how to add on brewery to existing restaurant

So, guy calls me and asks if I can make beer for his restaurant. I live in a small county (<40K) albeit with a lot of tourism and a fair 'craft' market for our size. My name is around as the guy who'd like to be a pro brewer somehow - either in a microbrewery or as part of a restaurant. Anyway, I already realized that, in Virginia anyway, it'd be more 'profitable' for me to work as part of a pub rather than try to start a brewery - esp with respect to licensure and distribution (or not having to pay 25% to distributors in a brewpub situation). I understand some of the legal stuff, like not being able to house a brewery in a non-commercial zoned site, taxes and licensure, etc. but am wondering if anyone has any experience with this. I've seen the 'friend wants me to brew beer for him' thread but want to continue that line of thinking. yes, I'm posting on probrewer, also. This seems like a great opportunity to go small and see how it works. I see all the advice about going no smaller than 7 bbl but in my imagination I'd rather not invest too much up front to see how it goes and then build from there (yes, I know, Sam Calagione style). Meeting with him soon to discuss the possibilities and am trying to prepare as best I can. thanks ahead of time!

CB

I don't have any advice for you, per se, but I am interested in the idea. I know a few restaurateurs and have thought about approaching them, but I'm not sure I would be as happy brewing for work as I am brewing for hobby. Plus, I can't decide if there's room for another craft brewer around here where Sam's got the racket (although my beer would be very different from his). I'll be following this, so keep posting and good luck!

thanks for the response. See, that's part of it for me. nearest brewpub is in another state and over an hour away and they don't distribute. Next closest are also in another state 1.5 hrs away and don't distribute here. nearest Brewery or brewpub in virginia is 2.5+ hours away. In my area, 'craft' products are very favorable and people are willing to pay more for local products, etc. Seems like a no brainer. Anyone reading this from my area, I mean, this is a stupid idea.

cb

As far as licenses you still have to license as a brewery either for a pub or commercial. Really the way that works is 1 of 2 ways, either you have the owner of the resturant license the brewery and you just brew for him, or you license the brewery your self use his address for all the licenses and you brew on his property and sell him beer. 1 way your partners the other your not, even though youll have a partnership just being in the same building. As far as the ABC/ATTB is concerned they dont care what way you go, Just as long as they get their $$$$ for the licenses.
Its not something I haven't looked into myself, Really its a great idea "IF" you want to brew for a living and not have the problems of owning a resturant, But you have to have the room you have to brew on the site and you have to have that site inspected and signed off by the feds.
Dont get me wrong there are probably other ways to license a partnership like this. I am not the athority on the subject, But I have looked into it.
good luck
JJ

First things that crossed my mind were:

How many barrels will you need to brew, age and deliver for the restaurant?
Will you be using an extract or grain system?
Is there adequate plumbing, drains, ventilation and fire prevention equipment in the brewing area?
Storage of extracts, grains, hops etc. who will have access to these items?
Will the restaurant pour from kegs or tanks?
How will taxes be collected?

thanks, again, for replies

First things that crossed my mind were:

How many barrels will you need to brew, age and deliver for the restaurant?
-i'm looking to rest. guy for this info - tables, turns, etc. we will estimate but, in general, lower/fewer than most places

Will you be using an extract or grain system?
-with focus on craft, all grain

Is there adequate plumbing, drains, ventilation and fire prevention equipment in the brewing area?
-yes. This is a point of contention, however, there may not be enough room 'on site' and we may require another space. This could mean going with the 'pilot brewer' license.

Storage of extracts, grains, hops etc. who will have access to these items?
-my own walk in. again, the space issue above

Will the restaurant pour from kegs or tanks?
-Not sure if VA allows tanks. kegs is my current choice.

How will taxes be collected?
-don't know.


cb

Wow. This is a huge issue.

Who's going to pony up the funds for the gear and installation? Is he going to own the equipment, license, ingredients and all and you work for him?

Is he going to make space in his restaurant? Does he own the space or rent?

Is he good about paying taxes? Does he keep an attorney on retainer?

What I'm trying to establish is that you need to define who's responsible for what. It's a very bad idea for you to buy equipment and install it in his edifice without a legal agreement.

I suggest you buy a copy of Starting Your Own Brewery. It has most of the answers you're looking for.

Here's another resource:

Virginia Brewers Guild
Hugh Burns
PO Box 2057

Williamsburg, VA USA 23187
Phone: 757-208-8887
Fax:
Email: [email protected]
Web site: www.vabeer.blogspot.com

Don't reinvent the wheel!

Bob

wow, thanks, bob. Yeah, the legal stuff is my main concern. Who owns what and when/if it ends what is the deal there. Thanks, also, for the vaguild link - didn't know about that. Wading the ttb/abc webpages is obnoxious. I've been in contact with my 'local' abc agent (he's still 3 hours away, I'm tellin' ya, it's like this part of the state doesn't exist). This is good, I'm feelin' more prepped for a serious discussion.


cb

Just out of curiosity, how established is his restaraunt? If this is something your going to get balls deep in the last thing you want is his restaraunt to go under and you be stuck with all that equipment and no where to go. It does sound like a no brainer as far as starting up the brewpub portion of it with your closest competition hours away. Then again all things that are too good to be true usually are. The best of luck to you though, I love a good brewpub.:rockin:

they haven't opened yet. They open next week (mid oct). Another note. It's odd that several other restaurants in the area are closed and for sale. I know this is a red flag but I can't help but wonder. You know, most people are idiots, right? We all think we won't fail otherwise why would we do it? Then again, if you don't try how do you know?


cb

What part of VA, or do you want to keep the specifics secret for now? I'd consider a road trip to support your cause when you're up and running.

About 5 hours from Chester. Seriously I'm 5 minutes from Bristol. A friend of mine came to visit one time and said he'd take care of the travel arrangements. Day before he gets here he calls and says he'll be in Richmond to come pick him up. I'm like, Dude, that's over 5 hours away! This place is opening up in Damascus - right on the Virginia Creeper Trail and the AT. I can't imagine through hikers have very deep pockets but there is a lot of tourism in the area - especially this time of year with the leaves changing and all. I'd like to see this happen but it's a long way to go right now.

cb

It's good that you are thinking it out.

I know a guy that sank $100K into a pre-exisiting well located restaurant.
The only real problem was he was stuck with $165K in additional plumbing, venting and Ansul Fire prevention system costs.

He opened and after one tourist season sold it at a loss.
Went back to drinking his beer at the pub across the street.

was that to appease the health/safety/fire inspectors? that's another big part - the whole osha and similar inspections. I just don't know about any of that stuff.

It seems like sanitation would be a big issue, I know, way down on the list. But the air in a restaurant is pretty foul. Lots of grease, and fumes, etc. It seems like you would need a separate room to brew in.

Another thought, you might want to get a license to sell off premise, so if the place doesn't do so great, you have other avenues to explore. Other local bars and restaurants.

You are just down the road from Boone, NC and Banner Elk. I don't know how far, but, that would do well in western NC.

Sounds like a blast. I have been involved in 4 rest. openings, and each has been mayhem of one sort or another.

Luck

thanks, sean.Western NC rules. AND, the laws are soooo much nicer. I guess that's why there's 10 breweries in Asheville. Thanks for the sanitation ideas - that's another one I have to get someone in the know to explain to me. Perhaps the restaurant dude will know already - I'm sure he's gone through a lot of this so far.

Remember - a restaurant with a brewery has 1/10 the failure rate of just a restaurant.

HOWEVER - make sure the restaurant is a place YOU want to go to and will match your beers.

Read that section in the article section of Probrewer if you have not already.

Lots to do but I think bottom line is NOT the hardware but do you agree with the owners vision - you will be tied to each other like glue.

My family as well as my wifes still live in Iowa while My wife and I moved to GA. My cousin told me of a little brewery/tap room in the small town where the county seat is. Northwood is small, I'd guess 2000 people or so. I saw an AP story on the hop lottery of Sam Adams and it mentioned this place. I checked out the web site and was amazed. When we were back for vacation this summer we went there and took a tour. The tour consisted of "when it slows down I'll run you in back". The owner took us in back and his whole system is a Sabco system you can buy for about $5000. My home made system is only a step or two below his but it gave me hope. Now, you could only do this type of thing back home in a small town and have a blast. He brews a few 10 gal batches a week, serves only a few 10 gal batches aweek, and rotates his beers. He sells the pints in the tap room and when its gone its gone. He is only open a few days a week so get there early and enjoy. Here is the link, I think you'll love it Worth Brewing Company Home Page

yeah, grinder - that is the truth, isn't it. It's more organic than anything.

bill. I can dig it! I'm lucky enough where having a blast is truly an option even if it isn't very profitable.


I'll keep everyone posted, I'm really enjoying your comments

What do your lawyer and accountant say? If you don't have either and haven't consulted with any, you're already in over your head. It doesn't matter that you make make the best beer around if you lose everything you own if this venture goes down the tubes.

i'll bet you don't have too many friends with that kind of tone, sig. I was wondering when the negative naysayers would arrive to this thread. Those folks will be consulted when and if we decide to move forward. My best guess is not too many lawyers understand the alcohol laws any better than I do and I already have an accountant but won't be paying anyone until I decide it's worth it. Thanks for the advice just the same!

cb

CB,

Sig may have been brusque, but he has the fortunate circumstance of being right. Too many brewers get all starry-eyed about shiny metal and bubbly beer. They rush into things without carefully considering all angles.

You need an attorney and an accountant on retainer. In fact, you'll probably need the services of a couple of specialist attorneys: A business guy to look over your organizational paperwork, recommend type of organization, navigate registration with Virginia, and help you define your relationship with the restaurateur; and a TTB guy to navigate you through Federal alcohol stuff (which you've already admitted is insanely complicated). You're also probably going to need a tax attorney to help you understand state and Federal taxes like excise.

You said you:

won't be paying anyone until I decide it's worth it.

Click to expand...

What you don't yet understand is that you can't decide if it's worth it if you don't have all the details at your disposal.

Simply, you should be frightened by this idea. In order to be successful, this effort is going to require a potentially devastating amount of finance. In order to be successful, you cannot half-ass it. You must be adequately capitalized, have the legal administrivia completely squared away, and have your relationship with your "partner" legally defined in the most rigorously detailed manner.

Anything else is just daydreaming.

Bob

thanks, bob, that's a much nicer way to put it and makes me want to listen instead. i realize there are no risks without some investment but I've also never failed at anything I've really wanted to do, either. Much of this depends on your definition of success and failure. I'm hoping the guy has done much of this already. He sounds like he knows more than me already and, again, I'm hoping has these folks at his disposal. I guess I'm leaning more toward the 'work for him and let him accept the risks' angle rather than 'I start my own business and work with him' thing. I'll have more to post after our meeting.

In re. to bob and sig:

A small restaurant and even brewpub is not that complicated, even with the licensing. You do need a lawyer to draw up docs, and to protect your interests with regards to contracts. You will also need an accountant to set up initial bookkeeping requirements, do your quarterly filings, sales tax, and other excise taxes at first, until you realize how easy it is, how much help you can get from the state, and how much you are paying them for 5 minutes per month.

I am not suggesting anyone should do without the services of an attorney or accountant if they are unsure of the proper course, but often people pay way too much for services that are very simple.

But then, if you are an employee, that is not your concern.

Maybe some pics when the place is ready to open?? as well as a link.

And, You are going to need a logo, or label, or something: Mandoman's Fermentations??

Headed down there now - I'll keep this posted!

I have been thinking about just walking into a random pub and sitting down late at night with the owner and just talking with him. And at the end of the night he says he wantsa brewery on site and i would be the brewer. I would not have to take care of the financials or anything...just brew. Now that was only a dream i had a few nights ago. But let the restraunt pay for it all and you just brew.

mandoman said:

i'll bet you don't have too many friends with that kind of tone, sig. Thanks for the advice just the same!

cb

Click to expand...

I wasn't really trying to come off negative, just trying to make sure you don't step into something that will cost you for the rest of your life. Even by entering into a verbal contract with someone, you can lose your butt without ever seeing it coming. As someone who ran a small business for several years I know of what I speak. I never got into a situation where I needed one but always had one there, in case. As for my friends, I watch out for them, more so when they don't watch out for themselves.

Thanks, Sig. I, too, didn't want to come across as terse (I had to look up what brusque meant and got lots of cool synonyms) to you - I can only imagine what can go wrong in this scenario and I appreciate you watching out for a fellow brewer (brewer's code!). i'm super paranoid of what can go wrong with these things cuz I know so little about it. I'm trying to arm myself with knowledge but it's hard to know whether you have everything covered and no 'checklist' to go down. Currently I'm ingesting the ttb and abc applications and am going to meet with an abc agent. That's just federal and state, though.

Anyway, an update. I met with the folks and they are too casual, I think. They're going for a, again VERY, casual l'il restaurant that serves a little lunch and a little dinner. they're spot is a house that's zoned commercial with a regular house kitchen (think the first apartment you rented) and one bathroom - room for maybe 10 tables and not much else. They're idea is cool enough and the idea of serving local beer is great. They have no money and I'm guessing would only cover their liquor license. In a perfect world I could make some craft beer and flow it their way and we'd all be rainbow happy. I'm looking into the possibilities at that level but am really using this as an excuse to educate myself with the idea of opening a brewery here. Probably won't as my wife refuses to take on any debt but I'm just too curious.

I'd be happy to discuss it more and keep the thread going as I learn more about it and see where this leads - who knows, maybe I'll figure a way out to make 10 gallon batches at the restaurant and serve them to the people?!

I know, doubtful.

CB

Check out www.twobeersbrewery.com
or [ame=http://www.youtube.com/watch?v=OEQXwK4JQlY]YouTube - Fresh Brew[/ame]
this guy is living the dream
JJ

Well, the restaurant gig didn't work for me b/c, in my opinion, it was just too shoestring and not established - too risky and all of the investment would be on me. Well, in the meantime, another already established rest. is interested in adding a whole brewery - and they have the money/know how/connections etc. and are very successful already. In the last 3 months I've done some hardcore research and know the laws/regs/hurdles/finances/etc. and am actually prepared. I'm going to meet with these folks in a week or so and see what they have in mind.

Anyway, this thread has been helpful and encouraging and maybe will continue to be!

Keep us posted, I'm enjoying living vicarously through your adventure.

Good on you! I wish you all the success in the world. Should you require assistance, well, just click the link in my sig.

Bob

Darn glad to hear it... I went to App State and drove that way to go up to Lewisburg to hit the caves. I also have a bunch of Hokie friends (even if I live in GA now). I will gladly stop off and quaff a beer in Damascus.

The rest of you... put it on your travel map. Beautiful place.

Check out flying fish website. They have some good advice and stories about how they got started.


http://www.flyingfish.com/fishtales/business1.cfm

This sounds much better all around. And don't forget that you can find good deals in used brewery equipment, as companies upgrade and consolidate. Or even unused by someone who didn't plan things well enough. There are two 1 barrel breweries in the local area, one of which only does lagers. Talk about expensive, but he is making it, just moved into a new building and is working on a bigger system.

UPDATE! Wolf Hills Brewing Company has been approved by our local planning commission and zoning boards. We have submitted our licenses to the TTB and Virginia ABC. We have a location and most of our equipment. We have 4 solid, consistent ales (APA, Stout, Brown Ale, Wheat). It's been about a year in the making so far and we may have another year to go but we've really made progress and passed the point of no return (license fees alone ran about $4K). We will be a brewery (i.e., not a brewpub) running a 1 bbl (31 gallon) system using homebrewing-style techniques (e.g., cooler MLT with copper manifold) in a single-tier system. Wolf Hills Brewing Co Microbrewery Abingdon VA will feature pics and stories, etc. very soon but is just a placeholder for the moment. We're also on facebook. We will be able to produce between 150 and 500 bbls a year (labor being the biggest variable) and plan/hope to expand quickly and have the funding lined up to do so. Our first six months goal is to 'test the market', get a better handle on demand, and try out distributors (although we hope we have that one covered) since you can't self distribute in VA. Ideally, we'll be expanding to a 7, 10, or 15 bbl system within the first year. We've got our fingers crossed but realize that the dream of many is realized only by a few.

Chris

Congratulations!
Keep us posted.

Sounds awesome dude! Congratulations!

Congratulations! It's good to see this thread revived with such a positive outcome. We'll keep our fingers crossed for you.

Chad