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General Category => Going Pro => Topic started by: jmcamerlengo on May 30, 2012, 07:01:45 PM

Title: Some figures for opening a pub.
Post by: jmcamerlengo on May 30, 2012, 07:01:45 PM
So I am getting my business plan put together for the brewpub and wanted to run some numbers by you experienced folks to see if this sounds feasible.

The city I am planning on opening in has a population of about 16,000 people. The greater area(about 20 mile radius) has over a half million population.  There is a successful brewpub about 40 miles east of me that brews on a 10 bbl system and runs 11 taps year round. There is also a successful packaging brewery about 20 miles west from me. 

In my direct location(within 5 miles) there are 2 Italian resturaunts an AppleBees, an upscale place, a Japanese place, and all of your fast food joints. The area is growing with new business exponentially. I will be within 3 miles of 2 major interstates. There is also a shale boom by me that is expected to last for quite some time. It just started and businesses are just starting to move in. So i think now is the time.

My plan: A variety of burgers and sandwiches basically, healthy options such as wraps. Keeping the kitchen equipment minimal. If you're from the cleveland/pittsburgh area, think The Melt, Panini's, Primanti brothers type of menu.

For the brewery, I am thinking 7 bbl system. 2 week ale fermentations, 4 week lager fermentations. 75% ales, 25% lagers. 3-4 (7) bbl fermenters, and 2 (15) bbl fermenters.  I plan on having 8 beers on tap. 4 house beers, all of which are ales. 4 seasonal beers, 1 of which will always be a lager, and 1 of which will  be a high gravity or specialty beer, and the other 2 will be different ales.

Does this seem like a feasible startup plan? Should I start with less and expand? Cut the number of taps and fermenters down? Do I not have enough? Thanks!
Title: Re: Some figures for opening a pub.
Post by: boulderbrewer on May 31, 2012, 04:27:43 AM
You did not mention serving tanks alot of times that determines your size of fermentors, packaging anything? One thing I would ask do you want to own a restaurant? Maybe a package brewery and a tap house, limited kitchen(what you are thinking anway) or food trucks. Not trying to be critical but to get you thinking outside the brass and glass box.
Title: Re: Some figures for opening a pub.
Post by: jmcamerlengo on May 31, 2012, 05:19:32 PM
Their would be 8 (7) barrel serving tanks or so I'd think, unless a better recommendation comes along. I want to keg but only keg brews that need to sit and age for a while such as an imperial stout and possibly the lagers.

I do want to own a restaraunt. I have a good knack for food and menus. I don't want to cook in the pub, I would hire an experienced line cook, but I will be developing the menu for the most part, giving the cook some creativity and input as well if he desires. I think the area is starving for a place that has some variety.
Title: Re: Some figures for opening a pub.
Post by: kylekohlmorgen on May 31, 2012, 06:01:13 PM
The opportune word is "chef"...

We just lost a brewpub (remote location for a brewery) because they had average "bar" food. No matter how great the beer is... a brewpub is always a restaurant first, good bar second, brewery third.
Title: Re: Some figures for opening a pub.
Post by: jmcamerlengo on May 31, 2012, 06:12:07 PM
The opportune word is "chef"...

We just lost a brewpub (remote location for a brewery) because they had average "bar" food. No matter how great the beer is... a brewpub is always a restaurant first, good bar second, brewery third.

I agree 100%. I've been doing lots of homework on what people in the area are looking for, and what is successful elsewhere as well. I have a menu pretty much developed. I was a cook before I was a brewer and actually wanted to own a restaurant before I even started brewing.

Here's a teaser of the kind of stuff Im doing:

Lamb Burger with greek tzatziki sauce on a kaiser roll with fresh rosemary fries.
Reuben Burger with corned beef and kraut and homemade thousand island
Ancho chili rubbed chicken with beer BBQ sauce with fresh slaw, avocado, and applewood bacon sandwich with ancho fries.


you get the idea. I really want to keep it simple. Theres places nearby where you can go and drop 20 bucks per dish and get the big thick steak or nice pasta dish. I want the average plate to be 7-9bucks, but I want to avoid doing the run of the mill bar food that every other joint has. THis allows me to keep kitchen equipment minimal, and I can hire an experienced line cook to be the guy.  My inspiration for this came from "The Melt" in cleveland, oh.  All they serve is grilled cheese of different types, fries, slaw, soup and LOTS of great beer. Their is an hour wait at 3 pm on a Monday. All they have in the kitchen(its open) is a young kid, a flat top grill, 2 panini press, a regular ol' kitchen stove and some warmers for the soup. Thats it. The kitchen itself is ridiculously small and yet the operation is smooth, efficient and run by 1 person.
Title: Re: Some figures for opening a pub.
Post by: kylekohlmorgen on May 31, 2012, 06:37:24 PM
You're on the right track. That sounds delicious!

Keep expansion in mind, in the bar, restaurant, kitchen, brewery, etc. As you grow, can your place grow with it?

Try finding a line cook that might have some kitchen mgmt experience. They'll be able to help you manage your menu so you can put out what you want with minimal ingredients, all while keeping them fresh and keeping waste down.

Good luck!
Title: Re: Some figures for opening a pub.
Post by: jmcamerlengo on May 31, 2012, 06:42:15 PM
Thanks Kyle!
Title: Re: Some figures for opening a pub.
Post by: boulderbrewer on June 04, 2012, 04:29:36 AM
I would match my fermentors to serving tanks. Say you got two great beers and the rest soso. you brew 15 bbl of beer where do you put it in two tanks tying up a tap? Good Luck. I'm rooting for ya! You need any help just PM or ask it
Title: Re: Some figures for opening a pub.
Post by: jmcamerlengo on June 04, 2012, 02:50:36 PM
Thanks much boulder. That is good advice. I am looking at locations now. I found a warehouse right off the highway with 6000 sq ft of "naked" space. So Id have lots of room to do what I wanted inside. Also have a line on 1 year old restaurant equipment from a place that recently closed down.
Title: Re: Some figures for opening a pub.
Post by: nateo on June 04, 2012, 05:46:23 PM
If you're doing sandwiches, you'll have stale bread. Stale bread = awesome croutons. I can't imagine why more restaurants don't do that. I worked at a pretty remote restaurant where we had to bake our own bread, and we'd use the stale bread for french toast and croutons, so we hardly ever had to throw any away.
Title: Re: Some figures for opening a pub.
Post by: jmcamerlengo on June 04, 2012, 06:54:16 PM
If you're doing sandwiches, you'll have stale bread. Stale bread = awesome croutons. I can't imagine why more restaurants don't do that. I worked at a pretty remote restaurant where we had to bake our own bread, and we'd use the stale bread for french toast and croutons, so we hardly ever had to throw any away.

Absolutely agree! I do the same thing at home. May offer a bread pudding dessert made with yesterdays bread.
Title: Re: Some figures for opening a pub.
Post by: morticaixavier on June 04, 2012, 07:18:29 PM
If you're doing sandwiches, you'll have stale bread. Stale bread = awesome croutons. I can't imagine why more restaurants don't do that. I worked at a pretty remote restaurant where we had to bake our own bread, and we'd use the stale bread for french toast and croutons, so we hardly ever had to throw any away.

Absolutely agree! I do the same thing at home. May offer a bread pudding dessert made with yesterdays bread.

mmm bread pudding with cherry imperial stout caramel sauce.
Title: Re: Some figures for opening a pub.
Post by: jmcamerlengo on June 04, 2012, 07:19:38 PM
If you're doing sandwiches, you'll have stale bread. Stale bread = awesome croutons. I can't imagine why more restaurants don't do that. I worked at a pretty remote restaurant where we had to bake our own bread, and we'd use the stale bread for french toast and croutons, so we hardly ever had to throw any away.

Absolutely agree! I do the same thing at home. May offer a bread pudding dessert made with yesterdays bread.

mmm bread pudding with cherry imperial stout caramel sauce.

Now were talkin!
Title: Re: Some figures for opening a pub.
Post by: boulderbrewer on June 06, 2012, 03:38:32 AM
Don't underestimate the cost of filling the empty space with the restaurant and brewery. I would look at it as complete building and subtract 15% of that cost for your envelope. It is a SWAG but a good starting spot.
Title: Re: Some figures for opening a pub.
Post by: Jimmy K on June 22, 2012, 01:55:03 PM
Lamb Burger with greek tzatziki sauce on a kaiser roll with fresh rosemary fries.

I'd buy that - sounds great! Now I'm hungry
Title: Re: Some figures for opening a pub.
Post by: jmcamerlengo on June 26, 2012, 02:56:58 PM
Lamb Burger with greek tzatziki sauce on a kaiser roll with fresh rosemary fries.

I'd buy that - sounds great! Now I'm hungry

Thanks! Im hoping a lot of people feel that way.
Title: Re: Some figures for opening a pub.
Post by: morticaixavier on June 26, 2012, 03:05:41 PM
Don't forget spicey. spicey sells beer!

Customer1: Mmm, these rosemary and chilli fries go really well with this tzatziki burger!
Customer2: Yeah! spicey though!
Customer1: the IPA really cools the spice.
Customer2: right you are! Waiter!
Waiter: Can I help you?
Customer2: can we get another couple pitchers of the IPA?
Title: Re: Some figures for opening a pub.
Post by: jmcamerlengo on June 26, 2012, 03:20:54 PM
Mort, I am an ancho and chipolte freak! haha. And yes you are absolutely right about the spice :)
Title: Re: Some figures for opening a pub.
Post by: morticaixavier on June 26, 2012, 03:38:52 PM
every once in a while, when we are in NYC my wife takes me to the belgian bar she used to hang at in college. The Vole et nuit (Shrew of the night?) they do belgian style frittes and mussles and make their own dipping sauces. some of which are quite spicey. it's amazing how quickly you can get on top of a 9 percent tripple when eating chipotle ketchup and horseradish aoli
Title: Re: Some figures for opening a pub.
Post by: jmcamerlengo on June 26, 2012, 03:44:20 PM
every once in a while, when we are in NYC my wife takes me to the belgian bar she used to hang at in college. The Vole et nuit (Shrew of the night?) they do belgian style frittes and mussles and make their own dipping sauces. some of which are quite spicey. it's amazing how quickly you can get on top of a 9 percent tripple when eating chipotle ketchup and horseradish aoli

Ideas are swirling....
Title: Re: Some figures for opening a pub.
Post by: richardt on June 26, 2012, 05:49:53 PM
Plan for success. 

Space is going to be one of your biggest issues, IMO.
Just 6K sf?  You'll very likely need much more room than that in less than a year.
And that's just for brewing/tap room purposes.  You're also planning a restaurant and kitchen. 
Make sure you have room to build out or grow into more adjacent space.

Be sure to check out the "going pro" audio and presentations from NHC coming out within the next few weeks (AHA member only access) that address this issue as one of the biggest mistakes new brewers make.
Title: Re: Some figures for opening a pub.
Post by: jmcamerlengo on June 26, 2012, 05:52:06 PM
Plan for success. 

Space is going to be one of your biggest issues, IMO.
Just 6K sf?  You'll very likely need much more room than that in less than a year.
And that's just for brewing/tap room purposes.  You're also planning a restaurant and kitchen. 
Make sure you have room to build out or grow into more adjacent space.

Be sure to check out the "going pro" audio and presentations from NHC coming out within the next few weeks (AHA member only access) that address this issue as one of the biggest mistakes new brewers make.

Thats great to hear! I will check those out.
Title: Re: Some figures for opening a pub.
Post by: nateo on September 22, 2012, 07:42:56 PM
Don't go too crazy with space. It's better to have a small restaurant that's always packed than a large restaurant that's always empty.
Title: Re: Some figures for opening a pub.
Post by: Wheat_Brewer on October 01, 2012, 12:20:03 AM
So some quick math, this is much more of a question to you.

1BBL=248 pints (pre spillage)

7BBL=1736 pints

1736 x $5.00 (assumed cost per pint and that's a large assumption on my part)/pint = $8680 grossed

How fast do you think you can sell a 7BBL batch, and how often do you think you need to brew?
Title: Some figures for opening a pub.
Post by: mpietropaoli on October 01, 2012, 01:38:31 AM
Don't forget spicey. spicey sells beer!

Customer1: Mmm, these rosemary and chilli fries go really well with this tzatziki burger!
Customer2: Yeah! spicey though!
Customer1: the IPA really cools the spice.
Customer2: right you are! Waiter!
Waiter: Can I help you?
Customer2: can we get another couple pitchers of the IPA?

 I thought hop bitterness escalated/intensified spice?
Title: Re: Some figures for opening a pub.
Post by: nateo on October 01, 2012, 04:35:07 PM
1736 x $5.00 (assumed cost per pint and that's a large assumption on my part)/pint = $8680 grossed

How fast do you think you can sell a 7BBL batch, and how often do you think you need to brew?

I've seen about 10% quoted for losses due to transferring, spillage, etc. So something more reasonable would be like 1562 pints @ $5 = 7810, @$4 = 6248. You'd probably be spending about 5-10% of that on ingredients, depending on how strong of a beer you're making.

A $1m brewery flat-line depreciated over 20 years is still about $50k per year, assuming no salvage value. I'm not really sure how you'd account for the salvage value on brewing equipment and buildings. I'm not really sure how long those tanks and equipment last, either. So if the life on your equipment is less than that, you'll have a much larger expense.

So making about $5k a batch seems like a lot, until you start thinking about how much capital it takes to get to that point, and we haven't even touched on labor yet.
Title: Re: Some figures for opening a pub.
Post by: Jimmy K on October 08, 2012, 01:31:43 PM
I thought hop bitterness escalated/intensified spice?

I agree with you, but I know others who don't. To me, an IPA after eating chili peppers is like applying sand paper to my tongue.  I've been wondering if there is a difference in the way taste buds react among different people.
Title: Re: Some figures for opening a pub.
Post by: skyler on October 24, 2012, 03:57:40 PM
I eat very spicy food quite regularly and have a high tolerance for capsaicin, but for me hops have little to do with it. I find higher-alcohol beers to be the best for helping my tongue manage capsaicin. If that beer is hoppy, fine, but a tripel wil help as well as a big IPA for me.
Title: Re: Some figures for opening a pub.
Post by: nateo on November 04, 2012, 06:37:09 PM
I would need a lot more info about the recipes and real estate/rent/equipment prices to get an accurate cost estimate, but I would break the numbers down like this:

Revenue (units sold x $price)
less variable costs
= contribution margin
less fixed costs
= operating income

Most of your costs are going to be a mix of variable and fixed costs. Like utilities, if there's a flat connection fee (fixed) plus KwH used (variable), or wages if you need to give your cook enough hours that he won't find another job (fixed) plus overtime if you get busy (variable).

I would use linear programming to formulate the recipes and product mix. My gut tells me you'd end up losing money having 8 different beers on tap, but that's why you run the numbers to be sure. My gut also tells me you'd lose money making any amount of lager.

Once you have your contribution margin, it's easy to figure out your break-even point.

Break-even = [fixed expenses / Contribution margin ratio] (Contribution margin ratio is contribution margin / revenue)
Title: Re: Some figures for opening a pub.
Post by: tschmidlin on November 05, 2012, 07:20:41 AM
I would use linear programming to formulate the recipes and product mix. My gut tells me you'd end up losing money having 8 different beers on tap, but that's why you run the numbers to be sure. My gut also tells me you'd lose money making any amount of lager.
I don't see your logic here.  Having more beer on tap is likely to increase sales, not keep them flat.  People will try different things and come back more often if there is more variety.  If it is licensed for it, you can also have guest taps to make up the difference if you can't keep your product on.

There are a lot of variables that go into it obviously, but I would not advise anyone to open a pub with fewer than 8 taps.  I would probably suggest 16 or 20, with about half guest taps from other local-ish beers and possibly something like Rolling Rock or Yeungling depending on the expected demographic.  You want people to try your beer, but you have to get them in the door first.

You can cut down on the number of fermenters to save $$, but make sure the building and equipment can handle more so you can expand easily.  Unless you can get a good deal on used ones of course.  Make sure the glycol can handle it, the hoses are long enough, the walk in is big enough, etc.

Obviously there will be differences between markets, so look around at the local places and see what they have on tap and how many taps.  Around here it's weird if a place has BMC on tap, but in other places that's all you can find.  You've got to know the demo.  If most places don't serve craft beer they you'll need to spend a lot of time educating your customers and it will probably be best to have some familiar beers on tap for them.
Title: Re: Some figures for opening a pub.
Post by: nateo on November 05, 2012, 01:22:23 PM
More beer on tap doesn't necessarily increase sales. Especially if one of your beers has a high margin, and another you're breaking even on, you're cannibalizing profitable sales from yourself if they buy the less-profitable beer. The more beer you have (made or bought) the more cash you need upfront to pay for the beer or ingredients. Unless you have so much cash that cash flow doesn't matter, I would be very concerned about carrying too much inventory that doesn't move or isn't profitable enough.
Title: Re: Some figures for opening a pub.
Post by: tschmidlin on November 06, 2012, 07:21:42 AM
It's not about increasing beer sales necessarily, it is about increasing total sales.  It's a pub, and if people will sit longer trying different beers or come back more often to try the variety then they are more likely to buy some food too.  Adding a couple of taps in the build-out is way cheaper than adding them later.

But hey, that's what I would do.  His place, his decision.
Title: Re: Some figures for opening a pub.
Post by: nateo on November 06, 2012, 01:36:47 PM
Luckily, once we have an idea of what the costs are, we can use math to determine the optimal solution to maximize profit. Maybe 20, or 16 or 8 taps is the optimal solution. Without any numbers it's impossible to say definitively.
Title: Re: Some figures for opening a pub.
Post by: Thirsty_Monk on November 07, 2012, 01:49:28 AM
I agree with nateo. Less taps less inventory. To some extend.

It also depends on how much people you attract in your area.
We had a pub with 27 tap and they did pretty well. Then they added 13 more lines and they stopped to pay the bills. Sales were the same as with 27 taps just had to carry more inventory.
Title: Re: Some figures for opening a pub.
Post by: tschmidlin on November 07, 2012, 09:27:12 AM
Well, clearly there's a limit.  I don't know where that is though, I think it depends on the market.  There are places in my area with 160 taps that seem to be doing fine.  There are some with 60+ that are doing well, and the place I go most has 25+ taps (he just added 8 more) and is doing fine.  The local brewery (not a pub, just a production place with a taproom) has roughly 18 taps at two bars, so there is some duplication for now but when they open a new (and bigger) production facility I expect that will change.

Anyway, my point is I think it depends on the market.  I can't imagine a decent sized pub with fewer than 8 taps though, around here they all have more.
Title: Re: Some figures for opening a pub.
Post by: nateo on November 07, 2012, 02:48:43 PM
Here's an example of what I was talking about. You could use hundreds of constraints and variables if you wanted to, but to keep it simple I'll just use a few, and avoid sticky widgets like amortizing cost for equipment or multi-period inventory management, although you can include all of those and more in a more detailed analysis. This is an incredibly powerful tool for analyzing business decisions, and will give you an optimal solution, as well as identify the range in which the answer remains optimal if costs or demands change.

Let's say you run a 3bbl British brewpub.
You have $5000 cash at the beginning of the week in your beer budget.
You need at least 20 kegs of beer, but you never need more than 60 kegs per week.
The costs of brewing your beer, how much you sell it for per pint, and profit per keg:
mild - $40 / $3 / $320
stout - $50 / 4 / 430
IPA - $60 / 4 / 420
barley-wine - $90 / 5 / 510
The costs of beer you can buy
bitter for $70 / 3 / 290
ESB for $80 / 4 / 400
porter for $90 / 4 / 390
foreign stout for $100 / 5 / 500
(There are 120 pints per keg.)
No more than 1/4 of your sales volume will be from $5 pints, at least 1/3 of your sales volume will be from $3 pints.

You want to maximize profit:
Max: 320m + 430s + 420i + 510bw + 290b + 400e + 390p + 500fs

subject to the following constraints:
1) 40m + 50s + 60i + 90bw + 70b + 80e + 90p + 100fs <= $5000
2) m + s + i + bw + b + e + p + fs >= 20
3) m + s + i + bw + b + e + p + fs <= 60
4) (bw + fs) <= 0.25(m + s + i + bw + b + e + p + fs)
= 0.75bw + 0.75fs - 0.25m - 0.25s - 0.25i - 0.25b - 0.25e - 0.25p <= 0
5) (m + b) >= 0.33(m + s + i + bw + b + e + p + fs)
= 0.67m + 0.67b - 0.33s - 0.33i - 0.33i - 0.33bw - 0.33e - 0.33p - 0.33fs >= 0

The results tell us that the optimal solution is $24822 profit, from 20 kegs of mild, 25 kegs of stout, and 15 kegs of barleywine. It also tells you that for every keg of IPA you add, the profit decreases by $46. For every keg of bitter or esb, it'll decrease by $30, for porter $40, and for foreign stout $10.
Title: Re: Some figures for opening a pub.
Post by: anthony on November 07, 2012, 04:01:00 PM
For the math muggles like me, what did you use to solve that function?
Title: Re: Some figures for opening a pub.
Post by: nateo on November 07, 2012, 04:14:30 PM
My prof uses Management Scientist. That's the most "user friendly" program I've seen, but it's pretty pricey to buy new and hasn't been updated in a while (it won't work with Win 7). I found an old copy of the textbook with the software for under $10 on amazon (An Introduction to Management Science : Quantitative Approaches to Decision Making by Anderson and Sweeney). 

I have http://lpsolve.sourceforge.net/ (http://lpsolve.sourceforge.net/) at home. It's free, but it's a little more cumbersome to program. I've heard good things about GLPK, but I haven't used it.

If you're interested in this sort of thing, I'd recommend picking up a copy of the textbook. Formulating the problems isn't always intuitive, and the results would be incomprehensible if you're not sure what each parameter means.
Title: Re: Some figures for opening a pub.
Post by: nateo on November 07, 2012, 04:30:07 PM
I should add, so you don't need to do the math, that the binding constraint in that example is the demand (60 kegs). You'd only be using $3400 of your budget for the optimal solution, but you'd decrease your profit and increase your expenses if you need to pursue a sub-optimal solution.

For instance if you wanted to carry all 8 different beers. You could add constraints to make it so the program has to pick at least a certain number of each type of beer. Like m>=1, esb >=1, etc. But in this case, the program would select the minimum number of the other kegs it can, because they're less profitable.

If you have to buy kegs on a contract or something, like if you have to buy at least 5 kegs of bitter it'd be b>=5x, or b-5x>=0 where bx would be binary: zero if you buy zero, and 1 if you buy any non-zero amount.

If you have a tied-distribution, like if you want to buy a keg of ESB you have to buy a keg of bitter, it'd be esb = b, or esb - b = 0, because all of the programs I know of can't compute solutions with variable on the right-hand side of the equations.
Title: Re: Some figures for opening a pub.
Post by: narvin on November 07, 2012, 06:45:46 PM
So, that's all well and good, but the assumptions you're making are pretty big ones for a a local brew pub.   For example, that there's demand for that much mild.  Or that IPA won't bring in a bigger crowd to eat your food.

This isn't budweiser level distribution where you can calculate their exact demand for each product reliably. You can play with the math all you want, but the result is only going to be as good as your model.
Title: Re: Some figures for opening a pub.
Post by: nateo on November 07, 2012, 08:06:49 PM
So, that's all well and good, but the assumptions you're making are pretty big ones for a a local brew pub.   For example, that there's demand for that much mild.  Or that IPA won't bring in a bigger crowd to eat your food.

This isn't budweiser level distribution where you can calculate their exact demand for each product reliably. You can play with the math all you want, but the result is only going to be as good as your model.

Yeah, but the math will always be better than your gut feeling.

And like I said, you can include hundreds of variables if you want to. If you think your IPA sales will increase your food volume, you can include your food demand and margin, and assign a coefficient to food volume that's a function of IPA sales. You need to make some educated guesses, but you should be able to get in the ballpark.

We're talking about a business, right? And we want to make a profit at that business, maybe even enough to pay ourselves well?

You can run a business from your gut. I've done it. It was already a successful, established business, so I've succeeded despite my ignorance, but if you want to build something from scratch, I wouldn't recommend being as stupid as I was.
Title: Re: Some figures for opening a pub.
Post by: narvin on November 07, 2012, 08:34:09 PM
So, that's all well and good, but the assumptions you're making are pretty big ones for a a local brew pub.   For example, that there's demand for that much mild.  Or that IPA won't bring in a bigger crowd to eat your food.

This isn't budweiser level distribution where you can calculate their exact demand for each product reliably. You can play with the math all you want, but the result is only going to be as good as your model.

Yeah, but the math will always be better than your gut feeling.

And like I said, you can include hundreds of variables if you want to. If you think your IPA sales will increase your food volume, you can include your food demand and margin, and assign a coefficient to food volume that's a function of IPA sales. You need to make some educated guesses, but you should be able to get in the ballpark.

We're talking about a business, right? And we want to make a profit at that business, maybe even enough to pay ourselves well?

You can run a business from your gut. I've done it. It was already a successful, established business, so I've succeeded despite my ignorance, but if you want to build something from scratch, I wouldn't recommend being as stupid as I was.

Sure, "the math" is always better than your gut feeling at solving a specific problem, but what are you solving?  A problem that you set the parameters for based on your gut feeling.  I'd be much more inclined to look at sales data and use some simple math based on margins than to start from scratch by building a complex simulation of something as volatile as a small brewpub.  A tool is just a tool, and any tool can use the wrong tool for the job  :-*  I could tell you that you need differential equations and control theory to solve the true problem, which is creating demand, but that doesn't mean linear programming is "mathematically" incorrect.

Title: Re: Some figures for opening a pub.
Post by: nateo on November 07, 2012, 09:50:31 PM
The "specific problems" here are the presumptions that IPA sales increase food sales, and therefore net profit, or that having 30 beers on tap vs 20 beers increases beer sales, and therefore net profit. All I'm saying is there is a mathematical way to determine if those presumptions are true or not, and under what conditions they're true or false.
Title: Re: Some figures for opening a pub.
Post by: tschmidlin on November 08, 2012, 08:58:42 AM
I'm with Narvin on this one.  Your model may tell you what beers are most profitable, but my experience tells me that if you don't have at least one IPA on tap in this market you aren't going to sell as much beer.  You have to have an IPA here according to the pro brewers I know.  You don't make beers based on which make you the most money, you make beer based on what sells.
Title: Re: Some figures for opening a pub.
Post by: jeffy on November 08, 2012, 11:13:21 AM
I'm with Narvin on this one.  Your model may tell you what beers are most profitable, but my experience tells me that if you don't have at least one IPA on tap in this market you aren't going to sell as much beer.  You have to have an IPA here according to the pro brewers I know.  You don't make beers based on which make you the most money, you make beer based on what sells.

We went to Big Time this summer, where you are, and they had three of their own IPA's  on tap.
Title: Re: Some figures for opening a pub.
Post by: nateo on November 08, 2012, 01:34:30 PM
The example I showed was just a simple example to demonstrate the concept. If you have to have an IPA on tap, put that into the model, like IPA>=1, or 5 or 7, or whatever the demand for IPA is. The model will give you the optimal solution, and also the range of objective coefficients, so it will tell you the acceptable range for every variable, every coefficient, and every right-hand side value.

If anyone would like to learn more about how to use linear programming to solve business problems, like multi-period inventory management, distribution, staff scheduling, or pretty much any other problem, shoot me a PM and I'm happy to help.
Title: Re: Some figures for opening a pub.
Post by: onthekeg on January 06, 2013, 06:02:22 PM
If you are losing money on the IPA, you need to answer a couple questions:
1.  Is it a top seller?  If so adjust the pricing to make a profit.  Why only sell it for $4.00?  Go to 4.50 or 5.00!
2.  If it isn't selling, take it out.
Title: Re: Some figures for opening a pub.
Post by: Thirsty_Monk on January 06, 2013, 06:56:49 PM
If you are losing money on the IPA, you need to answer a couple questions:
1.  Is it a top seller?  If so adjust the pricing to make a profit.  Why only sell it for $4.00?  Go to 4.50 or 5.00!
2.  If it isn't selling, take it out.
Hey OnTheKeg. How are you doing. Did not see you for some time.
Title: Re: Some figures for opening a pub.
Post by: nateo on January 06, 2013, 07:15:26 PM
If you are losing money on the IPA, you need to answer a couple questions:
1.  Is it a top seller?  If so adjust the pricing to make a profit.  Why only sell it for $4.00?  Go to 4.50 or 5.00!
2.  If it isn't selling, take it out.

Exactly! That was my point, though I'm pretty sure I made it in the most long-winded way possible.
Title: Re: Some figures for opening a pub.
Post by: mikeroni on February 03, 2013, 08:10:09 PM
Just saw this post; I am a professional, college educated, and classically trained chef and homebrewer who is in the process of opening up my own place.  If you have never worked in restaurant and have no idea the beast that they really are you have no business being in them.  It takes a lot more than cash to open a brew pub, you need to know everything there is about cooking, kitchen equipment, pricing, staffing, health codes, fire codes, POS systems, plates, silverware, dishwashers, to go containers, booths, seats, how to talk and negotiate with vendors, how to know when your vendors are screwing you on case of lemons, and we didn’t even scratch the surface of the rest of the kitchen, front of the house, or brewing.
Title: Re: Some figures for opening a pub.
Post by: nateo on February 03, 2013, 08:15:57 PM
If you have never worked in restaurant and have no idea the beast that they really are you have no business being in them. 

I agree in principle, although I'd say if you don't know, you need to be able to hire someone who does, or find a business partner who does. Or, you need to be able to learn it before you run your business into the ground. (That last one is what we did with our business, but I don't recommend doing that if you can help it)

And anyway, most people are kinda dumb and bad at their jobs, so I don't know how big of a liability being ignorant really is. If only smart, capable people had jobs or owned businesses, the unemployment rate would be 90% and almost no one would own a small business.