New brew shop??

[brewtasting]

Hi. I just registered but have been visiting the forum for a while.

I am considering opening a LHBS. The closest one to me is about 45 minutes away and it’s a highly populated area. I am thinking of two options:

The first option would be a small space, about 500 sq ft. It would be more aimed at the new brewer and also have an online store to offer more products. This store would get a lot of foot traffic from people that would not normally know of home brewing or wine making. But I thought it would be cool to introduce people to something new and as we know rewarding. And I can see better margins for products being sold here.

My second option would be a larger space with less foot traffic, but the lease is 1/3 of the other option. I would then make a more full blown traditional brew supply store since it would have the space. It would take long to get the word out that we existed.

Do you guys think the first option would work?

 

[theseeker4]

Hi. I just registered but have been visiting the forum for a while.

I am considering opening a LHBS. The closest one to me is about 45 minutes away and it’s a highly populated area. I am thinking of two options:

The first option would be a small space, about 500 sq ft. It would be more aimed at the new brewer and also have an online store to offer more products. This store would get a lot of foot traffic from people that would not normally know of home brewing or wine making. But I thought it would be cool to introduce people to something new and as we know rewarding. And I can see better margins for products being sold here.

My second option would be a larger space with less foot traffic, but the lease is 1/3 of the other option. I would then make a more full blown traditional brew supply store since it would have the space. It would take long to get the word out that we existed.

Do you guys think the first option would work?

Is your 500 square foot space everything, including shipping and receiving, storage, grain, all retail space, and counter? I don't see how you could possibly fit more than a few pre-made kits and a little equipment in that amount of space if that is the case. Get the bigger place, and use the extra money to advertise to get your name out.

 

[Stillraining]

There is another thread started yesterday on the same topic. Maybe you can get your answers there?

https://www.homebrewtalk.com/showthread.php?t=585039

My 2cents is foot traffic isn't going to be your market. You will need a strong web page with strong Google search hit results. ( or whatever you call it) In other words, if I google "home brew supply's" in ______( your town).................you pop up. That's how I found my store and they have probably 20,000 SF...Its an old grocery store!. I drove by it all the time..I never saw it because I wasn't looking for it.

 

[foam_top]

I can't comment much on the leasing space options as I have not seen them. However, I think in today's world it is practically a requirement for a small business to have a website, google tagging, as much social media and an online store if possible. The best of luck to you my fellow brewer. Update us on your adventure.

 

[mongoose33]

Your intent is to aim at the new brewer? What happens when they aren't so new any more? You're going to have to nurture a continuous supply of new brewers, and you'll spend a lot of time supporting them (which is one thing a LHBS can do that most online outfits do not, NB and a couple others aside).

When I started, I bought a lot of stuff from Northern Brewer. Pretty good place, I know more now and I might or might not have bought the same stuff from them.

Now, I'm just about done w/ buying equipment. I've bought from at least six online sources, price-shopping as everyone does. I'm at the point where I want the cheapest ingredients I can get, though when the price is close I'll patronize my LHBS.

If I were you, I'd make sure I was a resource for experienced homebrewers, too. Maybe make sure yeast was plentiful in stock and reasonably-priced, so as to encourage the local experienced brewers to come in and get some....and maybe some more things as well. Same with hops. And specialty grains.

 

[brewtasting]

Is your 500 square foot space everything, including shipping and receiving, storage, grain, all retail space, and counter? I don't see how you could possibly fit more than a few pre-made kits and a little equipment in that amount of space if that is the case. Get the bigger place, and use the extra money to advertise to get your name out.

I have heard what you have said and have decided on a ~1,000 sq ft spot. That should be enough for a start.

 

[brewtasting]

There is another thread started yesterday on the same topic. Maybe you can get your answers there?

https://www.homebrewtalk.com/showthread.php?t=585039

My 2cents is foot traffic isn't going to be your market. You will need a strong web page with strong Google search hit results. ( or whatever you call it) In other words, if I google "home brew supply's" in ______( your town).................you pop up. That's how I found my store and they have probably 20,000 SF...Its an old grocery store!. I drove by it all the time..I never saw it because I wasn't looking for it.

Thanks for the other link. I choose a larger space with less foot traffic and plan on building a very strong web presence. I have some skills with developing online.

 

[brewtasting]

Your intent is to aim at the new brewer? What happens when they aren't so new any more? You're going to have to nurture a continuous supply of new brewers, and you'll spend a lot of time supporting them (which is one thing a LHBS can do that most online outfits do not, NB and a couple others aside).

When I started, I bought a lot of stuff from Northern Brewer. Pretty good place, I know more now and I might or might not have bought the same stuff from them.

Now, I'm just about done w/ buying equipment. I've bought from at least six online sources, price-shopping as everyone does. I'm at the point where I want the cheapest ingredients I can get, though when the price is close I'll patronize my LHBS.

If I were you, I'd make sure I was a resource for experienced homebrewers, too. Maybe make sure yeast was plentiful in stock and reasonably-priced, so as to encourage the local experienced brewers to come in and get some....and maybe some more things as well. Same with hops. And specialty grains.

I agree with you and I am going in this direction

 

[brewtasting]

I can't comment much on the leasing space options as I have not seen them. However, I think in today's world it is practically a requirement for a small business to have a website, google tagging, as much social media and an online store if possible. The best of luck to you my fellow brewer. Update us on your adventure.

Thank you......... it will have a strong site since I can handle all that stuff myself. And I also have a strong business background, so that should help too.

 

[JimEb]

My local brew shop also sells beer and wine.

They sell pretty much every unique/exotic beer you can think of. Because of this they get a good amount of foot traffic from people who really like beer, but aren't homebrewers (yet). Great way to bring in people and then get them hooked on home brewing.

 

[ACbrewer]

op, if you followed the other link, you might have seen my comment, but I'll repost for simplicity
"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."
That should give you some idea about the cash flow.

 

[ACbrewer]

My local brew shop also sells beer and wine.

They sell pretty much every unique/exotic beer you can think of. Because of this they get a good amount of foot traffic from people who really like beer, but aren't homebrewers (yet). Great way to bring in people and then get them hooked on home brewing.

This is ... Tricky. In VA, you need a license from the State to sell Beer, and a different one to sell Wine and a still different one to sell Home alcohol fermentation equipment (I don't think they distinguish between beer or wine).

Anyhow, there are differing requirements for each (cost to set up) and the then application and fees. But it can work. OP should be sure to check out his states laws on the matter.

 

[TexasDroughtBrewery]

Hi. I just registered but have been visiting the forum for a while.

I am considering opening a LHBS. The closest one to me is about 45 minutes away and it’s a highly populated area. I am thinking of two options:

The first option would be a small space, about 500 sq ft. It would be more aimed at the new brewer and also have an online store to offer more products. This store would get a lot of foot traffic from people that would not normally know of home brewing or wine making. But I thought it would be cool to introduce people to something new and as we know rewarding. And I can see better margins for products being sold here.

My second option would be a larger space with less foot traffic, but the lease is 1/3 of the other option. I would then make a more full blown traditional brew supply store since it would have the space. It would take long to get the word out that we existed.

Do you guys think the first option would work?

From my research you will need to concentrate on more than just the new brewer. The average new brewer will spend 100 dollars or so on a basic kit and probably get a free Extract Kit with it.

However...your bread and butter is after they bought the kit and current home brewers who will visit your store 8-10 more times on average through the year to purchase ingredients. If you don't have those ingredients and supplies then you are missing a big market.

 

[brewtasting]

This is ... Tricky. In VA, you need a license from the State to sell Beer, and a different one to sell Wine and a still different one to sell Home alcohol fermentation equipment (I don't think they distinguish between beer or wine).

Anyhow, there are differing requirements for each (cost to set up) and the then application and fees. But it can work. OP should be sure to check out his states laws on the matter.

Same with where I am. I would need a variant of a liquor license.

But like JimEb said this seems to be a winner from older posts I have read. (on some other sites, and probably here when I was searching here).

But this would be a major goal of mine and would give the store diversity and a great revenue stream.

 

[brewtasting]

op, if you followed the other link, you might have seen my comment, but I'll repost for simplicity
"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."
That should give you some idea about the cash flow.

Thanks for the info.... my location would meet those requirement and was on big reason why i thought it could work.

 

[brewtasting]

From my research you will need to concentrate on more than just the new brewer. The average new brewer will spend 100 dollars or so on a basic kit and probably get a free Extract Kit with it.

However...your bread and butter is after they bought the kit and current home brewers who will visit your store 8-10 more times on average through the year to purchase ingredients. If you don't have those ingredients and supplies then you are missing a big market.

I agree...... at first, I was going to go into a location with a lot of foot traffic and new people would be introduced to brewing.... the lease would be 3x the cost and a much smaller space, so I decided against it.

 

[sandyeggoxj]

As an experienced Brewer with big batches I never go to the lhbs anymore. They aren't willing to sell me the things I need at a reasonable price. I buy pbw by the bucket and acid 5 by the case. Lhbs wants far too much. And I don't get deals for buying a 1/4 pallet of grain or they won't order anything but 2 row for me. If I'm buying 10 bags of grain and not milling it there I better not be paying the same cost per pound as a dude milling 10# for a small batch. I'm not expecting wholesale but Im not okay with retail either

The new Brewer gets coddled, the mid-range Brewer can get by and the experienced Brewer gets the "take it or leave it" deal. Just my experience.

 

[brewtasting]

did you ever talk to the LHBS and try and work something out?

 

[brewtasting]

And as an update, i am moving forward with my plans... thanks for the input so far all.

 

[kh54s10]

One observation was on the size. You stated a smaller space and a large online market. IMO this would require more space than a local market. You will need to have a larger inventory warehouse space and room for packaging and shipping.
For walk in business location is not entirely critical, but ease of access is. When I started brewing I had 2 LHBSs one was at the edge of a warehouse area in Providence RI. The other was on a main city street in Woonsocket RI. That one was twice as far from my house but had easier access. I went there. The Providence one went out of business. I now have another that is close by and I never go to the others any more. The new one has a lot more stock than the older ones had.

 

[brewtasting]

One observation was on the size. You stated a smaller space and a large online market. IMO this would require more space than a local market. You will need to have a larger inventory warehouse space and room for packaging and shipping.
For walk in business location is not entirely critical, but ease of access is. When I started brewing I had 2 LHBSs one was at the edge of a warehouse area in Providence RI. The other was on a main city street in Woonsocket RI. That one was twice as far from my house but had easier access. I went there. The Providence one went out of business. I now have another that is close by and I never go to the others any more. The new one has a lot more stock than the older ones had.

The online presence will be strong.... but it's new business and would not need that capacity in the beginning. There are a lot of hills to climb.

It will have decent foot traffic with good parking, so it will have good access....parking etc..

 

[kh54s10]

Good luck. It is always good to have another local store to shop.

You need to also look at capacity in the long run. If you quickly out grow a location there are other costs. All your advertising, printing etc will need a new address. etc. You might lose some customers due to a new location.

Parking is not the only concern with ease of access. The Providence store that I used as an example had parking close by but getting to the store was a pain. I avoided it whenever possible, especially during rush hour.

 

[BlueHouseBrewhaus]

Both of my local brew shops offer inexpensive ($25) weekend brew classes. One Saturday to brew and another one 3 weeks later to bottle. They tell me they pick up one or two new customers with every class. Plus it's good word of mouth. They also do discount Groupons for supplies and brew classes.

 

[ericbw]

Go with the bigger space.

 

[bobeer]

I've always wanted to have a LHBS that I could operate as a supply shop and as a super small brewery. I wanted to brew 10 gallon batches there and have my beer on tap so homebrewers could come in and get their stuff, stay for a pint of whatever's on tap, and have that kit available to buy. It would be a ton of work to run a store like this but I think it would be fun.

Good luck to you and your new business. Please let us know when you're up and running so we can check out your online store!

 

[Sailingeric]

My local brew shop also sells beer and wine.

They sell pretty much every unique/exotic beer you can think of. Because of this they get a good amount of foot traffic from people who really like beer, but aren't homebrewers (yet). Great way to bring in people and then get them hooked on home brewing.

That is how I got into brewing. Was going their for beer and then got the quick run down on how to brew and the rest was history.


You have to keep in mind you will need more than grains and hops. You will need to have equipment and kegging supplies, from lonely stoppers to big SS pots.

 

[ericbw]

The thing I like about one of my local shops is that they have a ton of those little parts, especially for kegging. It's kind of like an old school hardware store in that way. You can walk in and buy one thing and spend less than $2. If you have that stuff on hand, then you'll be very valuable to people. But I don't understand how the hardware store stays in business that way.