A common question I get is: what is the quickest path to profitability for a brewery. We all know the answer is the taproom. The other day I got a curveball to that question. A successful software developer asked: What is the quickest way to profitability while investing the least amount of money. My reply was, you are approach to this industry is shortsighted, go invest in a Crossfit gym. All this silly banter got me thinking about an important metric for restaurants and retail. Revenue per square foot.
The way you calculate the revenue per square foot is to divide the taproom revenue by the taproom square footage.
- Monthly taproom revenue – $75,000
- Taproom Square feet – 3,500
- ~$21 revenue per sq ft.
Restaurants and retail use this metric to determine if the concept is repeatable. Breweries can rely on this metric to measure scalability. We do not look at include the production square footage because there are other metrics to test that area.
Here is a quick reference guide
|
Revenue/ Sq Ft |
Action |
|
$30 |
Ideal |
|
>$30 |
Strong Cash Flow, put that cash to work |
|
<$20 |
Call me, or call someone; something’s gotta change |
Based on the comments w/ the revenue/SF metric I assume this would apply to a craft beer & wine tap room / bottle shop vs. just a brewery specific tap room. I’m finalizing a business plan now. Is there an ideal SF footprint size for a taproom? I’ve seen a lot in the 1,000-1,500 range.
Hey,
Thanks for your question. Typical taproom sq ft is 1,000-2,500 sq ft. The $30 per sq ft revenue is actually pulled from the retail industry. So you can apply it to your bottle shop. Cheers!
We’re in the final stage of planning our brewery. My current forecast based on “pints/hr open” comes out to $10 sqft. So, using your metric I’m being far too conservative.
Forecast is for $20K beer sales per month, 2,000 sqft., approx 16 bbls per month. City of 65,000, one other brewery in town, south coast of California.
This is a great start, but more sales need to be planned. $30 sq ft will give you the ability to move in any direction you desire.
When you speak of taproom generating $30 / sq foot. Is that a taproom with a food component, or strictly beer?
Hey,
I am talking about just beer. Food and beer it would be much higher, since this ticket averages for brewpubs are higher taprooms.
Sadie, this would be just for beer & merchandise sales. Taproom with no kitchen.
What are the metrics you use to test the production square footage?
1)Return on assets. 2)Barrel production to profitability if you stopped taproom tomorrow.