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Thread: Brewpub startup and break Even Point.

  1. #1
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    Brewpub startup and break Even Point.

    Hey Everyone,

    First of all let me set a quick introduction as this is my first post and I can't tell you how excited I am to finally be able to write something as I've been reading the forums for years. I've been an avid home brewer for years stepping up from buckets and carboys to unitanks and from pots and pans to kettles asystems like the grainfather and others to really dial in mashes for test batches.

    Anyway long story short over the last year or two I've been slowly prepping to start my own Brewpub in a suburban area (12,000 Residents per square mile)

    We're looking to open a 10bbl Brewpub in this area with approximately 50 - 75 seats. But I'm having trouble explaining to an investor how a Brewpub is different from a traditional restaurant in terms of cost and the rate of return in the first year.


    It's always been my feeling that a new brewery is leaps and bounds ahead of a new restaurant in terms of interest and isn't affected by local competition in the same way as an eatery. Our goal is to bring people in with beer and keep them there with a short menu of decent eats. Other Breweries in the area are actually a plus as long as our product stands up with theirs as it creates a hotspot for hopheads looking to try new beer.


    So the question. In your startup - what was your initial costs / size of brewery / and how long did it take you to recoup them?

    Thanks for your help!
    -Drew Noel

  2. #2
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    Bumping

    Bueller? Bueller? Anyone out there have any input? lol

    Thanks for any help!

  3. #3
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    Thatís too broad of a question for anyone to answer.

    Used/new equipment? Outside sales or all in taproom? Are you in downtown or outskirts? Cost of rent, utilities, overhead in general?

    Getting up and running will be a 6month-1.5years so youíll need all that cash.

    Can you build things? Tables? Do the plumbing and electrical for the brewhouse?

    So now that youíve spent your life savings, you can start making money. If nothing breaks right away, or you donít loose batches, or whatever happens on Tuesday next month. Maybe you can start paying back your investor after all that.

    Youíll also probably need to hire a few people
    Thanks,
    Eulie

  4. #4
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    Way too many variables to compare ones brewery model to help. Real estate costs, utilities, build out expenses, other competition, raw ingredient costs, amount of employees on payroll, insurance costs and local/state taxes (just to name a few) are wildly different in locations throughout the USA.

    Iíve seen a bare bones frankenbrew 7bbl taproom only sales brewery start up for under $100,000 with minimal employees in a small town where things cost less. That same bare bones brewery in another location/state could easily cost $250,000+.
    Last edited by Catfish002; 07-08-2019 at 05:53 AM.

  5. #5
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    My thoughts: If your investor doesn't think its a good idea, or doesn't believe it will work, are you sure this person is the right business partner for you?

  6. #6
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    Quote Originally Posted by eulielee View Post
    Thatís too broad of a question for anyone to answer.

    Used/new equipment? Outside sales or all in taproom? Are you in downtown or outskirts? Cost of rent, utilities, overhead in general?

    Getting up and running will be a 6month-1.5years so youíll need all that cash.

    Can you build things? Tables? Do the plumbing and electrical for the brewhouse?

    So now that youíve spent your life savings, you can start making money. If nothing breaks right away, or you donít loose batches, or whatever happens on Tuesday next month. Maybe you can start paying back your investor after all that.

    Youíll also probably need to hire a few people

    Thanks for your input. I guess I was looking for what the consensus is for most brewery owners.

    For more information I've done cost analysis etc and it goes in general like this:

    We're have a startup cost of about 350k. (including a year of rent)
    After all research is done - we're looking at a 10bbl brewhouse with 8 10bbl unitanks to start along with all the extras needed for general operation.
    It's going to be a brewpub based on the beer with but the addition of a wood fired oven for beer dough pizza and a few extra options etc. (Bring them in with beer, keep them there with food and beer)

    We're estimating about 60 - 75 seats for the brewery depending on setup and an average cost of 22 per seat.
    The local population within 1 mile is about 350,000. (outside of center city but less then a 10 min uber drive) with according to market research about 100k interested in "beer / craft beer / pizza / brewing"

    I can do electrical and plumbing for the most part (Raised by a Machinist - so pretty much can make anything as well) but I have planned about 30k in renovations etc.

    As far as I'm showing after everything is said and done being in a more expensive for rent (but also price of goods sold) we're looking at about a profit each year on the low end of about 350 - 450k, high end 750 to 1.25m base on production capability.

    Now the added benefit is my wife is a logistics manager for a way bigger company than the brewery would be and would be COO / I would be CEO / brewer so we have the ability to keep pay low until we pay off the investors (scheduled payments based on expectation would have them payed off in 3 years while creating a buffer for the brewery). It's because of this that they're hesitant as his business took 5 - 7 years to pay everyone back and he's worked with restaurants that don't expect to have a profit the first 3 years in total.

    I'm really just looking to see if my projections are anywhere in line with what others have seen in starting their breweries.

    I'd be happy to share my monthly / 3 year breakdown with anyone to see if I'm missing anything?

    Thanks again for all your time!
    -Drew

  7. #7
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    Quote Originally Posted by AmbrosiaOrchard View Post
    My thoughts: If your investor doesn't think its a good idea, or doesn't believe it will work, are you sure this person is the right business partner for you?
    So - My investor is definitely interested and I actually helped him a lot in the startup of his company which became huge but as he put it "Growing wealth is different then maintaining it" so he want's to make sure what I'm showing projection wise is actually achievable. Being an angel investor he wouldn't get any share in the company if he's paid off in the first 5 years. So we would essentially be able to operate as we wish only input as needed. I think he has more reservations as he views a brewpub as a restaurant instead of a brewery and doesn't fully understand brew culture. A single restaurant in the middle of a town = a lot of a business - a bunch = a lot of competition where a single brewery is great - but having a few breweries within 10 min becomes a hopheads holiday destination.

  8. #8
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    Quote Originally Posted by Catfish002 View Post
    Way too many variables to compare ones brewery model to help. Real estate costs, utilities, build out expenses, other competition, raw ingredient costs, amount of employees on payroll, insurance costs and local/state taxes (just to name a few) are wildly different in locations throughout the USA.

    Iíve seen a bare bones frankenbrew 7bbl taproom only sales brewery start up for under $100,000 with minimal employees in a small town where things cost less. That same bare bones brewery in another location/state could easily cost $250,000+.
    I totally agree but economy of scale still comes into play. Cost of living etc should equal out the cost of startup and location as you'd ideally charge more for the brews in a city vs the country side as your costs are more.

    Essentially we're at about 250k startup costs with 100k in rent per year. we're estimating 60 - 75 seats with a turnover of 2 at $22 per seat. (metropolitan area with 350k people within 1 mile)
    So the lowest projections com in at about 350 - 500k and if we brew to capacity 750 to 1.25 after taxes / payroll / etc.

    As far as competition - there is definitely a few breweries in the area but being that it's a spot where a lot of tourists come - I can see it being more a destination for hopheads rather than a straight competition. In fact I think if the breweries work together we could turn it into a brewery flight system - try 5 breweries in 1 day and have shuttles running on weekends. Generate a healthy cross promotion rather than straight competition.

  9. #9
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    30K seems WAY low for a buildout of a new brewery and restaurant. Does this include furniture and fixtures, cash registers, office equipment, security system, floor coverings, lighting, glassware, draft system? Also, even if you are able to complete electrical and plumbing installs up to code are you licensed in your city/county/state to do so? Unless you've found a steal of a deal on the brewhouse from someone liquidating equipment you're looking at $120K+ just for brewhouse and cellar equipment, not to mention walk-in coolers, floor coatings, drainage, spare parts, pump(s), etc.. And what is the plan for serving the beer...what does your keg float look like, or will it be serving vessels? If you're buying or leasing kegs you'll need at least a few hundred + a reliable keg washer @ $10K.

    As an owner/operator myself I can testify to the challenge of wearing many hats at once. Will you have an assistant brewer or additional produciton staff? A 10bbl system w/ 8 FV's is a fair amount of work for a single person to tackle + have time to do inventory, maintanence, draft line cleaning and put out the inevitable fires that come with any startup. Not to mention trying to staff the taproom/restaurant, if you've included yourself in those efforts.

    Unless this building was previously a brewery or restaurant with a wood-fired pizza oven I think you should at least double your startup-cost, IMHO. Are you able to talk freely with the other breweries in the area to see what their startup experiences were like in terms of SAC/WAC fees, insurance, startup challenges, etc?

  10. #10
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    Quote Originally Posted by BemidjiBrewing View Post
    30K seems WAY low for a buildout of a new brewery and restaurant. Does this include furniture and fixtures, cash registers, office equipment, security system, floor coverings, lighting, glassware, draft system? Also, even if you are able to complete electrical and plumbing installs up to code are you licensed in your city/county/state to do so? Unless you've found a steal of a deal on the brewhouse from someone liquidating equipment you're looking at $120K+ just for brewhouse and cellar equipment, not to mention walk-in coolers, floor coatings, drainage, spare parts, pump(s), etc.. And what is the plan for serving the beer...what does your keg float look like, or will it be serving vessels? If you're buying or leasing kegs you'll need at least a few hundred + a reliable keg washer @ $10K.

    As an owner/operator myself I can testify to the challenge of wearing many hats at once. Will you have an assistant brewer or additional produciton staff? A 10bbl system w/ 8 FV's is a fair amount of work for a single person to tackle + have time to do inventory, maintanence, draft line cleaning and put out the inevitable fires that come with any startup. Not to mention trying to staff the taproom/restaurant, if you've included yourself in those efforts.

    Unless this building was previously a brewery or restaurant with a wood-fired pizza oven I think you should at least double your startup-cost, IMHO. Are you able to talk freely with the other breweries in the area to see what their startup experiences were like in terms of SAC/WAC fees, insurance, startup challenges, etc?

    Thanks for the reply!

    The startup cost is 375k, not 30k. The 30k is just for plumbing and basic renovations. I actually build a lot of furniture as a hobby so we're going to have a simple built out bar top with bench seating for tables if you're not at a ledge. Promote community rather than keeping everyone separate. Once base 3phase power is put in (if it's not already in the building as a lot of the area was old industry) the biggest expense should be plumbing.

    We have 195k in yearly salaries for brewer / asst brewer / barbacks / and a cellar manager so that's all considered in already, We also have an accountant on board who has factored in all applicable taxes etc.



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  11. #11
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    I agree with 30k seeming low on the minor upfit.

    Unfortunately youíre gonna have to hire an architect, engineers, contractor, most likely a plumber and electrician.

    I also saved a ton of money by doing things myself. I suggest looking into your local laws about what work youíre allowed to do and not do yourself.

    That said. We overshot our build out budget by 3 times the amount. Because of permits. And dumb shit Iím still mad about. We had to install a fire hydrant, that was our weird thing. $16,000 for the hydrant, work, engineering, permits.

    $30,000 isnít enough for your upfit. Unless it was a brewpub with a pizza place already attached.
    Thanks,
    Eulie

  12. #12
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    Quote Originally Posted by eulielee View Post
    I agree with 30k seeming low on the minor upfit.

    Unfortunately youíre gonna have to hire an architect, engineers, contractor, most likely a plumber and electrician.

    I also saved a ton of money by doing things myself. I suggest looking into your local laws about what work youíre allowed to do and not do yourself.

    That said. We overshot our build out budget by 3 times the amount. Because of permits. And dumb shit Iím still mad about. We had to install a fire hydrant, that was our weird thing. $16,000 for the hydrant, work, engineering, permits.

    $30,000 isnít enough for your upfit. Unless it was a brewpub with a pizza place already attached.


    What was the size of your brewery / cost of adding in drains / electrical? As far as the kitchen side - we're keeping it easy with a single wood fired / Natural gas oven. That's all separate though with a budget of 60k (for oven, griddle, fryer plus cleaning.)

  13. #13
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    Yep - I guess I was only referring to the build-out portion @ 30k not your entire startup budget as being shy of reality. Another thing to consider is if the building has a sprinkler system or not. Being it will be an occupied building with customers you may have to install a sprinkler system, depending on your city's laws. For us, it's based upon square footage + occupancy. Expect $30 - 40k as the starting price for a sprinkler install. Also, triple your budget for a forklift, unless you already have your eyes on a cheap used one at $3k or you're referring to a used walkie or walk-behind version. If the forklift is propane you'll also need a CO evacuation system (buy electric if you can!).

    Cheers,
    Tom

  14. #14
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    Quote Originally Posted by Drew Noel View Post
    What was the size of your brewery / cost of adding in drains / electrical? As far as the kitchen side - we're keeping it easy with a single wood fired / Natural gas oven. That's all separate though with a budget of 60k (for oven, griddle, fryer plus cleaning.)
    5bbl
    We didnít add floor drains (cuting corners)
    Added 3phase to the building
    Built all our own tables, bar, did most of the wiring, plumbing, concrete for the handicap spots ourselves, placed all the equipment, ran all the glycol lines, built the walk-in cooler, tap systems, and built my own keg washer.

    I think you are missing the point of what people are telling you.

    Budget be damned. Youíll run into some issues, and itís gonna cost extra.

    Say the inspector comes in. Doesnít like the fact that your door handles are faced sideways or you need and railing. He will cite you for that. Leave. Come back a week later. And cite you for something else. And leave again. Thereís an extra months rent you didnít account on.

    Or. Your building is slighhhhtly over the square footage and you need to sprinkle the building. $10-30,000 easy.

    County hits you with landscaping requirements before you can get a permit to build. $5000 in plants, before you dig holes or hire someone to do that for you.

    Oh. Your state license lapses while you waited for your federal. Youíll need to reapply for that.
    Thanks,
    Eulie

  15. #15
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    Quote Originally Posted by Drew Noel View Post
    Hey Everyone,

    First of all let me set a quick introduction as this is my first post and I can't tell you how excited I am to finally be able to write something as I've been reading the forums for years. I've been an avid home brewer for years stepping up from buckets and carboys to unitanks and from pots and pans to kettles asystems like the grainfather and others to really dial in mashes for test batches.

    Anyway long story short over the last year or two I've been slowly prepping to start my own Brewpub in a suburban area (12,000 Residents per square mile)

    We're looking to open a 10bbl Brewpub in this area with approximately 50 - 75 seats. But I'm having trouble explaining to an investor how a Brewpub is different from a traditional restaurant in terms of cost and the rate of return in the first year.


    It's always been my feeling that a new brewery is leaps and bounds ahead of a new restaurant in terms of interest and isn't affected by local competition in the same way as an eatery. Our goal is to bring people in with beer and keep them there with a short menu of decent eats. Other Breweries in the area are actually a plus as long as our product stands up with theirs as it creates a hotspot for hopheads looking to try new beer.


    So the question. In your startup - what was your initial costs / size of brewery / and how long did it take you to recoup them?

    Thanks for your help!
    -Drew Noel

    Hi Drew,

    Have you considered a 7 bbl brewhouse? Freshness and vast selection of styles is driving the craft beer consumer to frequent locations. It has many more benefits besides having fresher batches, smaller footprint, less cost for equipment and shipping, quicker payoff etc... list can go on. Let me know if you would like to see pricing for a 7 bbl system. I've had years of professional brewing and have personally opened multiple locations.

    Cheers,
    Mike Paladino
    Brewery Design Consultant
    support@stouttanks.com

    Stout Tanks and Kettles, LLC
    The Small Brewery Experts
    16300 SW 72nd Ave
    Portland, OR 97224
    503-766-3206

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