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Thread: Brewpub startup and break Even Point.

  1. #16
    Join Date
    Aug 2013
    Location
    Creede, CO, Mineral
    Posts
    2

    Restaurant Portion

    Hello,
    I believe you need to revisit the restaurant portion of your business as $60,000 for setting up a commercial kitchen seems far too low. [I did not see where the place you have was a former restaurant or not]. You indicate that you will try and keep it simple, but fryers (if 35lb gas or greater fryers), grills require type 1 hood w/ansul, thus a hood requires proper air exchange. Hoods can get pricey depending on building configuration. Even if the place was a restaurant, if really old, then I suspect newer Health Department regulations will require substantial changes that can cost tens of thousands of dollars. If no commercial kitchen existed, I bet you are looking at $150,000 or greater to build it as minimally as possible. Our Health Dept. requires MEP drawings of electrical/plumbing to be submitted (minimum $6K), plus specs on all equipment used (for a new Health Dept license), does yours? Any building we have looked at buying we get a structural engineer to review the flooring as restaurant is heavy and many old buildings will not support the weight w/o reinforcement.
    My partner and I are doing a brewpub as well, and this is our 2nd venture into owning a restaurant (my partner is a 25year veteran as an owner/chef), and yes, it really is a restaurant with beer brewed onsite and your investor is wise to view (from a financial perspective) that way. Most of your startup costs and headaches will be the restaurant portion, there are just so many costs associated with restaurant setup and once you are up/running you will not believe how many more checks will be written unexpectedly. One financial consideration I think is worth mentioning is a newer theory concerning infrastructure costs vs revenue. It suggests that one adds up all infrastructure costs (Rent/NNN/Utilities) and that per month the costs need to be around 10% of revenue, ie, rent/nnn $4000/mo, $1000 utilities indicates one should have $50,000/month revenue. Also, Food/Labor should be 65% or better of revenue.
    Staffing is a nightmare from a restaurant owner’s perspective, then consider loss & loss prevention (both customer and employee), spoilage, inventory control, and menu planning and many other things (including sewer issues (my favorite-yuck!)). I digress.
    Anyway, it is not simple to do food in an establishment, an example is a tiny brewery that did frozen pizzas in a toaster oven and the health department made them do all sorts of improvements, that cost them a few thousand dollars, which does not sound bad, but costs go up exponentially (it seems to me) in a restaurant environment.
    Best Wishes on your venture!! Once you get past the startup and losing money phase, it is a blast, much better than a desk job!

  2. #17
    Join Date
    Jun 2019
    Location
    Philadelphia, PA
    Posts
    10
    Awesome, Im going to make those adjustments now. Sprinkler system was definitely something I wasn't thinking about - but definitely something that should be in the budget.

    Quote Originally Posted by BemidjiBrewing View Post
    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

  3. #18
    Join Date
    Jun 2019
    Location
    Philadelphia, PA
    Posts
    10
    Thank you for this info I'm going to revisit and maybe we'll look at a location that will be lower in rent to start, as well as definitely upping my budget for the kitchen. We'll definitely be needing a hood for the griddle / fryer section, but lumped it into the kitchen cost. I appreciate your time and writing such a detailed response - my lady had a restaurant in the past (which they had to let go do to family health issues) and we were basing it off her costs when starting. (her kitchen was much larger than what we were looking to do but we priced it the same)


    Quote Originally Posted by startupbrewer View Post
    Hello,
    I believe you need to revisit the restaurant portion of your business as $60,000 for setting up a commercial kitchen seems far too low. [I did not see where the place you have was a former restaurant or not]. You indicate that you will try and keep it simple, but fryers (if 35lb gas or greater fryers), grills require type 1 hood w/ansul, thus a hood requires proper air exchange. Hoods can get pricey depending on building configuration. Even if the place was a restaurant, if really old, then I suspect newer Health Department regulations will require substantial changes that can cost tens of thousands of dollars. If no commercial kitchen existed, I bet you are looking at $150,000 or greater to build it as minimally as possible. Our Health Dept. requires MEP drawings of electrical/plumbing to be submitted (minimum $6K), plus specs on all equipment used (for a new Health Dept license), does yours? Any building we have looked at buying we get a structural engineer to review the flooring as restaurant is heavy and many old buildings will not support the weight w/o reinforcement.
    My partner and I are doing a brewpub as well, and this is our 2nd venture into owning a restaurant (my partner is a 25year veteran as an owner/chef), and yes, it really is a restaurant with beer brewed onsite and your investor is wise to view (from a financial perspective) that way. Most of your startup costs and headaches will be the restaurant portion, there are just so many costs associated with restaurant setup and once you are up/running you will not believe how many more checks will be written unexpectedly. One financial consideration I think is worth mentioning is a newer theory concerning infrastructure costs vs revenue. It suggests that one adds up all infrastructure costs (Rent/NNN/Utilities) and that per month the costs need to be around 10% of revenue, ie, rent/nnn $4000/mo, $1000 utilities indicates one should have $50,000/month revenue. Also, Food/Labor should be 65% or better of revenue.
    Staffing is a nightmare from a restaurant owner’s perspective, then consider loss & loss prevention (both customer and employee), spoilage, inventory control, and menu planning and many other things (including sewer issues (my favorite-yuck!)). I digress.
    Anyway, it is not simple to do food in an establishment, an example is a tiny brewery that did frozen pizzas in a toaster oven and the health department made them do all sorts of improvements, that cost them a few thousand dollars, which does not sound bad, but costs go up exponentially (it seems to me) in a restaurant environment.
    Best Wishes on your venture!! Once you get past the startup and losing money phase, it is a blast, much better than a desk job!

  4. #19
    Join Date
    Jun 2019
    Location
    Philadelphia, PA
    Posts
    10
    Hey we have, The only issue would be location. with a nearby population in the millions many breweries in the area have a 15bbl or larger so by what we're looking, we are thinking about freshness etc.

    Quote Originally Posted by StoutTanksMike View Post
    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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