First Year Brewpub Sales

I'm writing up a business plan and I'm trying to do some market research, but I'm not having much success. There are no brewpubs in my city (Dayton, Ohio), and its hard to get sales data from local establishments because they're afraid I'm a competitor.

I'm trying to come up with estimates for first year beer sales (in barrels). Our brewpub will have a 10 bbl brewhouse and will hopefully be located south of the city in a relatively busy suburban location.

What is a typical sales volume for a starting brewpub of our size? At first, I thought it might be around 500 barrels, but after looking at the numbers of other Ohio brewpubs, I have no idea what to estimate.

Any ideas?

The sales volume is based off of the number of seats in the establishment, not the brewing capacity. It doesn't matter how much beer you can brew if you can't fit people in your bar. It also doesn't matter how many people you can fit if you can't brew enough beer.

Start by considering how many seats you expect to have, aka the number of serviceable customers you can have max. Then consider throughout the day how many seats might be filled. Consider that Friday and Sat nights you might fill the place up, but monday for lunch you might only have x amount of seats per hour.

Then consider how many drinks each customer might have. In a brewpub generally people will buy several drinks because it's more adventurous than a regular bar. People who don't even drink beer regularly will ask for suggestions as to what unique beers you have and should likely order. Imagine each person might have .75-1.5 beers during off peak hours, and 2-3.5 during peak hours. Those numbers aren't founded on any sort of real life science, but it demonstrates the concept of drinks per seat which is important.

10bbl is a large amount of beer, so you'd need a pretty big sized brewpub to cycle through that much beer.

Take the average seats per day and average beers per seat, then do the math. Convert total pints to bbl and you'll begin to see how realistic your estimates are. Hope this helps!

Wow, thanks for all of the information, cvstrat! I'll do some calculations and post more questions as they come up.

It seems that my original estimates were pretty close to my calculations. Around 500 barrels for an 80-seat pub is what I came up with. The pub will be open six days a week with lunch, dinner, and bar service every day.

Now comes the harder part: market research. What do I need to find out through market research? How much beer are local bars selling? What kinds of beers local bars are selling? And what else?

Chabutna said:

It seems that my original estimates were pretty close to my calculations. Around 500 barrels for an 80-seat pub is what I came up with. The pub will be open six days a week with lunch, dinner, and bar service every day.

Now comes the harder part: market research. What do I need to find out through market research? How much beer are local bars selling? What kinds of beers local bars are selling? And what else?

Click to expand...

With the caveat that I have no experience and therefore I'm not in any way qualified to answer any of these questions... the "what else" that I would want to know in your shoes is what kinds of beers the local beers AREN'T selling that customers wish they were. Basically you'd have to survey people to get to that.

10-15 bbl per seat per year will get you started

500bbl a year is 1000 kegs for and 80 seat place that's 5 beers per seat 6days a week. Or you need a minimum of 205 customer a day. That's each person buy 2 pints

I have talk to a few distribution drivers and they have told my that the average kegs used bar /pub is 5 to 6 a week less in the winter.

I'm not sure how much time and resources you want to put into market research but here are a few quick items to consider.

Market research:
A) Define your target segment(s)
You can use a lot of different descriptors for your segment, geographic, demographic, behavioral and so on. I recommend starting with geographic and demographic. First define who your customer is, for instance:

Joe
Age 25 - 35
Income range $XXXX - $XXXX per year/month.
Family situation : Single, married, kids or no kids.

Then find our how many Joes are in your area.

B) Once you know how many Joes are in the area, do a survey in a Joe-heavy location, to figure out things like "How often do you go out", "Out of our 8 competitors, which do you prefer?", "What is the most important thing you look for in a bar/pub.

C) Once you know how many Joes there are, and have an idea of how they behave, you can do a calculation like:

- Your bar is too expensive for them.
- They prefer BMC.
- They don't drink.
- They haven't heard of your bar.

Until you get a more realistic number of potential customers.

Example:
There are 5000 Joes in my area, out of the 300 Joes surveyed 85% said they would frequent my establishment. 4250 left.
20% of them won't hear of my bar.
4250 * 0.80 = 3400 left.
15% of those live outside of walking distance
3400 *0,85 = 2890 left.

And so on.

Cost calculations:

I would also do a few cost calculations to see what your running costs are going to be, to find the break-even point. Once you have an idea of your fixed and variable costs you can work backwards:

If you have a 50% margin on the beer you sell (cost of production $1 per bottle/glass) then you make $1 per bottle, that means that if you have costs of $1000 per month (not counting beer production) you need to sell 1000 bottles/glasses to break even.

If there are 5000 Joes in your area, this means that each Joe has to buy 0.2 bottles.

This is mostly to figure out whether your business proposal is overly optimistic or overly pessimistic. For instance, if you identify 20 Joes, each of them would have to buy 50 bottles per month, which breaks down to a little over 1 per day.

Positioning map:
I like using a positioning map to analyze the market. The axis on the map should be two of the most important choice criteria your customers use. I used price and quality in the example. This is really useful for getting an idea of where there are "gaps" in the market. Note that just because there is a gap, doesn't mean the position is good, the gap could exist due to the position being unprofitable.




I can expand on market/business analysis if you want, but I think this post is approaching wall-of-text already.