Need help -- Want to open my own brew shop

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TexasDroughtBrewery

TexasDroughtBrewery

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Hello,

There is a realy need for a homebrew shop in North Texas. The closest shop is at least 40 mins away. Can anyone give me any advice on what a start up cost, inventory on hand expenses, or really any advice in general? I have always want to open my own business, and I know this could be a long shot but I would at least like to know some numbers or get some insight so I can see if this is something I can even do...:tank:
 
One place to start is with the suppliers...find out what they require of you and IF they will let you distribute. If you are too close to someone else, based on their definition of close, they won't sell to you. Check the local rents to see what your floor space is going to cost. Check with AHA as they may have resources that will help...
 
Well that all depends on the size of the shop. Initial inventory, shelving, advertising and refrigeration units can run 15-40k. Rent can run around 15-50k per year. Utilities another 12-24k per year. Then your salary. If you go belly up will you be able to pay the rent in a closed shop?
Way too many variables. You need to do your due diligence and figure out the need locally. 40 minutes from a homebrew shop is not that bad of a trip. Until the one I go to moved it was an hour away.
 
My advice: If you have to ask here for advice, you're not ready. Take some business classes at your local college, find out everything you need to know about running a store, then MAYBE ask here for specific this or that type of questions, like Wyeast vs. White Labs.

And a brief comment from my own LHBS when I was last there, they don't make their money on supplies, they make it on classes and brew parties.
 
i would check and see what range the other local stores sell..there are heaps of different brands of grain's.where i live i have three stores to choose from all under 30mins.
 
I'm very familiar with two LHBS and neither have particularly large storefronts. If I were you, I'd work hard to find a location that's sized right with the right rent. It's not as if you need to be on a major thoroughfare with a lot of drive-by traffic and pay for that privilege.

One criterion of a good LHBS is good refrigeration for yeast and maybe hops as well.
 
stonebrewer said:
One place to start is with the suppliers...find out what they require of you and IF they will let you distribute. If you are too close to someone else, based on their definition of close, they won't sell to you. Check the local rents to see what your floor space is going to cost. Check with AHA as they may have resources that will help...
Click to expand...

Good point I will need to check out.
 
zacster said:
My advice: If you have to ask here for advice, you're not ready. Take some business classes at your local college, find out everything you need to know about running a store, then MAYBE ask here for specific this or that type of questions, like Wyeast vs. White Labs.

And a brief comment from my own LHBS when I was last there, they don't make their money on supplies, they make it on classes and brew parties.
Click to expand...

I do have a degree, and have made business plans...just not in this field so it was hard for me to ball park numbers...
 
zacster said:
My advice: If you have to ask here for advice, you're not ready. Take some business classes at your local college, find out everything you need to know about running a store, then MAYBE ask here for specific this or that type of questions, like Wyeast vs. White Labs.

And a brief comment from my own LHBS when I was last there, they don't make their money on supplies, they make it on classes and brew parties.
Click to expand...

I told my partner this would be a good way to make money...I see Austin Homebrew doing this all the time...it will be part of the plan.
 
jschein said:
Well that all depends on the size of the shop. Initial inventory, shelving, advertising and refrigeration units can run 15-40k. Rent can run around 15-50k per year. Utilities another 12-24k per year. Then your salary. If you go belly up will you be able to pay the rent in a closed shop?
Way too many variables. You need to do your due diligence and figure out the need locally. 40 minutes from a homebrew shop is not that bad of a trip. Until the one I go to moved it was an hour away.
Click to expand...

I was thinking around 800 sqft... and around 20k in on hand inventory was just looking to see if I was close to realistic costs.
 
Where in North Texas are you considering? I agree the shops around here are few and far between. And most are in the Dallas area which even if only 35 miles away can take hours to reach depending on traffic. Best advice I have seen so far is to talk to potential suppliers. If you overlap a known customers defined territory then you may have issues sourcing products. Are you involved with local home brew groups in the area you are considering? Those folks may be your best original customer base if you are closer, cheaper, or provide better customer service, etc.
 
TexasDroughtBrewery said:
I was thinking around 800 sqft... and around 20k in on hand inventory was just looking to see if I was close to realistic costs.
Click to expand...

Add to that a refrigerator, shelving, grain bins, grain mill, vacuum for the grain dust and floors, Cash register and credit card system, the c.c. company will take 6% of every credit card sale. Counter for the check out. A chair - you won't be so busy as to stand all day.

Accounting, insurance, business license....

Remember that Austin Homebrew is no longer around.... And they were for a while one of my favorite online stores.

Oh yes, website even if you don't sell online.

From what I understand with most businesses, don't expect to turn a profit for 3-5 years.....
 
TexasDroughtBrewery said:
I was thinking around 800 sqft... and around 20k in on hand inventory was just looking to see if I was close to realistic costs.
Click to expand...

Both of the LHBS that I'm familiar with also stock inventory for wine making. Around here, fairly common. Don't know if it's similar in Texas, nor if ambient conditions there are helpful or hurtful for winemaking--never done it, don't want to.

But it seemed clear to me that winemaking is part of their business model. In each, the winemaking area of each store is less than the beermaking section.
 
Staestc said:
Where in North Texas are you considering? I agree the shops around here are few and far between. And most are in the Dallas area which even if only 35 miles away can take hours to reach depending on traffic. Best advice I have seen so far is to talk to potential suppliers. If you overlap a known customers defined territory then you may have issues sourcing products. Are you involved with local home brew groups in the area you are considering? Those folks may be your best original customer base if you are closer, cheaper, or provide better customer service, etc.
Click to expand...

I was thinking something between the Denton - McKinney area. I think with UNT being around Denton might be a better idea...but I also have to take rent space and a lot of other things in consideration to.
 
I feel like their is enough business north to keep another shop afloat. I am not trying to be rich but just enough to be comfortable and have a fun job too. There are North Tx brew club ...Denton Brew clubs...plenty of Tap shops I can market at....a lot of potential customers north of Frisco.
 
TexasDroughtBrewery said:
I feel like their is enough business north to keep another shop afloat. I am not trying to be rich but just enough to be comfortable and have a fun job too. There are North Tx brew club ...Denton Brew clubs...plenty of Tap shops I can market at....a lot of potential customers north of Frisco.
Click to expand...

Your choice of location appears sound to me. You would be neck deep in the most explosive population growth around these parts. That will also mean higher rents vs. the older areas of the metro-mess.
 
SlickTX said:
Your choice of location appears sound to me. You would be neck deep in the most explosive population growth around these parts. That will also mean higher rents vs. the older areas of the metro-mess.
Click to expand...

Yeah, rent is one of my main concerns for this very reason.
 
I looked at this a while back. One set of numbers I remember seeing went something like this --- From LD CARLSON, and I think they have a FAQ you can use.


1. can't be closer than 10 miles to existing LD Carlson supported store, they don't want to have competition that destroys a market for their product (if 2 stores and both go under, LD has no outlet into that area now). The exclusion zone could be larger.
2. AT THAT TIME, they estimated 1 in 500 homebrews at any given time. (about 1 in 100 make wine iirc numbers).
A. your supplies/profit AFTER supplies ratio is something like 55% to 45% - varies on product, but it is a good rule of thumb average. That means you sell $100 brewing supplies (buckets, hops, etc) you keep $45, and send LD $55. So your rent, electric, etc comes out of that $45.
B. They also estimated the amount a homebrewer would buy in a year, and pointed out that at 100K of sales, you kept about 45K, and after typical rents, etc, you'd have about 0 profit (say +/- 500), as such they recommended a certain population base near you. I think it was 100K people in your market area. - you can use census data to figure this out. And that is a MINIMUM and you will probably only break even.

Anyhow take a look for the FAQ over at LD Carlson. and at the census data for your proposed area to get a feel for how large/small your area is.
 
ACbrewer said:
I looked at this a while back. One set of numbers I remember seeing went something like this --- From LD CARLSON, and I think they have a FAQ you can use.


1. can't be closer than 10 miles to existing LD Carlson supported store, they don't want to have competition that destroys a market for their product (if 2 stores and both go under, LD has no outlet into that area now). The exclusion zone could be larger.
2. AT THAT TIME, they estimated 1 in 500 homebrews at any given time. (about 1 in 100 make wine iirc numbers).
A. your supplies/profit AFTER supplies ratio is something like 55% to 45% - varies on product, but it is a good rule of thumb average. That means you sell $100 brewing supplies (buckets, hops, etc) you keep $45, and send LD $55. So your rent, electric, etc comes out of that $45.
B. They also estimated the amount a homebrewer would buy in a year, and pointed out that at 100K of sales, you kept about 45K, and after typical rents, etc, you'd have about 0 profit (say +/- 500), as such they recommended a certain population base near you. I think it was 100K people in your market area. - you can use census data to figure this out. And that is a MINIMUM and you will probably only break even.

Anyhow take a look for the FAQ over at LD Carlson. and at the census data for your proposed area to get a feel for how large/small your area is.
Click to expand...


Thank you I will be checking this out...and if you look at the census you will see that Frisco has been the top fastest growing city for the last several years...and all of the traffic in this city has been increasingly growing north. Just did the math on census and im looking at 350k people would be in the area that would consider this store significantly closer.


http://www.census.gov/newsroom/press-releases/2016/cb16-81.html
 
I have lived in Mckinney/Allen area for close to 10 years, brewing for about half of that time. It was a pain to get to the LHBS until I discovered Stubby's in Fort Worth. Great selection of ingredients, but what really does it for me is the flat rate shipping. I would recommend reviewing their business model because so far its been great for me. Having a functional website, great product selection and quick shipping is a must IMO. Might be able to get more customers that way. I enjoy having my ingredients shipped to my home in 2-3 days after ordering. Its made brewing much easier and convenient for me.
 
kh54s10 said:
I dunno?? Read a thread a while ago about some sort of change and clicked my bookmark, tested it again just now I get 404 page not found.
Click to expand...

New ownership about a year ago. It's now owned by the Adventures in Homebrewing folks.
 
hunter_la5 said:
Never heard of anyone charging that much.

But even a more reasonable 2-3.5% can be a lot to your bottom line, especially when your margins are already low.
Click to expand...

Maybe rates have gone down. A business I worked for many years ago looked into taking CC. Cash or checks only at the time. The boss told me it was 6% at that time.

Of course then you could get 5-10% interest on savings accounts.......
 
Yeah, after doing some homework their is a reason why LHBS are few and far between, they simply don't make money. Unless you are one of the big 3 guys online...which is part of the issue for the local guys.
 
mongoose33 said:
I'm very familiar with two LHBS and neither have particularly large storefronts. If I were you, I'd work hard to find a location that's sized right with the right rent. It's not as if you need to be on a major thoroughfare with a lot of drive-by traffic and pay for that privilege.

One criterion of a good LHBS is good refrigeration for yeast and maybe hops as well.
Click to expand...

There are a lot of posts here about how people got into homebrewing. I don't recall any stating they saw a lhbs and went in to see. It's almost always that they knew someone else who was doing it. So, yeah, a high profile locale probably isn't worth the money. Just be accessible.
 
I will say diversity is key. We just had a homebrew shop open up here in our county. The first one in our area they happen to be, but they opened in a very small town of our county that the highway runs past not through. However they are not only a brewshop they sell the obligatory wine making supplies as well as doing garden supplies. Think about what else you could meld your business with so you aren't relying on a minority of the population to keep you afloat.
 
Punity said:
Think about what else you could meld your business with so you aren't relying on a minority of the population to keep you afloat.
Click to expand...

My local shop is called Hydrobrew. They specialize in the DIY crowd for beer drinkers and weed smokers.
 
Zuljin said:
There are a lot of posts here about how people got into homebrewing. I don't recall any stating they saw a lhbs and went in to see. It's almost always that they knew someone else who was doing it. So, yeah, a high profile locale probably isn't worth the money. Just be accessible.
Click to expand...

Actually that is how I got into brewing almost 20 years ago!!
 
brewtasting said:
Are you not going forward with your shop?
Click to expand...

After doing more research I am on the fence...I would still really like to do it...but I am a bit more concerned if it will make any money. I still think there is a great need and enough interest but real estate is just too insane. hell the cost of living out here is too insane...which makes it very difficult.
 
jschein said:
Well that all depends on the size of the shop. Initial inventory, shelving, advertising and refrigeration units can run 15-40k. Rent can run around 15-50k per year. Utilities another 12-24k per year. Then your salary. If you go belly up will you be able to pay the rent in a closed shop?
Way too many variables. You need to do your due diligence and figure out the need locally. 40 minutes from a homebrew shop is not that bad of a trip. Until the one I go to moved it was an hour away.
Click to expand...

Rent ended up being closer to 50k plus...which really put a halt to the situation.
 
Don't know if you've looked into it, but I know quite a few LHBS owners that have gotten their start by operating online and outta their garage (or trunk haha). Basically what that does, is gives you the ability to forego a lot of the overhead costs and test the market. You can build a customer base easily through local clubs and advertising. Once you prove to yourself it's worth it and you need the storefront, find something that is reasonable. You don't have to rent a storefront in the largest strip mall in the area right off the bat.
 
SpahrBrewing said:
Don't know if you've looked into it, but I know quite a few LHBS owners that have gotten their start by operating online and outta their garage (or trunk haha). Basically what that does, is gives you the ability to forego a lot of the overhead costs and test the market. You can build a customer base easily through local clubs and advertising. Once you prove to yourself it's worth it and you need the storefront, find something that is reasonable. You don't have to rent a storefront in the largest strip mall in the area right off the bat.
Click to expand...

Yeah, those days are over. No whole seller for Homebrew supplies will deliver to you unless you have brick and motar. I wanted to start this online only and eventually build/rent a store front....nope.
 

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