In The Microbrewery Handbook we discuss a variety of topics that can have a positive or negative impact on your brewery ranging from financials to operations to zoning, equipment and employee engagement.
I wanted to share a few key do’s and don’ts of opening or operating your own microbrewery based on our experience opening Perfect Plain Brewing Co., a taproom-focused brewery in the heart of downtown Pensacola, Fla.
We often focus on the part of the business we are passionate about: Beer. That’s understandable, but in an ever-evolving market, it can sometimes lead to a lack of focus on other important pieces of running a successful operation. Let’s dive into some do’s and don’ts.
Do What you Know & Know What You Don’t
Ego gets the best of all of us at one time or another. We think we know how to do something; we think we know the right way to handle something, we think we have the objectivity or perspective to make a sound decision on something. And sometimes, after it fails, we realize that perhaps we could have used some help.
This happens all the time in business. Would you open a brewery without anyone on the team having any knowledge about beer? Likely not. Ask yourself why so many breweries open without consulting in help with banking, with accounting, with hiring and onboarding employees, or with sound expertise in customer service.
The reality is that most often, people gravitate to their comfort zone. So if you’re a brewer, you focus on the beermaking and very little on the other things. And vice versa.
Point is, it’s a major help to ensure your leadership team, or your mentors as you begin your company, provide a litany of expertise. Surround yourself with smart people who can fill the gaps in your skill set.
I was fortunate to have Reed Odeneal, a friend, to start as director of brewing operations. I didn’t come from a brewing background, instead my expertise was in marketing, messaging, branding and operations. We complemented each other, and that has proven quite valuable so far.
Be Meticulous in Your Hiring & Onboarding Process
Ask yourself: What is your hiring process? How do you onboard employees? Do you have standards or procedures for these things? In the Microbrewery Handbook I lay out a three-step interview process that I migrated from the health care industry and adapted to our specific needs. It allows the owner, the direct supervisor and the new hire’s peers to all have a say in the people who join our team. It’s a format that provides a sense of ownership for all and accountability to each other to make new hires successful.
In the hustle of opening a new business, standards like these are so often disregarded. We “fly by the seat of our pants.” But realize this: The cost of one position turning over in the hospitality industry is more than $5,000. Why? Lost productivity, additional training hours, loss of regulars for that person, paying overtime to cover shifts, etc. That doesn’t even factor in the stress of hiring again, new faces, onboarding them and the other psychological variables that come into play.
So knowing that, it seems like clarifying your hiring and onboarding should be a higher priority, right? Tie this financial outcome to the consequence of hiring poorly and you’ll quickly see that spending some time working on these processes are a major benefit.
Give Your Employees a Sense of Ownership
At Perfect Plain, we share our financials with every member of our staff upon request, and we remind our staff of this at every meeting.
We have a three-person peer interview panel – the final interview for all potential new hires – and if our peers don’t say yes to them unanimously, we don’t hire them. We are the first bar in our region to offer comprehensive health benefits to all full-time staff.
We give each bartender $25 per shift to do the right thing without having to consult a manager to void. A spilled beer, a birthday celebration, etc.
Why do we do these things? Simple. We ask that our staff have a sense of ownership. We want them to treat their job like it’s their own place. Every business owner wants that, right? Well, ask yourself: What are you doing to provide a sense of ownership? It’s easy to request that your staff act like owners, but too often it’s a one-way street. We expect that but provide nothing to make them feel like owners.
I challenge you, even if it’s just one or two steps, to empower your staff with some ownership-type information and responsibilities. I know it seems awkward.
Let’s use sharing the financials as the example. The feedback I get most often when I present a brewery owner with this fact is some kind of concern that if they see the business being successful, “everyone will ask for a raise.”
Research has proven this point to be false. Let me tell you what actually happens. Your bartenders and brewers probably see the daily sales reports coming through, and if you’re doing well, they see big numbers, right?
Do they know how much insurance costs? Do they know about your $2,000 power bill each month? Do they know how expensive supplies and materials are? I’ve experienced that when you share financials, more often than not your staff is surprised at what it truly costs to operate a business. When they only see revenue, and not the profit and loss statement, they likely thing profits are much higher than normal.
And at the end of the day, I offer this: If your company is doing so well that a staff member asks for a raise down the road, I can think of a LOT bigger problems you can be having as a business owner.
Don’t Undersize Your Brewhouse to Save Money
A sound business plan will outline a range of top line revenue needed to make your brewery break even or turn a profit.
It’s surprising how many people go through the laborious process of calculating these sales numbers, then you realize that because they’re trying to save money the first thing they do is downgrade the size of their brewhouse. Fitting your equipment to match your revenue goals and future potential is a must.
Let’s say you were buying a car that was slightly out of your price range. Would the first thing you ask them to do to cut costs is take 50 percent of the horsepower out of the engine? Of course not. You need most of those horses just to pull the weight of the vehicle efficiently. You’d likely find some features you like but could live without. Or perhaps you cut other things in your personal budget so you can afford the vehicle.
The brewhouse is the engine. You can only make as much beer as your labor and equipment allow. If you need a 10-barrel brewhouse and to save money you cut it to five barrels, then double your labor cost because you’re having to brew around the clock, are you saving money? Of course not. You’ll pay back those “savings” in the form of labor, repairs on equipment needing maintenance faster, etc.
I’m not suggesting you bust your budget. What I’m suggesting is that a sound budget factors in the need for your company to produce product efficiently and at scale. So I’m all for saving money, but this is one place where your revenue goals and your equipment need to match. Don’t say you’re going to produce 1,000 barrels per year on a 2-barrel. If you need 1,000 barrels to make money, then get the proper amount of horsepower to make your business sustainable.
Don’t Treat Your Taproom as an Afterthought
This is one of the more common mistakes seen in taproom-focused breweries around the nation. There’s so much focus on the beermaking process, and what could make that process easier. But reframe the mindset: What’s the use of spending thousands of dollars on equipment that can speed up your brew day by 90 minutes … if no one is there to drink that beer?
Craft beer consumers delineate between quality, no question. Don’t misread this as saying that quality doesn’t matter. It’s vital. However, reaching a certain quality standard – and knowing that yourself and at least a handful of your competitors will be in that same zone – engaging customers with an exciting taproom and fun vibe will produce more results for your business than that extra equipment ever could.
At this moment in the craft beer movement, this fact is only becoming more prevalent. Competition continues to saturate markets all over the U.S. I wrote an entire chapter on making sure every brewer and every brewery owner asks themselves “What makes us different?” I would always include a large investment in the taproom as one of the safest ways to create some uniqueness in your market.