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Heyyyyy, last but not least, it’s taproom day, taproom labor.

What do we consider when we talk about taproom labor? Well, first and foremost, it’s our hourly taproom staff. Second of all, it’s our managers, our taproom GM that’s typically paid a salary, or it’s our managers in the taproom that are also typically paid a salary.

What benchmark do we shoot for in the taproom? We’re looking at 8-11% of our retail sales. Ok? 8-11%.

Let me explain.

Back in the day, pre-COVID, this was 4-6%. COVID had a bit of a wage correction. We’ll call it a wage correction, a positive wage correction, for all the people working in the food and beverage industry, and what that did was is it really ticked up and increased a lot of taproom wages.

So if you were in a low minimum wage state such as the southeast where it was like still two or three bucks an hour plus tips, all of a sudden you found yourself paying regular minimum wage plus tips which is 8 bucks an hour.

If you’re in a high minimum wage state, you really don’t have any choice. California, Washington, Oregon, New York, Massachusetts. These states have a tip minimum wage of 14 and 15 bucks an hour. Ok? Plus tips. Your taproom staff are the highest compensated people at your brewery — which isn’t a bad thing because they’re doing a lot of high-margin selling, but it’s worth noting that they are the highest paid individuals. People in these high minimum wage states can earn up to $40 an hour working in the taproom depending on how busy it is.

Ok, so, to calculate it what we want to do is for low minimum wage states — and you know if you’re in a low minimum wage state because you have a big discrepancy between what the taproom, excuse me, tip minimum wages are versus regular minimum wage — and if you find yourself a low minimum wage state you want to be closer to that 8%. Take your beer sales over a period, multiply it by 8%, see if that’s what your gross wages are in the taproom.

Side note: Tips are not gross wages, tips are simply a pass through. So the tip amount should never be included in your taproom department on the P&L, right?

Tips are a liability, they come in, they come out. Even if you pay them on payroll, they are not an expense to you.

Alright, if you happen to be in a high minimum wage state you’re looking at 11% so you’re going to multiply your beer sales in the taproom and that includes all your pint, all your draft sales, all your can sales, all your beer-to-go and you’re going to multiply it by 11%. You should be in that range.

The biggest pitfall that I see is the pricing does not match the increase in wages. Ok, taprooms have not increased the pricing of their retail items to match the wages.

Breweries that are doing this extremely well are the inverse, right? They understand what their labor costs them and they’re doing everything in their power to get to that 8-11% in the taproom by increasing pricing through the retail.

It’s worth noting that our research has shown that consumers are generally price-insensitive when they visit your taproom. What does this mean? This means that they make impulse purchases. They will stick around for one more beer if given the opportunity and given the experience and given the quality of the taste and also food. But customers are generally price-insensitive when they visit it because it’s an experience to visit a brewery. It’s a fun time. They can bring the family in most cases. So we need to act on this and we need to price our beers accordingly so we can hit these benchmarks.

Alright, so quick recap on taproom. 8-11% is your range of benchmarks of your retail sales. The biggest pitfall is pricing is not matching the wage, the massive wage increase that we’ve all experienced, and breweries doing it well have figured this out and are pricing it.

I’ll talk to you tomorrow for a recap. See you then.
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