Let’s say you love beer. Not only do you love beer, but you want to make beer yourself. Maybe you’ve done homebrews before and now you want to share your beer with the world on a grander scale. Why not work on starting a brewery? Getting a brewery off the ground is basically like starting up a bar or pub, right?
While they often get lumped in with bars and pubs, breweries are far more complicated because they’re essentially two businesses — breweries are both a front end bar (and potential restaurant) and an alcohol manufacturer/supplier. Making beer for sale on site comes with a variety of obstacles and complications that go far beyond the regular issues in the restaurant industry.
While this is by far not an exhaustive list, below are seven things to consider when starting a brewery.
1. Work for a brewery first.
There is so much to owning and running a beer-making company, even if it’s a microbrewery. You really want to get to know the trade of commercial beermaking and get your foundation in place. To start off from scratch with no prior experience will mean you’re bound to miss details that someone with more experience would see coming. Even if you’ve developed successful home brews before, really consider apprenticing with an established brewery before putting your money (and possibly borrowing or financing with someone else’s, as well) into the very expensive brand new business of starting a brewery.
2. Get the right equipment for starting a brewery.
Speaking of expensive, be prepared to spend a lot of money on your equipment well before you start making beer. Even when bought used, a smaller, 31-gallon barrel brewing equipment system can cost up to $100,000. If you’re looking for a newer and larger system, you could be looking at spending up to one million dollars on starting a brewery.
And be aware the equipment you’ll absolutely need for your brewery goes beyond the kettle and kegs. You’ll also need:
- A cooling system
- Storage and fermentation tanks
- And some form of refrigeration equipment
Beyond those items, you’ll also need specialized cleaning equipment, a waste treatment system, and tap handles. If you plan to bottle or can your product (which can become a major profit resource down the line), you’ll need both bottling and canning lines, and some way to label your product. There’s more to commercial brewing than being just a good brewmaster, after all. You will need all of it in place when your location gets inspected for your permits and licenses.
3. Put cleaning first.
If you’ve ever worked in the restaurant industry, you know how crucial cleaning is. But when it comes to starting a brewery, that cleaning regimen needs to be amped up tenfold due to the fermentation process. Be ready to get your hands dirty on the job, but also be careful not to hire people without them understanding just how much cleaning will go into their day-to-day jobs.
4. Pick a good location.
For starting a brewery, it goes beyond just finding the right area of town to put down roots. It’s also about making sure the building itself will fit your very specific needs. You’ll want to find a space that is big enough that your business can expand if needed, but also not so big that you can’t afford the lease.
Also, make sure the building’s design itself can fit the various equipment and supplies you’ll need in the beer-making process, including entrance ways that they can be delivered through. Be ready to make updates and upgrades to fit your needs as a brewer. Even just making sure your flooring is composite and can be durable against impact shock and beer spillage alike is important.
If you’re planning to have a bar or restaurant at your brewery, or even if you’d like the option to add one down the line, you want to make sure you can properly soundproof the brewing area so that it won’t disturb your customers. Also make sure you set up an adequate air filtration system throughout the whole building. There’s a lot of dust and other kinds of emissions in a brewery that you don’t want endangering your employees’ heath nor affecting the customer experience.
5. Get your permits and licenses in place.
Any business that deals with the sale of alcohol in the United States knows that there is some heavy regulation involved. Regulatory compliance will be a huge part of keeping your brewery going.
To be legally able to make and sell beer, you need to get your federal brewing permit. To get your federal brewing permit, your equipment and location will have to be confirmed by the Alcohol and Tobacco Tax and Trade Bureau. This could take up to a year, so as soon as you have your equipment and location in place, get that ball rolling. In any case, you’ll have monthly bills to pay well before you can start making the beer.
You’ll also have to get state and county liquor licenses before starting a brewery, which can also take months depending on if the inspector is available soon. You should also double check for any other local permits you might need as a brewery. Every state is a little different, so thoroughly researching your state’s laws will be important.
6. Be prepared for taxes.
Beer making is one of the most heavily taxed industries. Be prepared to pay those taxes, but also look into how you can use the tax code to your advantage. There are reduced tax options for new craft brewers, so investigate if that applies to your business. Getting an accountant that specializes in food and beverage businesses can be very helpful in navigating your taxes, especially in your first couple years.
7. Get employment agreements signed.
Breweries take their beer recipes very seriously. You should be careful that your brew does not impede another brewery’s recipes, but you should also make sure your own original recipes remain safe. Consider having your lawyer write up an employment agreement that includes a non-disclosure and non-compete clause. This will ensure that your key employees (especially anyone handling the recipes directly) won’t quit, go to one of your competitors, and use your recipes there.
That being said, make sure the agreement is reasonable in terms of duration and geographic area — if you make the agreement unnecessarily strict, the employee could refuse to sign and walk away from the opportunity — leaving you down one talented beer-making employee on your team.
Want to learn more about controlling costs at your brewery, pub, or restaurant? Download our free eBook on “Growing a Restaurant Profit Margin” today: