How small is too small for a start up brew pub?

[Matt B]

I've been asked to research the feasibility of setting up a small brew system for a small brew pub... in a small town. The town has <75,000 residents but is growing at a decent pace.

The brew system I have priced up is a B3-2050 system that is capable of brewing 15 - 20 gallon (not bbls) batches. Then I've priced up 4 of the 42 gallon conical fermenters from Northern Brewer that would allow me to do 1 bbl batches.

How feasible is this? And if it's not can you provide some details as to why?

[kylesmi]

I would not go any lower then 7 bbl. There are alot of used systems out there.

[bbrodka]

The sizing and selection of a system is critical to the operational efficiency and overall profitability of a brewery. Use this information as a basic guideline to system configuration.

Calculation of Annual Production

System Size (Brewhouse Size) x Number of brews per week x 50 weeks per year = Annual Production

Example :10 Barrels (bbls) x 3 brews/week x 50 weeks/year = 1500 bbls/year

Calculation of No. of Fermenters Required

Desired Annual Production = No. of Fermenters (to meet desired annual production)
(Brewhouse Size x Vessel Cycles/year)

Sizing for a Brewpub - Example

Parameters:
"1000 barrels per year; 75% Ales, 25% Lagers" (Roughly 5.5 kegs serverd/day)
50 brewing weeks / year
14 Day Ales / 28 Day Lagers with full fermentation in fermenters
Ales - 25 cycles / fermenter / year (50 brewing weeks / 2 week fermentation)
Lagers - 12.5 cycles / fermenter / year (50 brewing weeks / 4 week fermentation)
6 beers on tap

Calculate system size and number of fermenters

For example
3.5 barrel system 1000 barrels / year / 3.5 barrel system / 50 brewing weeks/year = 5.8 brews per week
7 barrel system 1000 barrels / year / 7 barrel system / 50 brewing weeks/year = 2.9 brews per week
10 barrel system 1000 barrels / year / 10 barrel system / 50 brewing weeks/year = 2 brews per week
15 barrel system 1000 barrels / year / 15 barrel system / 50 brewing weeks/year = 1.3 brews per week

Comment - One must look at the labor component in selecting a system size.
Most properly sized brewpubs brew 2 - 3 times per week in their first couple of years of operation.
"Brewing less than twice a week, the system may have been oversized to start with."
"Brewing more than 3 times a week, the system may have been initially undersized."
"For this example, either the 7 or 10 barrel system is recommended."

Number of fermenters required
Projected: 750 bbls Ales (75%) & 250 bbls Lagers (25%)

For 7 barrel system
Ales ------> 750 bbls / year / (7 bbls x 25 cycles/year) = 4.2 = 5 Fermenters
Lagers ----> 250 bbls / year / (7 bbls x 12.5 cycles/year) = 2.8 = 3 Fermenters
Total -----> 7 - 8 Fermenters to produce 750 bbls Ales and 250 bbls Lagers

For 10 barrel system
Ales ------> 750 bbls / year / (10 bbls x 25 cycles/year) = 3 Fermenters
Lagers ----> 250 bbls / year / (10 bbls x 12.5 cycles/year) = 2 Fermenters
Total -----> 5 Fermenters to produce 750 bbls Ales and 250 bbls Lagers

Number of Serving Vessels ; Equals number of desired beer styles one wishes to serve via tank to tap.
Note number of beer styles may increase through kegging and/or bottling.

System Recommendation : 10 barrel system with 5 x 10 barrel fermenters and 6 x 10 barrel serving tanks.
Selecting the 10 barrel system over the 7 barrel system has the following benefits:
-good utilization of manpower (2 brews per week)
-reduced floor space (5 fermenters vs. 8 fermenter)
-better priced / more economical (fewer fermenters)
-better expansion capabilities
-meets all system requirements

**Note: Double sized fermenters (and conditioning tanks) may half the number of vessels required to meet annual production.
**Note: All calculations assume 50 brewing weeks per year**

http://www.specific.net/graphbp.gif

[Matt B]

What's the cheapest (and most realistic) you think someone could get started with in a small brewpub setup?

[beauxman]

bbrodka has it right, I posted this just as his posted so forgive the repeat:

It can be done, it has been done, and it is being done. That does not mean it is the way to go. How many seats would you have in your small brewpub? Figure about 4-8 BBL per year of beer sold per seat (depends on market) to start a projection. Now figure out how many batches of beer you would have to brew. Let's start conservative:

50 seats x 4BBL/year/seat = 200 BBL annually

200 BBL / 0.5BBL = 400 batches brewed per year

You would have to brew every single day of the year (including all holidays, no days off) and still come up short. Now throw the wrench of mutiple styles into your production schedule. They all sell at different velocity and this makes it even more difficult. Also, your net yield at the end of a 1/2 BBL brew is not going to be a full keg anyway. Now factor for growth, what if it takes off and you are hitting 6 BBL/seat/year:

50 seats x 6BBL/year/seat = 300 BBL annually

300 BBL/ 0.5BBL = 600 batches brewed per year!

Now factor in the costs to produce this little beer with that much labor (your labor isn't free even if you are not getting paid yet as the owner, opportunity costs are real and if you are brewing every single day you cannot run your business).

IMO: If all the beer is going to be consumed in house with no outside sales, then a 5 BBL system could work. 7BBL is better (room to grow and economy of scale) and usually about the same costs as the smaller systems. Also, how many styles are you going to produce? This would influence my decision on sizing as well.

I am starting a new project myself. I will have a 50 seat taproom and also do outside sales. I have chosen a 10 BBL batch size with 20 BBL cellar. The brewery will be built to swap out the hot side to a 20 BBL at some point. I still wrestle with the "small batch, quick turnover, fresh" vs. "economy of scale, productivity, lower cost of operation" when it comes to this. Part of me (business guy) says go with at least a 15 BBL rig. The other part (brewery guy) says keep a smaller batch size up front and keep the beer fresh and brew more styles. I think the 10BBL hot/20BBL cellar is a good comprimise (plus I already have a 10 BBL hot side).

What do other Probrewer types think of this approach?

-Beaux

[Matt B]

If we went with a 5bbl system what size batch would be too small to do on a system that size? If we did a test run of a style would a 1bbl batch be doable on that system?

To be honest, I'm a fairly seasoned homebrewer with no professional experience at all. I was approched by someone who is wanting to open a small restaurant in town and was sorta talked into doing the brewery side when he found out I brewed beer at home. (And by "Talked into" I mean he offered to cover the expenses to make it possible for me to do something I'd love to do so I didn't disagree) This guy knows nothing about beer. He has said "It's just beer" several times when discussing it and "you know, a stainless steel pot is easy to come by".

If I was to take him a rough estimate cost today what do you think a good number would be? I'd do the research, but I have a feeling the entire project will stop right here. I think he's wanting to spend about $10,000 or less. :rolleyes:

[beauxman]

Recipe for disaster (the ownership issue).

The reality is a brewery no matter how small is more than a passing whim or easy add on. $10,000 would not even pay for the tenant improvements you will need to make, not to mention any equipment. The equipment is only one piece of the budget.

-Beaux

[Ted Briggs]

Dogfish head started with a 10gallon Sabco brewhouse! It can be done. The major difference is that "beer is beer" atitude. Thats what screams "dont do it!!"

[madriverglen]

Take a good look at the business requirements/plan. Do alot of homework first. Ask a lot of questions to others and yourself. Then prove it is economically feasible. This will generally tell you what you should install for the customer base you have or plan on growing into. Some amount of excess capacity is not a terrible path to start with. Adding capacity afterwards can be a challenge.

Once you are at the point of brewing more than 4-5 times a week or worse double brewing several of those days, you will really need more hands on deck to help out with other tasks in the brewery. Brewing is very labor intensive. Do you like working 16hr days Mon-Sun just to keep up?

As Micheal Lewis told us - do not design for failure. I now understand what he meant. Education at a very high cost.

Best,
Joe

[beauxman]

Ted is correct, it has been done and worked (Dogfish is a great example). My concern is that underfunded and severely undersized breweries have a very small chance of making it. It is a very risky way to start but possible. I called it a recipe for disaster more because it sounds like the owner really doesn't get it.

-Beaux

[Matt B]

That and I'm in a small town in the south. People around here think that beer is either evil or is budweiser. I'm not sure a brewery opened with zero debt could make it around here. (small town TN that is, others have and are making it in the larger towns)

[Matt B]

I think I'm going to tell the guy the next time he brings it up that he'll need to plan for at least $50k - $75k on the brewing equipment alone not including the setup and install. His plan was for me to brew part time on a weeknight or weekend after I get off work. If he thinks I'm working 8hrs at my primary job and then brewing for 6+ hours every day then he needs to just drop it.


...but then again, it's just beer. :D

[Neckbone]

What size restaurant are you talking about? If it's something like a 15-30 seat cafe style place, I don't see why you couldn't make a 20-30 gallon system work. You don't need to be known through town as a "brewpub", just a restaurant that has their own beer on tap.

It sounds like the owner doesn't expect to bring in too much money from the beer sales, he just wants it as a gimmick type thing. Give it a try. If it doesn't work out, the owner is out $10k, and he can still keep his restaurant open. If it does work, you'll just have to bust your a$$ keeping the kegs full on that small system.

[ECB]

Ted is right, there has to be a stronger commitment to the beer. Because if it's "just beer", at some point he may say "just forget it".

Tom

ECBC

[Matt B]

I really have no idea what size restaurant he has in mind. I'm not even sure he has gotten that far with the planning yet. But once he gets a plan and has that information I think the 4bbl to 8bbl per seat per year estimates will make deciding on the feasibility of this project much easier.

And as long as the beer is making money he'll keep the brewery portion running.

[beertje46]

Check out Power House (http://indianabeer.com/bars/columbusbar/columbusbar.html). Apparently they took a page from the DFH book. Make one really good beer, offer an intellegent selection of "guest" beers and make a go of it.

Realistically, on the scale that Matt B suggests and Powerhouse (DFH before them)brews, you'll find the inhouse, small scale brew costs at least double. The accounting term for this is Opportunity Cost. The question from an operational standpoint is; can I make beer of higher quality than I can buy with the investment I'm willing to make? On the scale Matt B offers the answer is usually no.

You can plug all of the ROI spreadsheets you want and the answer is generally the same.

[Indian]

I just finished, a few months ago, building your system with a capacity to brew 21 gallons / two 21 gallon refrigerated fermenters, thanks to all the people on this discussion group and various inter net cites. About $1500 - $1800 a year to build and its not sexy but works.

My motivations were:
1. Build a system to become a better brewer
2. Build a professional relationship with brewing suppliers, (I am an importer, read between the lines suppliers, if you want to get into our overseas market).
3. No real ale is made where I live, (it’s what I like to brew and drink, I have met others whom think the same, which I see as market potential).
4. I could not justify shipping costs of your proposal. The value of the equipment was only a fifth of the shipping cost.

In the interim I bottle condition using age to my advantage. The more inventories the better it gets. Until I can get my consistency under control I just test pilot and work through recipe formulations. My horse will come in because I noticed, “every home brewer, (all brewers for that matter) whom have gone pro went through (I can not afford it so I will have to do it myself thinking).

If I had to do it allover again I would…… do it all over again. Just a word of thanks to all the folks on this discussion board as my techniques are improving, now suppliers well….were is the love?

Build a system resturants come and go