Opening a brew pub

[petep1980]

I have an mech eng buddy who wants to open a brew pub. In Buffalo there actually is an area which is a void of brewpubs so he actually nailed that. He's been an extract brewer and looks to ME for advise. Yes, ME. Thanks to this board I can usually sound smart telling him about batches, but keep in mind they are the 5.5 gallon variety.

How impossible is his endeavor? I believe he's looking at about a $500k investment.

 

[BigEd]

$500K doesn't sound like nearly enough unless you're going for a real small operation. At what point in the licensing process is he?

 

[CaptYesterday]

This off the top of my head (and probably completely wrong) but you're probably looking at $250K for a 10 barrel or so setup, on top of the cost of a restaurant.

What that costs in combination, I have no idea.

 

[Grinder12000]

Depends on the size and scope of the brew pub. Food? What is the general population???

You need a high education (University near by) area with many people in their 30s with nice incomes to buy $4 beers. Location is BIG. Parking? Look at at all the legal issues including home owner associations in the areas and figure it will take a min of 6 months for Fed, state paper filing.

I have an acquaintance going through this right now. Loans are tough to get.

Just pointing out road blocks. PLUS - can he make beer that people like? Remember - Extreme brews are NOT money makers.

BTW - there is a hugely successful tap room in Indiana that makes 10g batches.

 

[Dwain]

With as many posts as you have, you've been around here long enough to know that this group is going to wear you out for even thinking about it. It doesn't matter that the majority of this group has never run their own business or know how to even start the research process. However, there are a few owners on here. They can give you some good info. At the end of the day, If the Business Plan (market research, demographics, etc.) and his presentation thereof can convince a group of investors to loan him the money, go for it. I have done a partial plan and even though I've been brewing for many years, I have been somewhat overwhelmed. Good luck and keep us posted. - Dwain

There again, while I'm clowning this post, you get good info, go figure?

 

[Grizzlybrew]

See this thread: https://www.homebrewtalk.com/f14/things-i-learned-going-home-nanobrewer-137210/

I say, if you have a passion, a real passion, go for it. In europe, there are privately-owned brew pubs everywhere. I know they're dealing with a different psychology/culture, but I don't know why we can't have it here. If the goal is to get rich... ... ... ... ... ...

If the goal is to serve quality brews to those who deserve it, go for it!

 

[Yuri_Rage]

It doesn't matter that the majority of this group has never run their own business or know how to even start the research process.

It's possible that you vastly underestimate the intellect of "this group."

 

[Dwain]

Never the intellect. This is one of the most eclectic, diverse, intelligent groups I've ever been associated with. But in general, when someone has talked about it, the response has been negative. I'll see if I can dig up some threads to link. - Dwain

Yuri, in fairness, when I looked through the threads, they were split probably 60/40 for the positive. Everything from "here's what I found out" to "Don't do it, it's fun now but it'll be too much work and there's too much red tape" I guess the unfounded negative ones just stuck with me more;

HOWEVER, Brewpastor's threads should be required reading.

https://www.homebrewtalk.com/f28/dont-try-home-parts-1-2-3-a-11411/

 

[northernlad]

The restaurant alone will start at $50,000 just for bare-bones equipment for a bare-bones menu. This is not including permits, licenses, front of the house, smallwares, or any other costs. Just economy kitchen equipment. Factor in any demo and remodel if there is an existing building for the restaurant and the dollars evaporate. Then you can add the cost of the brewery equipment which other people will know more about than me.
I don't want to disrespect a man and his dreams, but I was 15 years into restaurant work before I thought I could make a go of it. If he is still in the Extract phase of brewing and has no other real experience in this type of thing he would be a fool to do this right now. And I mean that in the best possible way. I say it because I see many people who do not understand how much work a restaurant is let alone brewing a beer someone would drink.
If you are concerned about the "credibility" of my info: I worked in restaurants for 18 years from dishwasher to Kitchen Manager, now I sell restaurant equipment to fine people like your friend.

 

[Dwain]

I don't doubt your credibility, I don't even know you. My family was in the restaurant business for several years. They had a shrimp boat, processing house, ice house and seafood restaurant. Between the 4 families there were 8 adults and 8 children old enough to help plus the hired help. As soon as that went bust, it was on to bay rig platform service. That's why as soon as I was old enough, I went to work in the petrochem industry for someone else.

I guess my real point is: It bothers me to read/see peoples ideas shot down without any real information. Either his friend can bankroll the gig or he will need to borrow money. If he can bankroll it, he's got plenty and losing it won't hurt him. If he has to borrow it, they'll find out right away what their weaknesses are and they will go forward or blow it off. - Dwain

P.S. The OP did ask how impossible is this endeavor, so I guess he deserves what happens

 

[oldschool]

I saw a fine preowned 15bbl system for sale for about 70k minus a chiller and boiler, but you can fine those used also. Starting up this kind of thing wouldn't be as expensive as you might think. There are MANY brewpubs/breweries out there looking to upgrade there exhisting system. I started a powder coating business by hunting for good deals on used equipment and saved myself a tremendous ammount of money. I would love to do the same thing. I think people throw cold water because they are jelous of what you can accomplish. school

 

[garbs]

I'm from Buffalo and I have to say, I think you'd really have to have something good to compete. There is already a brewpub in the city (Pearl Street) and from my experiences, it's pretty good. But if you think you can do better, then give it a shot. I'll try it out

 

[scrambledegg81]

If the goal is to serve quality brews to those who deserve it, go for it!

Just look at Dogfish Head for the perfect example. Started as a pub with a few microbrews, and grew to what it is today.

 

[Sigafoos]

I'm from Buffalo and I have to say, I think you'd really have to have something good to compete. There is already a brewpub in the city (Pearl Street) and from my experiences, it's pretty good. But if you think you can do better, then give it a shot. I'll try it out

Pearl St is downtown, and the vast majority of people don't venture downtown unless it's for sports games. Hell, people in Amherst think you'll get shot for stepping over the town line.

Keep me appraised of how things go.

 

[StunnedMonkey]

BTW - there is a hugely successful tap room in Indiana that makes 10g batches.

Where is it? What's it called? Details man.

 

[FishinDave07]

Check out ProBrewer.com

some good info there.

 

[Gordie]

$500k is plenty for certain size brew pubs and way underfunded for others. In the meantime, check out the www.probrewer.com classified pages as well as the forum there. Lots of good info and you should be able to get a handle on the going rates for various pieces of equipment. In the meantime, contacting a professional brewery consultant is a good idea.

Check out http://www.soundbrew.com/ and click on the "General Notes on Brewery Projects" tab on the left.

I grew up on the west side of Buffalo and I have to say, we sure do love us some beer. Despite that, if your friend has no experience with both brewing and running a restaurant I'd recommend that he associate with some professionals before spending dollar one on moving this forward.

Gordie

 

[Edcculus]

I'm from Buffalo and I have to say, I think you'd really have to have something good to compete. There is already a brewpub in the city (Pearl Street) and from my experiences, it's pretty good. But if you think you can do better, then give it a shot. I'll try it out

1 brewpub in the entire city, and you say there is too much competition? What about gas stations across the street from eachother? What about downtown areas with multiple restaurants and bars in the same block? Remember, its not about getting people to want to drink beer in general, its about getting them to want to drink YOUR beer.

 

[Kass_Brauhaus]

It's like any other industry, my friend. He will have good days and bad days. There is great risk that it will fail. I would strongly suggest he build an AG setup and nail recipes before he takes it to the next step, but the bottom line is that if he wants it bad enough, he should do it. End of story.

And WTF? There's already a brewpub in Buffalo??!! Since when has one brewpub in a city been enough!!??? (not to flame, just want to punctuate my incredulity)

It seems that the permitting process weeds out the people who don't really want to do this.

 

[mtnjam7]

In the area that he's considering, are there other bars in general? One thing to make sure before you start getting into opening any establishment is the zoning for that area of the city. If it's allowed, then my post doesn't matter, but there may be a reason that a certain area doesn't have any brewpubs around. Of course, you could always then just move to a different part of town.

 

[petep1980]

Well those of us who live near/around Buffalo I'll say this. There is a brew pub downtown, there is one in Amherst / Williamsville and there is one in Ellicottville. You can probably figure out the void.

The area they are considering is EXTREMELY residential. It has almost no industry at all. It's also not near any colleges with any significant size.

 

[DRoyLenz]

I'm a HUGE proponent of people starting their own businesses. I got in to brewing hoping to one day expand it in to a brewpub.

Yes, restaurant experience would be nice...
Yes, all-grain brewing experience would be nice...
Yes, business experience would be nice...

Personally, I believe that where you lack in some areas, you make up with by aligning yourself with the right people, and delegating the work appropriately. I don't have any restaurant experience, but if and when I do open up my establishment, you better believe I'm going to be talking to some very experienced restaurateurs.

This is not an impossible venture AT ALL. It will be a life-changing venture for sure. It will be a very difficult and frustrating venture. The restaurant business is a vicious beast, but people do succeed, and there is no reason your friend couldn't.

P.S. I read Brewing Up a Business by Sam Calagione. I won't say it is the end all be all of reference books to opening up a business, but it does discuss a lot of the things he had to do when opening Dogfish Head. I'd suggest you check it out.
http://www.amazon.com/Brewing-Up-Business-Adventures-Entrepreneurship/dp/0471708682

 

[olllllo]

Captial costs are only a fraction of the amount of money that you will burn through initially. There is a period where you are paying for all of the labor and all of the consumables out of pocket. You will have months were you are leasing equipment, space, and/or services before you are open. Months where you have no money coming in... Probably months or years before you turn a profit.

This is the reason why, IMO, you need than 500k.

Unless there is an explanation of how you will overcome these assumptions in your business plan.

You need a business plan.

 

[petep1980]

When I was in real estate school they tought us how damn near impossible restaurant loans are to get. I feel like this loan would be even harder. I am also a downer on this idea, but I keep my mouth shut because like he needs to hear what I say.

 

[Sigafoos]

Well those of us who live near/around Buffalo I'll say this. There is a brew pub downtown, there is one in Amherst / Williamsville and there is one in Ellicottville. You can probably figure out the void.

Are you considering Amherst/Williamsville the Buffalo Brewpub or the Buffalo Taproom? My issues are that the Taproom is all contract brewed (CBC) and the Brewpub, frankly, sucks. I've been there twice; both times their flagship beer has been soured and they serve in falsie pints.

 

[olllllo]

Another thread you should look at is the Naked City has a Location.

What you won't see in there, I don't believe, is the part where they had to sell their Two Phase boiler for Gas.

The city was going to require that Naked City pay for the street to be torn up AND supply Phase 2 power to all the businesses on his block. IIRC that was a proposition in the 100k range.

Fortunately they also had a gas hook up or they'd have to pay the city or re-locate at considerable expense.

 

[petep1980]

Are you considering Amherst/Williamsville the Buffalo Brewpub or the Buffalo Taproom? My issues are that the Taproom is all contract brewed (CBC) and the Brewpub, frankly, sucks. I've been there twice; both times their flagship beer has been soured and they serve in falsie pints.

No, he's looking in an area nowhere near those.

The Buffalo Lager is solid, their other stuff blows.

 

[Mantis]

I recently went with a buddy of mine to meeting for people who are interested in openning a Quizno's franchise. They recomend having $500,000 to start it up. They also said that you had better have a another source of income for a year because you make no money in the first year.

I see a brewpub being way more costly than a franchise deli place, so the $500,000 really seems like it won't be enough.

I talked with my business professor who told me that anytime you are given a projected start up cost, double it. That way you have more room for screw ups and will be able to live a little more comfortably during that first year.

 

[Pangea]

Ummm... this kind of plan needs more than a guess at the amount of capital required. There are many, many variables that can change the amount needed. Asking HBT is good for opinions, but really you shouldn't put too much stock in any of them. Make a real proforma income statement, cash flow sheet, and balance sheet and you'll have the best capital requirement estimate possible. In order to put that all together you'll need to research costs of everything, and most of the replies before me have provided very good suggestions like probrewer.com. Frankly if anyone is seriously considering a business that requires 500k capital and hasn't already done a set of proformas, I'm worried about their capabilities for success.

$0.02

 

[Kass_Brauhaus]

Don't forget, this is secondhand information we're getting. It's his buddy opening it up. Also, his buddy is a mechanical engineer. Jokes about engineers aside, we do tend to cross our "t"s and dot our "i"s. While we tend to have zero business sense and intuition, I doubt very much that anyone, especially an engineer, would just stab at this and go forward.