not realistic. I changed it to the total cost of all the batches)

Expenses

Malt--------------------$4500 (Assuming each 5bbl batch cost $450 of grain--->$2250; brewing 2x month totals $4500)
Hops-------------------$1500
Yeast------------------$60
Electrical-------------$1000 (For the whole place)
Chemical-------------$300
CO2--------------------$120
POS fees------------$365
Office supplies-----$50
Federal tax----------$350 ($7/bbl)
State tax-------------$165 ($3.31/bbl)

Loan--------------------$2500
Labor-------------------$4000
Waste------------------$260
Water/sewage-------$215 (That is a hard one to gauge...)
Insurance-------------$140
Bond--------------------$100 (Quarterly)
COMM/IT-------------$90
Accounting-----------(Don't think I need a month number for accounting)

Total Expenses: $17,185.63

With all that said I ran the numbers and it appears I would need to sell 14 bbl/month to break even, which to about 3.36 bbl/seat/year. Now it's just a matter of making the number work I guess.
Let me know where you think I may be aiming too high or too low

[datomcat13]

There's a couple of estimates that are high on your materials. Call up BSG or whoever you are going to buy your grain and hops from and get a price book. $1.50/lb is more then double what I'm paying. And fed taxes just dropped to $3.50 a bbl. Also I'm on a 15 bbl system that sells 80% out of my taproom. We don't filter and have had no problems. That would save you some money.

[nosdunk]

The price on your malts and hops is way to high. I also think your cost of yeast may be a bit low depending on your process (reuse) I'm not sure I would want to pay the loan on a 10 bbl brewery. and only use 5 bbl's of it. I do think, overall, your price per barrel is about right. $70 - $100 a barrel depending...

You may need a number for accounting depending on your state filing requirements. Maybe you can do this reporting yourself?

[Silva]

tirouj,

Are you going to pay to rent? I don't see any cost for lease. Also, you should add more taxes (Unemployment, Social Security, etc).

How many people you going to hire 40hrs/week? It is $4,000 labor sufficient?

Just some thoughts.

[tirouj]

Hi everyone,
Thank you for all the feedback, this is really helpful. I do want to address what all of you have mentioned to make sure I capture everything. Before I continue on, did you all have to budget for every potential beer styles you may have on tap for your proforma/start-up business plan? Or did you do a generic cost of a batch of beer?

First I am in Massachusetts, so the cost of living is a little more here.

Silva,
We plan on having our full time Head Brewer and maybe another fulltime employee to be 1099 so essentially contractors for the first two years, we figure it very expensive to pay for benefits and everything else as a start up. As a 1099 they can pay their own taxes however I could probably adjust that a bit. Yes, I will pay for lease...some how that fell off of the total expenses but it was included in my cost per batch.

Nosdunk and datomcat13,
I will contact BSG along with Northern Brewer to have some accurate number for the list of ingredients. We are opting for the 10 bbl because it is a good starting point that can last for a while without needing to upgrade our system in 3 years or so. We probably will opt for an accountant but I am not sure if we will need one every month. Yes, the fed taxes will be adjusted to $3.50

Rene,
Thank you for the suggestion of the online training...I only knew of the one that Portland Kettle Works offers to businesses who buy their equipment...I did not realize that Portland State University offered an online training. I will definitely check that out. BTW great hockey game last night! You guys were awesome.

Todd and BluDragonly,
I like the idea of just doing 10 bbl batches, if we can do that and keep a variety of beers on tap that's what we'll do. Maybe the first few months we will slug it out with multiple batches then once we figure out what really sells, we can do 10 bbl batches to sustain? I just don't want to spend the money twice.
We are working with the 50 seat taproom assumption for the proforma but I think we might end up with a space slightly bigger. We are aiming for 2500 sqft space and for a 10 bbl I think we would need 700-900 sqft (rounded up 1000 sqft) according to JVNW. That leaves me with 1500 sqft for the front of the house, which should give me more than 50 seats if we do a relatively open space concept i.e. more bar stools and ledges rather than seats and table.
The town is about 35k, no breweries in town. We have standard chain restaurants Long Horn, etc. Solid middle class folks. We will not serve food and are opting for the food truck sensation. I have seen the food truck option work really well for a few breweries both in MA and VA. I think it is great to focus on just making great beer if you can forge those partnerships with food trucks.

Springhill, Brewerjake, and Brandjes,
As I mentioned earlier, I will revise the numbers. Hopefully the break down I provided was helpful. I am optimistic we should be able to sell more than 100 a day...in which case we would be in a better position but I want to be careful. Location, Location, Location

Still taking feedback. I will keep you guys posted on progress and revisions. Thanks again.

Tirouj

[renezig]

Hi Tirouj,

I didn't know you were from MA. Please send me your contact, I am a former Harpoon brewer.

Thanks,

René

Hi everyone,
Thank you for all the feedback, this is really helpful. I do want to address what all of you have mentioned to make sure I capture everything. Before I continue on, did you all have to budget for every potential beer styles you may have on tap for your proforma/start-up business plan? Or did you do a generic cost of a batch of beer?

First I am in Massachusetts, so the cost of living is a little more here.

Silva,
We plan on having our full time Head Brewer and maybe another fulltime employee to be 1099 so essentially contractors for the first two years, we figure it very expensive to pay for benefits and everything else as a start up. As a 1099 they can pay their own taxes however I could probably adjust that a bit. Yes, I will pay for lease...some how that fell off of the total expenses but it was included in my cost per batch.

Nosdunk and datomcat13,
I will contact BSG along with Northern Brewer to have some accurate number for the list of ingredients. We are opting for the 10 bbl because it is a good starting point that can last for a while without needing to upgrade our system in 3 years or so. We probably will opt for an accountant but I am not sure if we will need one every month. Yes, the fed taxes will be adjusted to $3.50

Rene,
Thank you for the suggestion of the online training...I only knew of the one that Portland Kettle Works offers to businesses who buy their equipment...I did not realize that Portland State University offered an online training. I will definitely check that out. BTW great hockey game last night! You guys were awesome.

Todd and BluDragonly,
I like the idea of just doing 10 bbl batches, if we can do that and keep a variety of beers on tap that's what we'll do. Maybe the first few months we will slug it out with multiple batches then once we figure out what really sells, we can do 10 bbl batches to sustain? I just don't want to spend the money twice.
We are working with the 50 seat taproom assumption for the proforma but I think we might end up with a space slightly bigger. We are aiming for 2500 sqft space and for a 10 bbl I think we would need 700-900 sqft (rounded up 1000 sqft) according to JVNW. That leaves me with 1500 sqft for the front of the house, which should give me more than 50 seats if we do a relatively open space concept i.e. more bar stools and ledges rather than seats and table.
The town is about 35k, no breweries in town. We have standard chain restaurants Long Horn, etc. Solid middle class folks. We will not serve food and are opting for the food truck sensation. I have seen the food truck option work really well for a few breweries both in MA and VA. I think it is great to focus on just making great beer if you can forge those partnerships with food trucks.

Springhill, Brewerjake, and Brandjes,
As I mentioned earlier, I will revise the numbers. Hopefully the break down I provided was helpful. I am optimistic we should be able to sell more than 100 a day...in which case we would be in a better position but I want to be careful. Location, Location, Location

Still taking feedback. I will keep you guys posted on progress and revisions. Thanks again.

Tirouj