Saturday, November 15, 2008

Unofficial Accountability Update

Last week was a pretty busy one at RePublic HQ. I met with a couple of commercial Realtors to get the location search rolling, which I believe will be important to our success because bars and restaurants are usually sold without being advertised. Since a restaurant for sale would probably lose huge amounts of business after appearing in a classified ad, it makes sense for its owner to try and conduct the sale by networking through a real estate agent. Whether Jane and I buy an existing business or take over the lease of an already-vacated facility, I think the cost of startup will necessitate that we move into a location with tavern infrastructure in place.

Between meeting with realtors, I met up with a commercial kitchen designer to make sure we're looking for locations in the right size range. The designer I met with was surprised that I contacted him directly because he's usually recruited by architects. His typical role - and I'm simplifying here - is to determine which kitchen equipment will be required to execute a particular foodservice concept, work with a design team (typically coordinated by the project architect) to determine the kitchen layout, and inspect the equipment deliveries to ensure that the terms of purchase were satisfied. The meeting was very helpful, but the location we choose will play a large part in determining whether or not we hire a designer. If we're able to inherit a fully-equipped pub, we probably won't need one. If our eventual location requires an overhaul, hiring a designer would probably be money well-spent. The good news for now is that my sizing estimates were solid.

The hop search took a turn toward urgency as I continued to talk with HopUnion. The dealer told me that most of the varieties I'm looking for are 80% contracted for next year, meaning that 80% of the expected 2009 crop has already been purchased. I plan on committing to a contract next week, after doing a bit of last-minute scrambling to see what else is out there. These will probably be my options:

1. Talk with another US hop dealer to see which organic varieties they expect to have available for contracting. I received a return call from a sales rep last week, but he wasn't around when I called back. If the dealer has what I'm looking for, I'll sign a contract with them.
2. Sign a one-year contract with HopUnion for non-organic hops. The grower I'm buying my 2009 Cascades from expects to plant more varieties next summer. It usually takes a minimum of two years for newly-planted hops to produce worthwhile yields, which means I could be buying all Wisconsin hops by the fall of 2010.
3. Sign a three-year contract with New Zealand Hops for organic varieties that will impart a harsh bitterness to my beer.

I'm optimistically hoping that option #1 bears fruit, but my fallback plan is option #2. Buying organically is one of my long-term goals, but I can't justify the combination of shipping from New Zealand (i.e. trading one environmental benefit for another), committing to buying non-local hops for three years and compromising on my desired specifications. Option #3 was a lot more attractive five months ago when it was my only option.

Jane and I also received some excellent business plan advice from an experienced investor. His general advice was to elaborate more on ourselves (we should be trying to convince people to believe in us as much as our idea), remove tavern management specifics (e.g. menu items and employee policies) so we'll have the flexibility to adapt the business to its customers, and include more local market data (which is admittedly difficult to find). The meeting actually made me excited to revise the business plan, which I plan to do in conjunction with finalizing a hop supply next week. In the back of my mind, I'll be getting ready to ask some architects how they're typically involved in evaluating potential tavern locations.

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