Thoughts on LHBS and restaurant

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mendozer

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What are your general thoughts on a business that is a LHBS by day and restaurant/bar by night? My LHBS closed and the two closest north and south are about 20 and 30 miles, respectively. I work in a nice strip mall with a grocery store, a gym, small restaurants, dentist, medical offices, ups store, pet store, etc. There's a spot next to my work that's decent square footage. Since my LHBS closed, i thought it'd be cool to run a brew shop on one side and have a restaurant/taproom featuring all beers made in house.

From a competition standpoint, the restaurant would have the biggest battle I think due to the market around us. However, this city is fairly busy and this strip mall is busy. Besides, where else can you buy the ingredients for your next brew, grab a pint of beer made last week, and order up a nice braised beef shank at 4 pm?
 
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mendozer

mendozer

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Nice! I oughta check out that place next time I'm down there.
 

treacheroustexan

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My LHBS kinda does this. They have a bar with beers they brewed on tap, and their wine available. No restaurant, but they are connected to a pizza shop so people walk next door and grab some pizza to bring back.
 

Special Hops

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Place in Raleigh is similar. Atlantic Brew Supply. They have a brewery with taproom and an LBHS right next door. They don't do food but coordinate with local food trucks to have at least one or two around during lunch & dinner hours.
 

madscientist451

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You have to be realistic and take a hard look at you return on investment.
Does it make sense to pay strip mall rent prices for a alcohol business?
Probably yes, because there is considerable profit margin.
On a restaurant?
Maybe yes, maybe no; you can buy used restaurant equipment all day long 24/7/365, because so many start and then go out of business.
On a homebrew store? Maybe, but I doubt it. Your LHBS closed, doesn't that tell you something about the amount of profit they were bringing in?
If you are in the brewery working during the day, can you take the time to answer the phone, help customers, deal with deliveries and all the other tasks associated with a daytime retail business?
You'll have to hire someone to do all those things.
The concept is already working for others, but you have to have the right combination of costs/cashflow/location/customers and competition.
 

betarhoalphadelta

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I think you'll want to really look at the numbers, as well as your local laws. Obviously if you're becoming a functioning brewery, you'll need to go through all the federal licensing as a brewery. Then, you need to figure that you need to brew a LOT to support the restaurant side of the house. So brewing becomes perhaps as much or more of the business plan as the other two businesses.

That's not meant to dissuade you. Selling in-house produced beers has MUCH better margin than selling other craft beer, which will help your bottom line. But it also means that the time and capital investment is MUCH higher than it would be if you weren't a functioning brewery. So you need to run the numbers.

It might be easier to be an LHBS and a craft beer bar / growler fill bar (if allowed in your locale) while also selling food. That will attract craft beer fans (and maybe they'll get the bug to become LHBS customers if not already), but will take all the hassle of brewing as a business off your plate.
 
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mendozer

mendozer

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Good tips thanks a lot! I wasn't thinking of "brewery" per se, but rather brewing a couple times a week to serve our bar, so more like the fill bar idea. Licensing sounds....expensive. Maybe at first it could be a growler fill bar only. And to save $$$ maybe even have a "kitchen" owner pay rent and use some of the space until it becomes bigger to buy them out. The only downside to that is I'd want input on the menu. My LHBS kind of sucked though. They had such random things that I wondered who was buying it. The other one 20 miles away is much better, despite being smaller. Very organized and have everything you need without being a giant warehouse. That's the other thing, the one near me was way too big.

One other thought I had for extra cashflow was to supply the smaller nano breweries their grains. But basic business knowledge says not to do so much. Wholesaler, Retailer, fill bar, restaurant is a nightmare to think about business licensing.
 

treacheroustexan

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If I were you I'd pick one concept to start with and build from that. Start with a restaurant, or start with brewing supplies and just keep building. Just my opinion!
 

brandonnys

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Good tips thanks a lot! I wasn't thinking of "brewery" per se, but rather brewing a couple times a week to serve our bar, so more like the fill bar idea. Licensing sounds....expensive. Maybe at first it could be a growler fill bar only.
If the idea is to produce any beer, you are a brewery. If you are going to serve food and serve beer produced on premise, you're a brewpub. Some states have a brewpub license, but you go through the same process with the TTB/state as a regular production brewery would. Unless your idea is to give the beer away (which is kind of the antithesis of a brewery), then you better believe the taxman will be at your door looking for their cut, which means a license.

ABV/Mainbrew does no brewing on site, not even brew demos. They serve other people's beer, so they got an on-premise license to serve pints and fill growlers, as well as an off-premise license to sell kegs to go. Aside from that, it's just a normal business license for the homebrew supply stuff, and whatever food-related licenses they needed for the restaurant portion.
 

kh54s10

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It sounds like a great idea. Do you have the funds to start this. My estimates would be $10k-20k to the lhbs, $100k-$300k to the brewery and another $100k - $300k for the restaurant.

So minimum $210K to $620k just to open. Probably more... Not including rent.

If you do all three you will be operating at least 16 hours a day - probably more. To staff all three you are going to need a lot of employees.

What is your background? Do you have restaurant experience, are you cook, are you a professional brewer? If not these are skilled positions you will have to fill.

Then count on at least a year getting everything going. Permits, licenses etc.
 
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mendozer

mendozer

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I'd like to team up with my local welder too for custom jobs or even have him mass produce kettles instead of ordering pricey blichmans and such. I live in an area where I can see many DIY brewers. It's not the fanciest city or ppl with money. Idk where to start in terms of money though. How much to loan, what to start stocking, where to get supplies from, etc. I would like to actually pick the brains of the ppl that closed
 

kh54s10

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I have no direct experience with mass producing kettles, but know that the tooling would be very expensive. Think in terms of close to or well over a million dollars.
Sheet metal cutters - probably computer controlled plasma or laser, Presses, welding tools..... There is a reason why they either come from China or are expensive....

What to stock depends on what you are going to do. So far you have put out LHBS, Brewroom and restaurant. There are LHBS distributors like BSG. They do protect current customers territories. So if there is another LHBS nearby, they won't stock your store.

In order to get a loan you are going to have to do your research first. Have a good business plan ready when looking for the loan.
 
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mendozer

mendozer

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I shouldn't have said mass produced. What I meant was we have kettles like the concord bought in bulk. Then offer customers customizable options. They choose what to put where. Sight classes, thermos, valves, and my guy welds them in, or offer bulkhead kits.

I just wonder what the actual margin is for wholesale vs retail. I obviously want to be priced at the lowest possible found online to fight that competitor. I'd likely need to see books from other shops to get an idea of the market too. They probably won't share that info.

It's looking more and more of a grim outlook.
 

beernutz

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http://www.hopcitybeer.com/ is a to me an interesting concept similar to what you're considering. It is a beer and wine warehouse plus a taproom that also sells a wide variety of homebrew supplies. Not exactly what you are asking about but they seem to do pretty good business.

The restaurant business is pretty tricky so I hope you have a lot of prior experience. My daughter is in that business and has held a wide range of jobs. She's seen many places come and go, even those that were doing good business so I hope you know what you're getting into.
 

Scturo

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My LHBS does this. And they do a good job. They are not the biggest name brewery in the area. They do get a consistent customer base. Menu is decent. I can go another LHBS, but why not go to one that can offer me a beer after getting my supplies.
 

Special Hops

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I am no business expert but it sounds like you are trying to Start about 3-4 different businesses all at once. My tip - Narrow it down to one or two and do it well instead of doing 4 things mediocre.

Maybe partner with someone to run the restaurant
 

brandonnys

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I second that. That is where I get my supplies and their food is great and has one the biggest tap list in the area.
Kevin's the owner. He'll likely chat with you if he's in the office. He wears a kind of straw cowboy hat most of the time.
 

JohnK93

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My LHBS, after being open for 20+ years, expanded their operation to include a brewery and taproom (Veracious Brewing) and was rated one of the Beer Advocate's top new breweries in 2015. They don't serve any food, it's all bring-your-own and food trucks outside, but this allows them to focus on the beer and not have to worry about food & kitchen laws. As far as I can tell, this is working for them. This might be another route to go, at least to start.
 

seatazzz

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Mendozer, hope this works out for you. Having to go to Lakewood and Sodo when I live smack dab in the middle of them is a pain. I did hear a "rumor" that one of the guys from Larry's is planning on opening a LHBS in Puyallup in late May or June...don't know how valid that is. Where is this location you're thinking of?
 

Dcpcooks

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Sounds like Bells to me. I think the pub came later after the general store and brewery. If you have experience in food service then you might be able to make work.

Check your local laws regarding tap room and brew pubs. Food service can impact your license. Some states won't allow a tap room in breweries.

The cost to build out a Resteraunt is driven by the exhaust hood and Ansul fire prevention set up. Then the gear you want/need to actually cook the food. You may need two walk in coolers as the health dept won't let you mix the beer and food in some places.

I'd start with the village or city trustees. See if they will grant you a liquor lic. The go to the health dept to get the basic regulations on food service.

Plan on renting the space and getting it approved for your use on a local level. You'll need that approval before the TTB will even review your application for a Brewers lic.

It's doable and can be very profitable. Most of your profit will come from alcohol sales in the tap room. Food service usually only generates about 10-15% profit so you'll really want to offer the food service to make it work. The last place I was involved with required 16 hours a day for a year before it started to really fly.
 
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