I finally got a minute to respond. I have received a lot of emails from you guys. I appreciate everyone's high spirits toward the change in the buys. I just wanted to touch base and say hello and talk about what is going on. Jeff and I have been talking a lot about how this transition is going to work. I think we are getting pretty close to having everything ironed out. Jeff has put in a lot of leg work trying to get you guys the best deal that he can, I think everyone owes him a beer next time you see him.
I am going to be as transparent as possible with the logistics/finances of the new bulk buys. After speaking with my accountant yesterday he seems to think that $0.09-$0.11 per lb ,mark up should cover the income tax side of the buys. I think that an extra $.02-$0.03 per lb would be fair for my time and efforts, but I am open to suggestions. I think the difference in pricing from before to now will be minimal. Jeff spoke with the GM of NCM and it seems that they are going to make it a bit cheaper to begin with. So I thought that we could take the low side of the tax price ($0.09) and the high side of my compensation ($0.03) to get a constant price increase across the board $0.09+$0.03=$0.12 per lb increase. Those of you that know me well know that I am not in the market to make a killing quickly. If it turns out that these numbers are incorrect and there was more profit than first thought, I will drop it down to a more reasonable amount. But keep in mind that the $0.03 compensation will also be taxed, it really isn't much after Uncle Sam steals his part.
Now for the first buy. I think it would be fair to waive my compensation on the first buy. I would like to meet all of you, and get to know you, this way you can know what type of person I am. Also this gives me a chance to learn the ways of the bulk buy. I am all in for expanding this hobby and keeping it as affordable as possible for everyone while still staying in business.
Another idea I had was taking pre-orders for yeast,specialty malts, and what ever else as well. If the pick up for the grain is near BYOB I could see some of you guys stopping in to pick up a few things. Now I have never been to a pick up but I assume about 40-50 guys show up. If 40 people all came to my store looking for 1056 or saf 05 at the same time, we would both be screwed. Again I am open to suggestions here.
One thing I did want to gently touch base on has a common thread I saw in the email "thread" that Jeff sent out. I know that when you walk into your LHBS and see grains that are marked up 100/200/300% it seems outrageous, but I don't think you guys realize the cost of a store front or the volume of business the average LHBS does. Just for an example Belgian Pilsner, a 55# sack cost me $44.50 before shipping (yes you guys get grain cheaper than I do). So after shipping lets say an even $50 a sack. At $1 per lb that doesnt leave much room for profit. With liquid yeast it is roughly $4.60 per bag/vial. To ship 100 bag/vials it is $250. So that brings the total upto $7.10 per bag/vial. Now factor in spoilage about ten bag/vials a month, this brings it to around $7.25-$7.50 a bag/vial. Now if you come in and pay with a credit card that's $.25- $.50 per swipe plus 1-3% of the sale. You can see that adds up. Lets say that the mark up on average is 100% across the board for everything in the store. The average mom/pop LHBS does between$4000-$6000 in business a week. 50% goes back into buy new inventory. That leaves $2000-$3000, now subtract rent lets say $1000 a month, utilities $400, business licenses say $50 a month, insurance $50 a month, shipping, water, taxes, and so on. Trust me I love what I do, I get to brew everyday, I have the best customers, I get to play sherlock when some one brings in a funky brew and wants to know what they did wrong, I love my job everyday. But even at 100% mark up LHBS owners aren't living like kings. This isn't me griping, like I said before I like transparency.
In closing, I am looking forward to working with you guys in the future. If any of you have any concerns or questions feel free to voice them here, email me, or call the store. [email protected]
or 856 858 6000.