The Next Wave in BC Craft Beer

It was just over three years ago when I started this blog out of frustration over the lack of craft beer coverage in the mainstream media – virtually none. In fact, they were reporting the decline of beer in favour of wine when I knew it was a generalization that completely overlooked the ferment that was happening in BC amongst the microbreweries and brewpubs. Clearly, the MSM had no idea, given their wine obsession. At the time, craft beer in Vancouver seemed like an underground subculture whose workings were known to a select few. I had started getting the word out through CAMRA Vancouver’s newsletter, but needed a means for discussing issues and covering events in more depth than e-mail. The B.C. Beer Blog was born.

SYWTOABP: Top 10 Takeaways

When I volunteered to write the “So you want to open a Brew Pub” blog post series, I had a rough idea of how many posts I was going to need to write, how much time I was going to have to spend researching costs and industry regulations, but in the end I probably spent a lot more time and energy on this series of posts than anyone expected. I tend to write lengthy rambling posts going into more detail than is necessary, so I often go back and rewrite the material into a short, snappy, Top 10 style list of key takeaways.

SYWTOABP: Industry Research

The So You Want to Open a Brew Pub series of blog postings is in the final stretch.  I realize I’ve done several posts on market research, but not a dedicated post to industry research.  What’s the difference you ask?  Well, I got asked that once and, basically, market research is investigating the people (businesses) who potentially would buy your product or service. Industry research is everything else: competitors, government regulations, suppliers, etc. 

A loyal reader would note we have covered government regulations and suppliers pretty thoroughly, and touched on direct competitors and less direct competition for people’s disposable income. What part of industry research have we neglected? For starters, what industry is a brew pub in?  If you answered brewing, you haven’t been paying close enough attention.  A brew pub is officially classified in the restaurant and food services industry. That is the industry most of my research and writing has focused on. However, some of the brew pubs in the province have had considerable success selling beer outside of their pub in kegs, bottles, and even cans.

The recent BC Business article on the craft brewing industry noted the success of Central City. They started making their beer available for purchase offsite. Now demand exceeds capacity, which isn’t a bad problem to have. Their rapid success isn’t unique. Several other BC craft brewers are noted as experiencing very healthy sales growth in the last few years. However, I have to caution anyone thinking of opening a brew pub that thinks Central City’s growth is the norm for new businesses in either food services or brewing. As Central City expands, less of their total revenue will come from retail sales at the brew pub and more will come from packaged product.  Selling bottles, kegs, and cans for consumption elsewhere is what the brewing industry is all about.

SYWTOABP: What Does a Brewmaster Do?

I was going to call this post “A Day in the Life of a Brew Pub Brewmaster“, but a more accurate description would be “Discussing Brewpubs with a Brewmaster Over Beers and a Burger”. Regardless of the title, I came away from my meeting with Claire Connolly, brewmaster at Big River Brew Pub, with good news and bad news. The good news is, so far, I’ve gotten a lot correct in this series of blog posts. The bad news? Opening a brew pub will probably cost more and take longer than you’ve estimated.

First of all, let me apologize again to Claire for not arriving on time and for being a bit hot, tired, flustered, etc. Hopefully, I still managed to find out the information I thought people would be most interested in and summarized our chat accurately. There were only five questions I wanted to get answered, but our discussions were expanded several times to talk about the BC beer industry as a whole. Perhaps, Rick will put some of those thoughts down. I will focus on passing on insider tips on running a brewpub and brewing beer at a sufficient scale to service a venue of 100-200 people.

SYWTOABP: Writing a Business Plan

This may not be the final post in the series, but writing a business plan is one of the key steps necessary to opening a brew pub or starting most any business.  You need the business plan to apply for financing or perhaps to secure a lease or even a key permit or license.  Writing a business plan is work.  A great amount of time can be spent refining a business plan and more business plans get written than get financed.

Writing an entire business plan was never a goal of this blog series, but providing some of the numbers, resources, and information that goes into a business plan was among the goals.  I found a pub business plan posted online that was made available for free, specifically to help others open a bar.  Brewing beer was not part of this business plan.  It is dated but with the exception of including brewing as part of the operations and brewmaster among the key staff it has all the major sections you can expect to see in the average business plan.

It is still available on the forum I found it, but I also put a copy on WordPress.com to ensure that it remains available as long as this blog is online. The numbers are mostly all there, but need to be revised and adapted for the new decade and British Columbia.  Part of that work was done by me in my big spreadsheet post.  I thought we should look at the major sections of an actual business plan and the information they should contain. Potential investors and funders will want answers and if you don’t even know the questions, you will look foolish in a key meeting that may determine the future of your dream.

You can’t anticipate every question, but the most important questions such as the experience of the team, the depth of the market and industry research, the veracity of the sales forecasts, the details of the startup costs, these can be researched and written up prior to any important meetings.

SYWTOABP: Spreadsheets

This is, perhaps, the least sexy topic of a decidedly unsexy series of blog postings about opening a brew pub in BC. However, if there is one thing that becomes readily apparent as time passes by, is what a disadvantage people are at in the business world if they can’t use Microsoft Office, particularly Excel. Relying exclusively on consultants, accountants, bookkeepers and bloggers to tell you which numbers are the most important to your business, is not a recipe for long-term success and will cost you money.  This isn’t just some blogger talking. This is advice that the authors of “The Knack” also try to hammer home.

Accounting isn’t rocket science.  It relies, for the most part, on simple addition and subtraction.  Time Value of Money calculations are a bit more work, but Excel has ‘wizards’ that probably can walk you through it by now.  This post isn’t about accounting. It isn’t even about the time value of money. It’s about taking the numbers you have and finding out the numbers you need to know.

SYWTOABP 7: How much does commercial brewing equipment cost?

Another unsexy post listing equipment and costs associated with opening a brew pub. Unless, of course, you have some sort of fetish for stainless steel, in which case, have I got some pictures and links for you!

Unlike when I priced out the equipment necessary for a commercial kitchen and a bar at the front of the house, I didn’t have to go through numerous online catalogs and price everything out individually.  Nor did I just bike down to the dominant vendor for musical equipment in the province. Nope, I was lucky in that when I reached out to suppliers of brew pub equipment, they actually got back to me with useful information.

BC already has a number of successful brew pubs. Vancouver and the surrounding area support many, but Victoria has far more per capita. As I always tell people, Victoria is the most British part of Canada. Outside of Victoria and Greater Vancouver, there are number of other brew pubs such as Longwood in Nanaimo. In fact, there are many brew pubs and craft breweries spread throughout the Pacific Northwest, AKA Cascadia. If you suspected there would be some specialty manufactures of brewing equipment also in this area, you’d be correct.

SYWTOABP 8: How much does it cost to have a stage in my pub?

I’ve been putting off doing this research for a long time, but also looked forward to it.  It was actually really easy to get a quote for audio & video equipment.  I went down to the big Long & McQuade store on Terminal Avenue where Jamie helped me out. Before we get to the list of equipment, the bigger problem in having live music at your establishment is neighbors, noise complaints, safety regulations, city bylaws, bureaucrats, promoters – even the artists themselves.  So in addition to adding another page to your spreadsheet and $10-15,000, minimum, to your startup costs, a stage for live music represents additional leg work and headaches.

SYWTOABP 6.5: More on market research and cashflows

This isn’t the post I wanted to write or at least planned to write this week.  The plan called for another dull list of equipment you (I) need to price out, this time for a commercial brewing operation of a size suitable for our hypothetical brew pub.  The post I wanted to write was something in my mind that I’ve dubbed “A day in the life of a brew pub brewmaster”. To that end, I’ve been beating the cyber bushes for a brew pub brewmaster who is willing to talk about their job and duties. That post, whatever number it ends up being, will happen before the series draws to a close.  I’ve been putting off doing the list of brewing equipment until after my little chat with a working brew pub brewmaster, which made sense, but has meant publishing delays…

SYWTOABP 6: How much does a commercial kitchen cost?

Another dry but necessary set of costs to estimate when planning to open a bar, is the equipment and construction necessary to install an efficient commercial kitchen.  Hopefully, I can both make this more interesting and less anal than my list of equipment I developed and priced for our fictitious brew pub. Now that I’m approximately half way through the process, I sort of wished I had selected a location, and made explicit the square footage and liquor license size.

I’m not a greedy man.  I think a liquor license for over 100 people but under 200 is large.  If I had a license like that and could just plop down a pub wherever I like, I would.  Alas, this series isn’t about what I want. It is being written for the benefit of the community of craft beer lovers in BC to, hopefully, take some of the guess work, and even the leg work, out of opening a pub, or in this case, a brew pub.

Many restaurants open and close every year in BC, so finding a location with some of this equipment installed or finding some of this equipment used isn’t hard.  Once again determining whether something is used but in extremely serviceable shape or whether something is going to need replacing very soon is a skill and a risk you take when purchasing used equipment.  It is my intention to price out new equipment.  But as I alluded to earlier I’m not sure what type of equipment this brew pub kitchen needs.  I’ve worked on quick service and cafe business plans several times.  I mentioned the W2 Cafe which should be opening next Friday, as an example of a real venue that I provided advice and expertise to.  Our proposed brew pub will need a much larger and full featured kitchen than was included in the W2 business plan, but does it have to have a deep fryer?  Are we specializing in Greek food?