Monday, April 6, 2009
Napoleon Complex
I totally have it. I don't pick fights or put giant tires on my Dodge Stratus, but I do have a vague suspicion that people would take me more seriously if I were six inches taller. Fellow "Underachievers", do you feel the same way? Tall people, is it sort of surreal to have adult conversations with your gravitationally-enhanced peers?
Thursday, April 2, 2009
Sense of Urgency
Jane and I recently met with a banker to talk about loans. We already knew that a Small Business Administration (SBA) guaranty would probably be required, and that it would take a while for the government to process our loan application. What we didn't know was that we'll need to be sufficiently funded, and have a location picked out, before we apply.
According to the SBA, banks typically like to see equity account for at least 25% of financing. That means if our expected startup cost is $800K, Jane and I will need to come up with $200K before we can apply for an SBA loan.
Location-wise, we won't be able to sign a lease until we've received a loan. We'll definitely need to have a place picked out, though, and have it thoroughly inspected (with the help of our trusty architectural team) so we'll be able to claim a specific renovation expense instead of a broad range.
To meet our goal of being fully capitalized by the end of May, Jane and I have a lot of work to do. The SBA can process a loan application in two weeks, but they're swamped with applications right now. Hopefully we'll be able to raise enough investment capital and choose a location by the end of this month, and hopefully the following month will be enough time for the SBA to make a decision. At least we picked a suitable political climate for audacious hope.
According to the SBA, banks typically like to see equity account for at least 25% of financing. That means if our expected startup cost is $800K, Jane and I will need to come up with $200K before we can apply for an SBA loan.
Location-wise, we won't be able to sign a lease until we've received a loan. We'll definitely need to have a place picked out, though, and have it thoroughly inspected (with the help of our trusty architectural team) so we'll be able to claim a specific renovation expense instead of a broad range.
To meet our goal of being fully capitalized by the end of May, Jane and I have a lot of work to do. The SBA can process a loan application in two weeks, but they're swamped with applications right now. Hopefully we'll be able to raise enough investment capital and choose a location by the end of this month, and hopefully the following month will be enough time for the SBA to make a decision. At least we picked a suitable political climate for audacious hope.
Wednesday, April 1, 2009
What Kind of Smoke?
When I first caught wind of The Brewpub Bill in July of 2007, I emailed my state senator (Mark Miller) to outline some of the proposal's consequences and request that he withdraw his support. Four months later, I received the following email:
Thank you for your email. I appreciate your patience. It is my understanding the new law change included in the state budget will allow an establishment like the one you describe – no food requirement. You may want to consider opening as a brewer, rather than a brew pub. There are higher limits on the amount of beer you can sell. I look forward to hearing about your opening.
In my opinion, it said "thank you but F you." I replied to say that I was disgusted with the legislative process but would rather move forward than make enemies.
Last month, I emailed Senator Miller to voice my support of a statewide smoking ban* but urge him to reject any state budget that contains non-budgetary items (such as a smoking ban). The point of my email was "I'd like to see a statewide ban, but let's give it a proper approval process instead of taking the path of least resistance." Yesterday, I received a typed letter from his office that essentially said this:
Thank you for your support of a statewide smoking ban. Tobacco causes a bunch of problems. Governor Doyle included a smoking ban in his budget proposal. I support a statewide smoking ban.
Umm... ok. May I hit that bong, senator?
*While I enjoy the lack of smoke in taverns and recognize that second-hand smoke is a public health concern, I'm not entirely sold on smoking bans. In fact, I'd love to exploit an unregulated market by opening a smoke-free brewpub. The reason I support a statewide ban is because it's less unfair than municipal bans, which already exist and aren't going away.
Thank you for your email. I appreciate your patience. It is my understanding the new law change included in the state budget will allow an establishment like the one you describe – no food requirement. You may want to consider opening as a brewer, rather than a brew pub. There are higher limits on the amount of beer you can sell. I look forward to hearing about your opening.
In my opinion, it said "thank you but F you." I replied to say that I was disgusted with the legislative process but would rather move forward than make enemies.
Last month, I emailed Senator Miller to voice my support of a statewide smoking ban* but urge him to reject any state budget that contains non-budgetary items (such as a smoking ban). The point of my email was "I'd like to see a statewide ban, but let's give it a proper approval process instead of taking the path of least resistance." Yesterday, I received a typed letter from his office that essentially said this:
Thank you for your support of a statewide smoking ban. Tobacco causes a bunch of problems. Governor Doyle included a smoking ban in his budget proposal. I support a statewide smoking ban.
Umm... ok. May I hit that bong, senator?
*While I enjoy the lack of smoke in taverns and recognize that second-hand smoke is a public health concern, I'm not entirely sold on smoking bans. In fact, I'd love to exploit an unregulated market by opening a smoke-free brewpub. The reason I support a statewide ban is because it's less unfair than municipal bans, which already exist and aren't going away.
Wednesday, March 18, 2009
Information Overhaul
I moved The Dork Pages from Google Pages, which is no longer supported, to here:
RePublic Brewpub on Google Sites
The new website automatically tracks changes, which will make it easier for you to figure out when your copies of files are outdated. This presents a challenge to me because I'm in the habit of reloading the files whenever the mood strikes. From now on, I'll need to be more selective in order to avoid bombarding you with pointless (from your perspective) updates. If this process makes me less anal-retentive, I'll consider it a success.
Recent updates include the carbonation calculator, the capping gravity calculator, the homebrew inventory tracker, both brewlogs and both recipe calculators.
RePublic Brewpub on Google Sites
The new website automatically tracks changes, which will make it easier for you to figure out when your copies of files are outdated. This presents a challenge to me because I'm in the habit of reloading the files whenever the mood strikes. From now on, I'll need to be more selective in order to avoid bombarding you with pointless (from your perspective) updates. If this process makes me less anal-retentive, I'll consider it a success.
Recent updates include the carbonation calculator, the capping gravity calculator, the homebrew inventory tracker, both brewlogs and both recipe calculators.
Thursday, March 12, 2009
Staying Focused
When Jane and I started this weblog, our goal was to document the startup process so interested parties could follow our progress and future business owners could learn from our experiences. Lately, I've been ranting about politics and drawing poop jokes. The temptation to mention the aftermath of a British beer tax increase (bottom third of the article) and Large-Scale Sustainable Agriculture is so great that I can't resist.
With that out of the way, I'm all about reform. Here are some FAQs written in the tradition of websites where questions aren't actually asked:
"Do you have a location yet?" Nope, but we're constantly looking. We've found a few sites that would be suitable, but we still have a couple of months to find a place that's truly wonderful. Know of any? We need about 3,000 square feet and 11' high ceilings. A place that nearby residents could walk to would be awesome. So would a place that's already plumbed and wired for a bar or restaurant.
"How's raising money going?" Pretty poorly, to be honest. Jane and I aren't rich, we don't know many people with the means to invest, and securities laws prevent us from soliciting investments from people we don't know. Madison bankers: every single one of you is going to know my name by the end of next month.
"What are you brewing?" We have House Ale, Belgian Pumpkin Ale and Chocolate Porter in bottles. A Pale Ale is in the fermenter and I'll be brewing a Belgian Blond next. I hope to repeat and perfect the four regulars (the beers listed above minus the Pumpkin), but I won't be able to stop myself from mixing it up with some special brews. The brewery that I recently helped with their financial projections just sent me about two and a half pounds of Cascade and Columbus hops, so we're in for a bitter and citrusy summer.
"Are you hiring?" I wish. Check back in November.
With that out of the way, I'm all about reform. Here are some FAQs written in the tradition of websites where questions aren't actually asked:
"Do you have a location yet?" Nope, but we're constantly looking. We've found a few sites that would be suitable, but we still have a couple of months to find a place that's truly wonderful. Know of any? We need about 3,000 square feet and 11' high ceilings. A place that nearby residents could walk to would be awesome. So would a place that's already plumbed and wired for a bar or restaurant.
"How's raising money going?" Pretty poorly, to be honest. Jane and I aren't rich, we don't know many people with the means to invest, and securities laws prevent us from soliciting investments from people we don't know. Madison bankers: every single one of you is going to know my name by the end of next month.
"What are you brewing?" We have House Ale, Belgian Pumpkin Ale and Chocolate Porter in bottles. A Pale Ale is in the fermenter and I'll be brewing a Belgian Blond next. I hope to repeat and perfect the four regulars (the beers listed above minus the Pumpkin), but I won't be able to stop myself from mixing it up with some special brews. The brewery that I recently helped with their financial projections just sent me about two and a half pounds of Cascade and Columbus hops, so we're in for a bitter and citrusy summer.
"Are you hiring?" I wish. Check back in November.
Sunday, March 8, 2009
Tavern Sales
Recently, the Brewers Association released its 2008 Craft Brewing Statistics and the National Restaurant Association (NRA) released its 2009 Restaurant Industry Forecast. Last week, I updated RePublic's business plan to reflect the new information. Diving back into the numbers got me thinking about whether or not my sales assumptions are reasonable.
Every year (I think), the NRA conducts a nationwide survey of restaurants and publishes the results in a document called the Restaurant Industry Operations Report. In the most recent edition, the median sales per seat for restaurants with average checks of $10-$14.99 was $9,859. I've been using that figure as the basis of RePublic's expected revenue, but one thing about the number bothers me: the median food sales reported by the NRA was 85.4% of total sales, but I'm only expecting food to account for 50% of RePublic's total sales (the NRA considers non-alcoholic beverages to be food, so 'beverage' equals 'alcohol only' throughout this discussion). Common sense suggests that bars without food will typically have far lower sales than $9,859 per seat. Unfortunately, I don't know of any published data that describes the sales of establishments with less than 70% food. I also suspect that sales per seat will drop for restaurants with no alcohol, which should cause a bar/restaurant sales prediction to look something like this:
I know that one former tavern in town sold about 50% food and generated around $5,500 per seat in annual sales. The place wasn't open seven days a week, though, and I wouldn't describe their operation as "busy". Returning to industry-wide data, the NRA provides five data points that I feel are useful (all for restaurants with average customer checks under $15):
-Median sales per seat (checks of $10-$14.99) = $9,859/yr
-Median food sales (checks of $10-$14.99) = 85.4%
-Median sales per seat, no booze = $8,345/yr
-Maximum reported beverage sales = 27.9%
-Maximum reported beverage sales per seat = $2,500/yr
Assuming the 27.9% and $2,500/yr figures are from the same establishment, the total sales per seat would be $8,961. That allows us to describe three scenarios based on NRA data:
-Sales per seat with 100% food = $8,345/yr.
-Sales per seat with 85.4% food = $9,859/yr.
-Sales per seat with 72.1% food = $8,961/yr.
Using that data, a linear graph can be drawn that looks like this:
It's not pretty, but at least it acknowledges that total revenue will depend on the food-to-beverage sales ratio. The result is that RePublic's projected sales per seat would drop from $9,859/yr to $7,469/yr. I'm aware that every market is different, but the raw NRA data should be in the ballpark. Comments from bar/restaurant owners on how I'm interpreting that data, or on sales per seat vs. food/beverage mix in general, would be most welcome!
Every year (I think), the NRA conducts a nationwide survey of restaurants and publishes the results in a document called the Restaurant Industry Operations Report. In the most recent edition, the median sales per seat for restaurants with average checks of $10-$14.99 was $9,859. I've been using that figure as the basis of RePublic's expected revenue, but one thing about the number bothers me: the median food sales reported by the NRA was 85.4% of total sales, but I'm only expecting food to account for 50% of RePublic's total sales (the NRA considers non-alcoholic beverages to be food, so 'beverage' equals 'alcohol only' throughout this discussion). Common sense suggests that bars without food will typically have far lower sales than $9,859 per seat. Unfortunately, I don't know of any published data that describes the sales of establishments with less than 70% food. I also suspect that sales per seat will drop for restaurants with no alcohol, which should cause a bar/restaurant sales prediction to look something like this:
I know that one former tavern in town sold about 50% food and generated around $5,500 per seat in annual sales. The place wasn't open seven days a week, though, and I wouldn't describe their operation as "busy". Returning to industry-wide data, the NRA provides five data points that I feel are useful (all for restaurants with average customer checks under $15):
-Median sales per seat (checks of $10-$14.99) = $9,859/yr
-Median food sales (checks of $10-$14.99) = 85.4%
-Median sales per seat, no booze = $8,345/yr
-Maximum reported beverage sales = 27.9%
-Maximum reported beverage sales per seat = $2,500/yr
Assuming the 27.9% and $2,500/yr figures are from the same establishment, the total sales per seat would be $8,961. That allows us to describe three scenarios based on NRA data:
-Sales per seat with 100% food = $8,345/yr.
-Sales per seat with 85.4% food = $9,859/yr.
-Sales per seat with 72.1% food = $8,961/yr.
Using that data, a linear graph can be drawn that looks like this:
It's not pretty, but at least it acknowledges that total revenue will depend on the food-to-beverage sales ratio. The result is that RePublic's projected sales per seat would drop from $9,859/yr to $7,469/yr. I'm aware that every market is different, but the raw NRA data should be in the ballpark. Comments from bar/restaurant owners on how I'm interpreting that data, or on sales per seat vs. food/beverage mix in general, would be most welcome!
Thursday, March 5, 2009
New Obsession
Lew Bryson wrote a great piece about excise taxes today. I'd imagine that smuggling beer is harder than smuggling cigarettes, but I've seen Fat Tire for sale around here before.
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