Back to Shopping at NorthernBrewer.com

Cost of Starting a Brewpub

Northern Brewer General
#1

Hey guys, I want to preface this by saying I AM NOT starting a brewpub. 1) I’m poor with no rich uncle (that I know of) who has left me his entire estate, 2) I’m inexperienced, having only brewed for about a year now, and 3) I’m not that insane (yet).

HOWEVER, a friend and I were having a discussion the other day over a pint of beer about how cool it would be to open a brewpub since he has worked in several restaurants and I am now brewing beer. I’m sure you’ve all been down this road before and, like me, laughed it off and went on to talking about football.

Yet, just out of pure curiosity, what would be the cost of opening up a brewpub? If I were to do it, the beer brewed would be purely for on-premises consumption, not marketing. I’ve seen estimates out there that range from $50,000 - $2 Mil. Does anyone have any experience in this area? I know several homebrewers go on to be professional brewers. What kind of bills would you be expected to drop on a project like this?

Again, this is purely to satisfy my natural curiosity while taking away my natural problem with numbers (especially when they have a $ in front of them). I do not plan on writing up a business model on this or even implementing it in any. So, any thoughts, conjecture, debate, etc. would be welcome. Thanks!

#2

I know of a brewery here that cost over $1 mill that failed. It had a nice shiny 10 bbl turnkey system.
I know some guys that started a brewery that cost less than $100,000 with used dairy equip that are now distributing to the whole state so it will cost what you can afford and be what you make it.

#3

Oh yea and the million dollar brewpub had Paul Farnsworth as a consultant.

#4

A buddy of mine took a class at Siebel and part of the class was a “simulation” of what the first few years on production might be like. The class itself might have been something like “Brewery Finance” or something. Anyway, he said that they played a Monopoly type game that was relatively realistic and took you through all kinds of real-life scenarios including issues with licensing, production, distribution, taxation, etc. My buddy’s brewery was between $5 million and $6 million in the hole before they started turning a profit. When I ask him how realistic that was, he told me that the instructor told him “very”. So you need money to keep going, not just to start. Remember too that you will be taxed on the amount of beer you brew, not sell. So you pay the taxes whether you sell the beer or not. Lots of horror stories out there.

#5

Yea, but wouldn’t that $5-$6 Mil range be more for a full-scale distribution brewery? I’m talking small-scale (think nano-brewery) brewpub with no distribution. Surely that would cost MUCH less than $5-$6 Mil…

#6

I really think I could put together a brewpub brewery for 20k. I loosely ran the numbers once and for me the real problem comes in on the business side of things. Morgtage/rent, utility bills, and INSURANCE, all make it so much more un-attainable. For me at least. I’m sure I’m naive, but the numbers I ran showed I’d be sustainable by around 9-12 months. I would need 5k-10k per month to operate and simply don’t have the cash reserves to make it to the 9 month mark, yet alone the 18 month mark if you want to figure in some padding. And then an additional 2-3k/month to replace the money I earn at the current job I’d have to quit.

That said, I think I could pay my current bills and open a brewpub for 75k all said and done, making it to the 9 month mark. By then the awesome beer would take off and be a huge hit throughout the local community, right? That’s what my gut says . . .
:cheers:

#7

My 75k figure above was for operating and living costs for 9 months. I would still need additional 20k for brewery equipment and stools for the bar. So looking at 95k . . . IMO, on the down low side.
:cheers:

#8

Not that I’ve ever thought about it. :roll:
:cheers:

#9

Yeah, I’m not sure what the scale was so maybe this was a very large brewery. But there are other things to consider too. You’re going to be a brewpub instead of a “microbrewery” (one is located in a public-friendly place while the other can be in a manufacturing area). So your location would require servers, beertenders, an attractive location for the public and you’ll need to serve food (and some areas require that a certain percentage of your revenue come from non-alcoholic items like food, soda, merchandising, etc.) so now you’re a brewer/restauranteur and restaurants are the #1 failed business in the US. Some places start that way and branch out into distribution and others start as a microbrewery, distributing to stores, bars, restaurants, etc. and then opening a brewpub once they’re on their feet. So many other things to think about too. You feel like starting “small” would be best because you could keep the cost down, but you need to sell A LOT of beer to make money and starting small and then having to retrofit the system to make it larger could cost more money than it might cost to start “good-sized” in the first place. What about knowing your target market? The same beer you like may not be liked by the people in your area which means you could spend a lot of time brewing American Wheat instead of Belgians, etc. My head is spinning.

#10

One just sold in our area, fully operational with a staff of 50 employees and prime 2 story downtown location for $3 million.

#11

I have a business plan for a bootstrap brewpub that will require $35-50K up front. Starting small (in a gas station or similar), building business, and adding on as needed. No waitstaff, only one or two employees other than myself, and selling just enough food to qualify for the license.

#12

I was curious about this myself not too long ago and found a site from an equipment manufacturer and they were absolutely against anything smaller than 7 BBL for a brewpub to start. They said 90% of all brewpubs with say a 3 BBL system either out grow it way before they thought or more likely fail with the inability to produce/sell enough to keep up with cost. They also said as we all know bigger batch sizes help hold cost down because the time investment is the same, the ingredients aren’t much more in bulk.

Just a thought I seriously want to make a packaging brewery happen one day and I don’t have a rich uncle either.

#13

Yea, I’ve seen similar criticisms. Most professional brewpub systems you can buy (aside from, say, a BrewMagic system) seem to be 3.5bbl at the lowest. The next step up, which seems to be the minimum that “the experts” recommend is 8.5bbl. The next step is 15bbl, etc… Seems reasonable to me. I know one of the brewpubs near my house here has a 15bbl system, and that seems to work well for them.

#14

You can buy complete systems from this company.

http://www.pico-brewing.com/
#15

There are way to many factors to say, depends on the size you want to start.
look at places like Worth brewing in Iowa, brews 10g batches at a time on a simple system that a lot of homrebrewers have

#16

I had the idea of making a nano brewpub, maybe locating in a small strip center. The tough part would be the balance between great location and very cheap rent. I envision doing about 10 gallon batches in a small setup and doing one or 2 brews a day. I would have to start brewing a while in advance of opening to build up a stock. Maybe supplementing with commercial craft brews. If I create a new recipe I could have a contest to name the beer. With a gift certificate as the prize for the winner!?!

I would prefer serving a small selection of food, something very easy. (Very little food equipment)

The object would be to have minimal initial investment and minimal staff.
I guess I would have to have a secure income and have the brewpub for fun, supplemental income. (maybe)

If I ever have some disposable income I may actually look into it.
C’mon Powerball!

#17

I have been in an around restaurants and bars for the last 30 years as an architect. This is a running joke:

How do you guarantee you will make a small fortune in the restaurant/bar business?

Start with a very large one. :lol:

#18

Too true - something like 95% of all new restaurants close within two years. IME, usually because the investors have unrealistic expectations for recovering their money and making a profit and are not willing to continue investing new money to get over the two-year hump. Or else the owners just don’t know how to run a business in the first place, let alone something as fickle as a restaurant, where a single bad health inspection can be enough to gut you. A final obstacle is the type of person, particularly managers, that are attracted to an alcohol environment - I’ve seen more than a few places close down because the owners, or their managers, have a substance abuse problem or just can’t handle the variety of temptations (cash, liquor, young waitstaff, etc.).

#19

to much overhead is why I see the majority of new places closing. Buying everything new then skimping on food quality etc.

#20

Personally I could not imagine trying to open a restaurant today, but I am sure glad my clients do.

Recently designed stores for a small pizza chain. They got a good little following and tried to with the “best pizza in DC” by Washington Mag. readers. There was a place to vote online with comments. How easy for a competitor to trash the newcomer autonomously?

In the real world, with the internet today and facebook etc, one person has a bad experience and the whole world know about it within minutes. THAT is very scary!

Back to Shopping at NorthernBrewer.com