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Brewpub disadvantages

IMG_0996 (400x267) (200x200)Last week I talked about some of the benefits of owning a brewpub. To make this dream of mine a reality I also need to address the drawbacks of a brewpub as well. Granted I am no expert in any of this, I am purely posting my thoughts and what I am able to see, so if you have more suggestions please let me know. There are a number of disadvantages to owning and operating a brewpub vs. a brewery. Some may seem small and insignificant but they all add up to something that matters.

The first disadvantage that I am able to find is that you have a much more limited audience. A brewpub can realistically pull people from a radius of about 20-30 miles at a maximum. While I have personally traveled much greater distances to get to a good brewpub, that is not what the average consumer will do. A brewery can distribute in a large area and be in many places at once whereas a brewpub can only be in one spot. The advertising, marketing, and branding have to be completely different in order to bring in a crowd. I also believe that a brewpub must advertise to help stay alive, while most craft breweries do little if any advertising.

Another disadvantage is that a brewpub cannot focus only on beer. While the beer provides a nice profit margin and an additional source of income, food is more important. Nobody goes to a restaurant that doesn’t have good food. The restaurant market is much larger than the brewpub market, therefore food has to be exceedingly important. Customers can go to a number of restaurants to get food (and a commercial beer) if that is what they are looking for. So everything from beer to food needs to be quality as consumers have a number of choices.

The third disadvantage is that you are not just running a brewery. There are a lot of other factors to think about and be worried about while running a brewpub. A whole extra list of expenses comes into the mix as well. No longer do you have to worry about brewery equipment, you also have kitchen, bar, and restaurant items that need to be addressed. A brewery has no need for a flat-top cooker or bar stools or booths, but a brewpub certainly does. The decorum also needs to be more dressed up than what a brewery has. A brewery, while magical to most of us, is an industrial facility that makes a product. A brewpub is a commercial product that makes a product(s) and delivers an experience. You also have additional staff that need to be qualified for the job and trained on beer knowledge, service, and a number of other things.

The final disadvantage does along with the theme of a brewery being industrial and a brewpub being commercial. Breweries can lease space in places that don’t get a lot of foot traffic because they are not looking for traffic, they are looking to produce and distribute beer. A brewpub has to lease in a place with high foot traffic, ample parking, and be in a desirable location. Needless to say, rent is much higher in a brewpub than what a brewery would ever be.

Let me know if I missed anything when analyzing the disadvantages of owning a brewpub in comparison with a brewery. Thanks for reading and I will be back soon with more ideas for my brewpub.

Brewpub benefits

Ever since make my initial post on my brewery or brewpub last week I been bouncing ideas around in my head like crazy. I have a bunch of them written down, even the ones that I know are unrealistic or totally unobtainable. I’ve gotten into the habit of writing everything in my head down lately. It might stem from a product design class that I had in college where we were encouraged to embrace the crazy. During that class we read a bunch of books about the product design process and how ideas develop over time. Like the first computer mouse was made from a butter tray and a deodorant ball. Sounds crazy, but it did wonders to improve the functionality of a computer and today how many of us could operate without a mouse?

So with that said, I have a notebook that is getting ideas jotted down in it whenever an idea pops into my head. The more I think about a brewery or brewpub the more I lean towards a brewpub. While I have no experience in the restaurant business, I have worked in a kitchen off and on for eight or so years. Does that really mean anything, probably not but I have an understanding of what it takes to run a kitchen efficiently and cost effectively. Going the brewpub route gives me a few more options. First there is an added benefit of having an additional source of income in the food sector. While profit margins are usually around the 3-5% range on food, it is additional income that a brewery only would not have.

The second benefit is that a bottling line and some of the other “finishing” products that are needed in a brewery are not needed for a brewpub. Basically you need your brewing, fermenting, and serving equipment and it is ready to go. The cost of  brewpub sized brewery equipment is also slightly less since the volume of beer made is so much less. Another benefit is that you have a built in tasting panel on premises. Each customer can provide valuable information that might not be possible with a production brewery since most all of the product’s tasting is done off site. You also do not have to worry about distribution. The final benefit that I see is that you have a much better chance of developing loyal customer who keep coming back. Having access to the brewer and seeing where the beer is made can be huge selling points. There is also more opportunity to market directly to repeat customers and build brand loyalty.

I guess this would be following the Dogfish Head model since they essentially started as a brewpub and used it to finance the main brewery. Growing up in the Philadelphia area and going to college roughly around the same area also allowed me to see what successful brewpubs can look like and get an idea of how to differentiate my perspective brewpub. There are multiple brewpubs and even brewpub chains in the area. Iron Hill Brewery appears to be the most successful as they have multiple locations (eight to be exact) and have built a strong membership of mug club members and repeat guests. There is room in that particular market for more brewpubs and ones that fit a different mold than IHB.

Granted, I am still in Texas so the Philadelphia market is kind of off limits for right now. Lubbock, Texas, where I am sadly, currently at, has a huge potential for a quality brewpub as the only one in town focuses on food and not beer. Too bad I hate it here and cannot wait to leave this summer. Where was I, O that’s right, the brewpub idea. I think I want to pursue developing a brewpub more than a production brewery right now. The next question is location, equipment, how big, and a billion and one other things that need to be sorted out. Thanks for reading and let me know if you have any other benefits to going the brewpub route or reasons why a production brewery would be better. I’ll post about the disadvantages sometime later this week or next.