So You Want to Open a Brew Pub
Given the recent surge in the popularity of craft beer in BC, we’re beginning to see some new brewpubs and cottage breweries opening up. Therefore, it is timely that our newest B.C. Beer Blog contributor, Muskie McKay, will take a look at what’s needed to open a brew pub in the province. Please give Muskie a warm welcome. And if you are interested in starting a new venture, he may just be the person to hire to help you get a start on the right foot.
This will be the first in a series of postings dealing with the challenges and issues facing anyone who wants to open a brew pub in BC. This series will deal with legal requirements, costs, equipment, training, as well as more general problems facing all would be entrepreneurs. I’ve lived all over BC, Canada, and abroad, so I’ve had the opportunity to sample a lot of different beers. Nevertheless, I want this series to be very practical and very local, so all the laws discussed will be those facing British Columbians. All the costs and estimates will be in Canadian dollars. I’ve helped people open a number of restaurants and cafes, but I’ve never worked on the business plan for a brew pub. I do have an MBA specializing in entrepreneurship, if that makes anything I have to say more relevant.
Opening a pub, especially a brew pub, isn’t like opening a cafe or other retail establishment. You really are reliant on acquiring certain licenses and permits before you can open your doors or brew any beer. So this first post will deal with BC liquor laws as well as touch on zoning and land use. Not the sexiest topic, I know, so hopefully you’ll stick with me, as I’ll have some lighter posts interviewing existing brew pub owners. One more note before I get into the details of the current legal requirements to open a brew pub in BC. If you do any Googling on opening a bar, or you go to your local library or book store, you’re likely to come across two sources. The unfortunately titled The Complete Idiot’s Guide to Starting and Running a Bar and Entrepreneur Magazine‘s Step By Step Guide to Opening a Bar/Club. I own both and neither has all the answers. Both are very much geared towards Americans. If you really want to read a book about starting a business, I recommend The Art of the Start by Guy Kawasaki.
Now with that out of the way, to open a brew pub in BC you will need to apply to the Liquor Control and Licensing Board. The specific license you need is a Manufactures License. To do this, you need to fill out the following forms: LCLB014, LCLB004, and RCMP GRC3584. But wait, there is more:
When applying for a liquor manufacturing license, a business plan, including financial statements outlining production and sales forecasts for a three year period, must be submitted.
I’m not going to write your business plan for you, nor do your complete financial statements or forecasts. You need to know these things yourself, inside out. You need to be well aware of your costs, operating margins, and cashflows. The three books linked to above will help and I’ll provide additional links and recommendations as this series goes on. Additional requirements to open a brew pub in BC include:
- Being 19 years of age or older
- Be a Canadian Citizen or Permanent Resident
- Have a Federal Excise Tax licence and tax number (in the same name as the one you supply on your liquor licence application).
- Two large copies of your floor plans of your proposed manufacturing facility – drawn to scale, and one smaller copy reduced to 8 1/2″ X 11″.
- Permission from the local fire inspector, which requires you to find a location, negotiate a lease, ensure it is zoned properly, consult local government officials, and choose a legal structure.
- Additional forms and information for the LCB, based on the legal structure you choose.
- $550.00 application fee
You probably need to talk to the local planning department, business licensing board, and local building authorities while working on your LCB application. Turned off from opening a Brew Pub yet? I haven’t even told you how much it will cost! That is something we will look at in more detail in future postings. In the meantime, here are some links to additional useful information:
- Brewers Association of Canada
- How to start a brewery in 1 million steps
- From Dreams to Reality: A brewpub feasibility study
- Small Business BC
UPDATE: Bar Ownership comes to Reality Television
While visiting my mom, I got to watch some TV. I don’t have cablevision in my apartment and haven’t for years. One TV show I stumbled upon is “Bar Rescue” hosted by Jon Taffer. It is new and on Spike. It is the restaurant makeover of the bar and pub industry.
One tidbit they throw out was the average bar should cost $200,000 to open, but they haven’t been to average sized bars (IMHO) in the two episodes I’ve seen. One bar seated 210 people in the Riverwalk district of Chicago. It got renamed “The Local“. The other bar was also in Chicago and it was even bigger, The Abbey. Neither was a brew pub, but the Local was switched to an all local craft beer menu.
Here are some links I’ve collected about the show and the host:
- From Mess to Success: Spike TV Readies Bar Rescue Reality Show
- No Holds Barred: Jon Taffer Tells Us What’s on Tap for Season One of Spike’s Bar Rescue
- Q & A with Bar Rescue’s Jon Taffer: “Everything is to Make Money”
- Jon Taffer Gives the Lowdown on His New Spike TV Show ‘Bar Rescue’
I liked the show, but I also liked what he has to say about the business of running a bar online and presumably in person. The show is obviously edited to make it better television not teach people about bar management or entrepreneurship. His top three tips to anyone running any business are:
- Have sufficient capital.
- Know your numbers.
- Get serious about marketing.
If you’ve read some of the posts in this series already you’ll notice: a lot of spreadsheets estimating cash flows, a lot of admonishments to know your important numbers yourself not rely on consultants let alone bloggers, and considerable effort spent explaining the importance of market research and how it is used to forecast your sales and plan your business. So it is is good that one of the industries experts says the exact same thing.
Why aren’t there more brewpubs in Vancouver? In short because real estate prices are high and liquor primary licenses are heavily regulated and the time and money necessary to get permission to open a brewpub dissuades most people from even attempting it. I tried to make this series as general as possible so avoided local restrictions and real estate financing as topics, but learning about both may be necessary to open a brewpub in Vancouver or elsewhere in BC.
Not all brew pubs are successful. Spending too large a portion of your capital on renovations and tenant improvements sinks many entrepreneurs. Failure to have enough funds on hand to see you through opening to cashflow positive is another challenge many underestimate. And in this business taste and service matter, so here is a cautionary tale of a brewpub that did not succeed. Location and market size matter, my speculation that the Comox Valley would prove sufficient to support craft beer done on a small scale was proven correct. I hope more people read this series, $1.9 million dollars is a lot to sink into any business “for the purchase and rehab of the large former antiques warehouse”.