Data provided here comes from our team of experts who have been working on business plan for a brewpub. Furthermore, an industry specialist has reviewed and approved the final article.
Are brewpubs profitable, and what is the typical monthly income for brewpub owners?Let's check together.
Revenue metrics of a brewpub
How does a brewpub makes money?
A brewpub makes money by selling food and drinks.
What are the common products sold in brewpubs?
Brewpubs typically offer a variety of products centered around craft beer and a cozy dining experience.
These establishments commonly sell a range of their own freshly brewed beers, often crafted on-site, encompassing diverse styles such as ales, lagers, stouts, and IPAs. These beers are often available in various sizes like pints, flights, or even growlers for take-home enjoyment.
Alongside the beer selection, brewpubs often serve complementary food items, such as burgers, sandwiches, pizzas, appetizers, and sometimes even more upscale dishes, all designed to pair well with their beers.
The goal is to provide a harmonious blend of quality beer and delicious food, creating a unique social setting where patrons can enjoy the flavors and craftsmanship of both the beverages and the culinary offerings.
This combination of handcrafted beers and thoughtfully curated food makes brewpubs a popular destination for individuals seeking a complete and enjoyable sensory experience.
What about the prices?
A brewpub typically offers a range of items on its menu, each with its own price point.
The prices can vary based on factors such as location, quality, portion size, and local market trends. Generally, a brewpub's menu can include various types of craft beers, often priced around $5 to $10 per glass or pint.
Appetizers like pretzels, nachos, or wings might range from $8 to $15, while main dishes like burgers, sandwiches, or salads could fall within the $10 to $20 range.
More elaborate entrees, such as steak or seafood, might be priced between $20 and $30. Specialty or seasonal items could have higher prices, reaching up to $40 or more.
| Item | Price Range ($) |
|---|---|
| Craft Beers | $5 - $10 per glass |
| Appetizers | $8 - $15 |
| Main Dishes | $10 - $20 |
| Elaborate Entrees | $20 - $30 |
| Specialty/Seasonal Items | Up to $40+ |
Who are the customers of a brewpub?
Brewpubs typically serve a variety of customers including beer enthusiasts, social drinkers, and food connoisseurs.
Which segments?
We've prepared a lot of business plans for this type of project. Here are the common customer segments.
| Customer Segment | Description | Preferences | How to Find Them |
|---|---|---|---|
| Beer Enthusiasts | Passionate about craft beer, seeking unique and flavorful brews. | Exploring diverse beer styles, trying limited releases. | Beer festivals, online beer communities, local events. |
| Foodies | Interested in gourmet food pairings with craft beers. | Enjoying beer and food pairing menus, exploring new flavors. | Food and drink pairing events, food blogs, social media. |
| College Students | Looking for affordable and social hangout spots. | Reasonably priced beers, lively atmosphere, fun activities. | College campuses, student discounts, social media. |
| Local Residents | Supporting local businesses, seeking community gathering places. | Connecting with neighbors, enjoying familiar brews. | Neighborhood events, community newsletters, local advertising. |
| Tourists | Exploring the city, interested in trying local flavors. | Sampling local brews, experiencing the local culture. | Tourist information centers, city guides, travel websites. |
How much they spend?
In our detailed brewpub business analysis, we find that patrons generally spend between $20 to $50 per visit. This spending includes purchases of craft beers, meals, and occasionally merchandise. The frequency of visits tends to fluctuate based on several factors including seasonal events, personal habits, and local demographics.
Customer patterns indicate that the average brewpub enthusiast visits around 2 to 4 times a month. This varies significantly with regular locals visiting more frequently than occasional patrons who might drop in primarily during special events or weekends.
By projecting these figures over a year, considering a bit of fluctuation, the estimated lifetime value of a brewpub's average customer would range from $480 (2x20x12) to $2400 (4x50x12), factoring in both the casual visitors and the dedicated regulars.
With all these considerations, we can reasonably assert that an average customer contributes approximately $1200 annually in revenue to a brewpub. This calculation is pivotal in strategizing marketing, customer loyalty programs, and daily operations planning.
(Disclaimer: the figures mentioned above are broad averages and may not precisely reflect specific circumstances or local market conditions for your brewpub. Detailed assessments and market research are recommended for accurate financial planning.)
Which type(s) of customer(s) to target?
It's something to have in mind when you're writing the business plan for your brewpub.
The most profitable customers for a brewpub typically fall into the category of craft beer enthusiasts.
These customers tend to be knowledgeable about different beer styles and are willing to pay a premium for high-quality, unique brews. They are the most profitable because they often order a variety of beers, try new releases, and frequently visit the brewpub.
To target and attract them, the brewpub can host events such as beer tastings, brewery tours, and beer-pairing dinners, which appeal to their passion for craft beer. Additionally, marketing efforts on social media and local beer forums can help create buzz and attract this audience.
To retain them, the brewpub should focus on consistent quality and innovation in brewing, offering loyalty programs or memberships with exclusive benefits like early access to new releases, and maintaining a welcoming and knowledgeable staff that can engage in beer-related discussions and recommendations, fostering a sense of community and loyalty among craft beer enthusiasts.
What is the average revenue of a brewpub?
The average monthly revenue for a brewpub can range significantly, typically falling between $5,000 and $50,000. Let's delve deeper into specific scenarios to understand this variation.
You can also estimate your own revenue under different assumptions using a financial plan tailored for a brewpub business.
Case 1: A quaint little brewpub in a small town
Average monthly revenue: $5,000
This type of brewpub is usually a cozy, small-scale establishment found in a rural area or small town, serving a limited selection of locally brewed beers. It doesn't cater to a large crowd, with a capacity to serve perhaps 50-100 customers per day.
The quaint brewpub might not have a wide variety of beers or a comprehensive food menu, and its customer base is likely more localized. The lower foot traffic and sales volume reflect on its revenue.
Assuming an average expenditure of $5 per customer and around 30 customers a day, the estimated monthly revenue for this kind of brewpub would be about $5,000.
Case 2: A popular brewpub in the urban downtown
Average monthly revenue: $25,000
This brewpub is situated in a busy urban area, attracting both city dwellers and tourists. With its strategic location, it can serve hundreds of customers each day. This establishment prides itself on a diverse range of house-made beers and a robust menu featuring compatible culinary delights.
Unlike the small-town brewpub, this one is positioned to attract more patrons due to its urban locale, variety in offerings, and the unique experience it provides. It might also host live events or themed nights, further enhancing its appeal.
With customers likely spending an average of $20 each, and assuming around 200 daily customers, a popular urban brewpub like this could easily generate an average monthly revenue of $25,000.
Case 3: A cutting-edge brewpub with exclusive brews
Average monthly revenue: $50,000
This brewpub represents the upper echelon of the brewpub sector, often situated in a high-end neighborhood or a trendy part of the city. It is renowned for its exclusive, premium-quality brews, gourmet menu, and often an immersive experience with brewery tours or tasting events.
This type of brewpub attracts beer connoisseurs and individuals who are willing to spend more for premium craft beers and a unique gastronomic experience. It's not just a place to dine and drink; it's a destination.
In addition to revenue from on-premises sales, this type of brewpub might also distribute its beers to local establishments or sell merchandise, adding to its revenue streams.
Given the upscale nature and pricing, if we consider an average spend of $50 per customer, with around 300 customers per day, this top-tier brewpub stands to bring in a hefty monthly revenue of $50,000.
The profitability metrics of a brewpub
What are the expenses of a brewpub?
Brewpub expenses encompass brewing equipment, ingredients, facility rent or lease payments, staff wages, and marketing efforts.
| Category | Examples of Expenses | Average Monthly Cost (Range in $) | Tips to Reduce Expenses |
|---|---|---|---|
| Rent and Utilities | Rent for the pub space, electricity, water, gas | $3,000 - $10,000 | Consider a smaller location, negotiate rent, use energy-efficient equipment |
| Inventory | Cost of brewing ingredients, kegs, and other supplies | $5,000 - $15,000 | Optimize inventory management, negotiate bulk discounts with suppliers |
| Employee Wages | Salaries and wages for bartenders, brewers, and kitchen staff | $3,000 - $8,000 | Cross-train employees, hire part-time or seasonal help as needed |
| Marketing and Promotion | Advertising, promotional events, social media ads | $500 - $2,500 | Focus on cost-effective marketing, utilize social media and word-of-mouth |
| Liquor License | Cost of acquiring and renewing the liquor license | $500 - $1,000 | Ensure compliance to avoid fines and penalties |
| Equipment and Maintenance | Brewing equipment, kitchen appliances, maintenance | $1,000 - $3,000 | Buy used equipment, perform regular maintenance to extend equipment life |
| Food Costs | Ingredients for the kitchen, kitchen staff salaries | $2,000 - $6,000 | Optimize menu pricing and control portion sizes |
| Insurance | General liability, property insurance | $100 - $300 | Shop around for competitive insurance rates |
| Entertainment | Live music, games, and entertainment expenses | $500 - $2,000 | Host entertainment on select nights, negotiate rates with performers |
| Accounting and Legal Fees | Accounting services, legal consultations | $100 - $500 | Use accounting software, seek legal advice when necessary |
| Miscellaneous | Cleaning supplies, office supplies | $100 - $300 | Buy in bulk, consider eco-friendly options |
| Contingency | Emergency fund for unexpected expenses | $500 - $1,000 | Plan for unexpected costs to avoid financial strain |
When is a a brewpub profitable?
The breakevenpoint
A brewpub becomes profitable when its total revenue exceeds its total fixed costs.
In simpler terms, it starts making a profit when the money it earns from selling crafted beers, meals, and possibly merchandise exceeds the expenses it incurs for rent, brewing equipment, ingredients, salaries, and other operating costs.
This means that the brewpub has reached a point where it covers all its fixed expenses and starts generating income; this is known as the breakeven point.
Consider an example of a brewpub where the monthly fixed costs typically amount to approximately $25,000.
A rough estimate for the breakeven point of a brewpub would then be around $25,000 (since it's the total fixed cost to cover), or selling between 2,500 and 5,000 pints per month, assuming the price per pint ranges from $5 to $10. This does not take into account additional revenue from food sales, which can significantly contribute to total earnings.
It's important to understand that this indicator can vary widely depending on factors such as location, size, pricing, operational costs, and competition. A large, well-situated brewpub might have a higher breakeven point than a small one tucked away in a side street, as it might face higher costs due to a prime location and greater seating capacity, hence requiring more revenue to cover their expenses.
Curious about the profitability of your brewpub? Try out our user-friendly financial plan crafted for brewpubs. Simply input your own assumptions, and it will help you calculate the amount you need to earn in order to run a profitable business.
Biggest threats to profitability
The biggest threats to profitability for a brewpub can stem from several key factors.
First and foremost, rising operational costs, such as ingredients, labor, and rent, can eat into profits, especially if the brewpub cannot efficiently manage these expenses.
Additionally, fluctuating customer demand and competition from other local breweries or bars can impact sales and market share.
Poor customer service or quality control issues can lead to a decline in patronage and reputation, harming profitability in the long run.
Regulatory compliance and licensing challenges may also pose financial risks, as non-compliance can result in fines or closure.
Lastly, economic downturns or unforeseen events, like the COVID-19 pandemic, can severely disrupt business operations, further threatening profitability if the brewpub lacks financial reserves or a solid contingency plan.
These threats are often included in the SWOT analysis for a brewpub.
What are the margins of a brewpub?
Gross margins and net margins are financial metrics used to determine the profitability of a brewpub business.
The gross margin is the difference between the revenue earned from selling crafted beers, meals, and possibly merchandise, and the direct costs related to producing and providing those items.
Essentially, it's the profit remaining after deducting the costs directly related to creating and serving the brewpub's products, such as ingredients, brewing process costs, staff wages, and utilities for the brewing facilities.
The net margin, however, encompasses all expenses the brewpub incurs, including indirect costs such as administrative expenses, marketing, rent, and regulatory fees.
Net margin delivers a comprehensive view of the brewpub's profitability, reflecting both direct and indirect costs.
Gross margins
Brewpubs typically have an average gross margin ranging from 60% to 70%.
For instance, if your brewpub generates $20,000 per month, your gross profit would be roughly 65% x $20,000 = $13,000.
Let's illustrate this with an example:
Consider a brewpub that sells 1,000 pints of craft beer in a month, with each pint priced at $6, making the total revenue $6,000.
However, the brewpub incurs costs for ingredients, brewing, staff, and utilities.
If these costs amount to $2,400, the brewpub's gross profit would be $6,000 - $2,400 = $3,600.
Consequently, the gross margin for the brewpub would be $3,600 / $6,000 = 60%.
Net margins
Brewpubs generally achieve an average net margin ranging from 5% to 15%.
In simpler terms, if your brewpub's revenue stands at $20,000 per month, your net profit might be around $2,000, equating to 10% of the total revenue.
We can use the previous example for consistency:
If our brewpub sells 1,000 pints at $6 each, the total revenue is $6,000.
The direct costs, as we calculated, come to $2,400.
Moreover, the brewpub bears additional indirect costs such as promotional activities, administrative tasks, permits, insurance, and property rental. Assuming these total $2,800.
Subtracting all the direct and indirect costs, the brewpub's net profit is $6,000 - $2,400 - $2,800 = $800.
Thus, the net margin for the brewpub would be $800 divided by $6,000, resulting in approximately 13.33%.
As a brewpub owner, it's crucial to recognize that the net margin (in contrast to the gross margin) offers a more accurate insight into your business's actual earnings because it accounts for all operational costs and expenses.
At the end, how much can you make as a brewpub owner?
Now you understand that the net margin is the key indicator to determine whether your brewpub is profitable. Essentially, it reveals how much profit remains after covering all operating expenses.
The amount you earn significantly depends on your execution quality, strategic planning, and customer service.
Unsuccessful brewpub owner
Makes $2,000 per month
Imagine you start a small brewpub but make decisions that do not support long-term success, like offering a very limited beer selection, minimal engagement with customers, neglecting ambiance, and not diversifying your menu. Your total revenue might stagnate at about $10,000.
If you fail to manage your expenses wisely, possibly due to high waste, poor inventory management, or overstaffing, your net margin might not exceed 20%.
Under these circumstances, your monthly earnings would be roughly $2,000 (20% of $10,000), putting your business in a vulnerable position.
Average brewpub owner
Makes $7,500 per month
Now, if you open a standard brewpub with a decent variety of beers and a satisfactory menu, engage somewhat with your community, and maintain a pleasant environment, your total revenue could climb to $40,000.
By keeping an eye on your costs—through decent supply chain management, moderate marketing, and energy-efficient practices—you could potentially achieve a net margin around 25%.
Therefore, in this mid-range scenario, your monthly earnings would be around $7,500 (25% of $30,000).
Outstanding brewpub owner
Makes $50,000 per month
As an owner who goes the extra mile, you understand the value of a diverse and unique beer selection, excellent food pairings, frequent event hosting, active community engagement, and a top-tier customer experience.
With an outstanding brewpub, you could significantly increase foot traffic and customer loyalty, potentially driving your total revenue upwards of $200,000.
You know that meticulous financial oversight, strategic partnerships, and preventive maintenance reduce unnecessary expenses, allowing you to achieve an impressive net margin of 40%.
For the exceptional brewpub owner, this would translate to monthly earnings of approximately $50,000 (40% of $125,000).
We hope this inspires you to strive for excellence in your brewpub venture! Remember, achieving outstanding performance begins with a comprehensive and forward-thinking business plan for your establishment.