Hacker News Reader

Comment by silencio | Hacker News Reader

I could almost replace "beer" and "brewery" with "food" and "restaurant" and feel like it would be talking about the same thing.

My restaurant ends up focusing so much more on keeping up with cleaning, food safety, and local regulations than actual cooking food it feels almost silly. And most people only want to hear about food or money (lol, money) when they ask me about how the restaurant's doing. I hope I don't accidentally convince someone that they should look into running one.

View on HN

You know the easiest way to make a small fortune running a restaurant?

Start with a big one.

Start with one, period, do a truckload of due diligence and then add another truckload before the sale closes, and then cross your fingers and hope that your employees don't burn the place down. ;) Starting a restaurant from scratch is something I don't want to wish on even my worst enemy. It's very, very difficult and time consuming to the point that I will try my best to talk people out of it if they even think about it. I know 3-4 talented chefs that almost went bankrupt trying to open their own restaurant instead of just buying one and remodeling/revamping it.

Big ones can be iffy, they'll all but guarantee you some kind of (positive) cash flow but a lot of them sink so much money into necessary wages that I definitely recall wondering why the fuck anyone would think I would spend $1+ million to buy a wildly popular business that gives me all of $10k/month back before I can pay off any business loans. I seem to recall the broker trying to sell that particular one to me with "you can take the place of a few employees because owner/managers tend to work way harder and save like another $10k+!"....sure, if I wanted to work my ass off from 7am to 1am every single day?

I believe angersock meant start with a big fortune.

It's like the joke "How do you make $1000 fast? Well, you start with $1,000,000…"

Another version. "How do you become a millionaire? Start as a billionaire and buy and airline"

oh god I get it now.

That's what I get for idling on HN between dealing with misbehaving employees and hiring new misbehaving employees on the one day this week I deal with the restaurant

tl;dr basically. if you're lucky not to lose it altogether. :(

Same with the franchise restaurant biz. In another life, I was in a position to get a franchise from the Golden Arches. The restrictions were amazing. You'd have to come up with X dollars, and be willing to relocate. Profit after controllables was typically 10-14%, and after that you'd have to pay franchise fees! and then taxes. So on a million/year in sales, you'd have 100k less a franchise fee and taxes. Not exactly driving a Beemer... And each franchise sold for multiple millions unless you were in a program that focused on leasing the facilities to up and coming store managers.

Do you think the regulations are over-the-top, or are they reasonably balanced? It sounds like you spend all your time satisfying regulations, and actually providing the product falls far down the list. In your opinion, could the regulatory burden be lifted and still produce a safe product, or are they all necessary?

Now I really don't know what to say to my brother in law who is opening a brewery / restaurant...

Yeah, I like brewpubs as a customer, but I don't see what the business model is, over just running a brewery or a bar. You get the beer at cost, but the price of a keg of beer is not really a problem most bars feel the need to improve upon.

My understanding is that the business model of the brewpub is to sell beer at retail prices as opposed to selling at wholesale to a distributor.

I would guess that the bigger margins would allow you to start at a smaller scale.

Brewpubs can skirt around the regulatory insanity that some states impose on breweries. I'm not sure how close South Carolina is to the norm but you cannot sell more than 48oz of beer to the public per day and only after a tour (and only 16oz can be over 8% abv). You have to sell to an independent distributor who sells to independent (of both distributor and brewery) stores. If you operate a brewpub you can sell "freely" but only up to 2,000 (IIRC) barrels a year.

I know several states have tough regulatory environment but I don't know if they go as far.

I wonder what defines a brew pub. Could you have a couple under the same roof owned by the same person? "This tap belongs to pub A, this to pub B..."

That could be a loophole, here's the relevant legislation:

SECTION 61-4-1700. Definitions.

For purposes of this article:

(1) "Brewpub" means a tavern, public house, restaurant, or hotel which produces on the permitted premises a maximum of two thousand barrels a year of beer for sale on the premises.

(2) "Permitted premises" means those areas normally used by the permittee or licensee to conduct his business and includes, but is not limited to, the selling areas, brewing areas, storage areas, food preparation areas, and parking areas.

(3) "Person" means an individual, partnership, corporation, or other form of business organization.

HISTORY: 1996 Act No. 415, Section 1.

http://www.scstatehouse.gov/code/t61c004.php

The cost of beer made on-premises is roughly half what vs. buying from a distributor. If you can create real demand for your product at your own pub, you can make an extra $100 per barrel (a.k.a. $50 per keg). At ~2000 barrels a year (which is 200 brew days per year on a _tiny_ 10 barrel system) that's an extra $200k added to your bottom line.

Yes, you need decent chunk of financing + equipment to get started. No, it isn't "real money" to most of the folks on HN. Compared to the margins on most foodservice businesses, though, it's amazing.

If it's a labor of love, he knows what he's getting into, and the financials make sense, then good luck to him :) It's not impossible, it's just not what the average person thinks the business is all about.

I have an acquaintance who made good money on Wall Street for about ten years and then invested it all in a brewpub out in the country (near a ski area.) I don't think he's making much money and I hear he works all the time. But I think after Wall Street he realized he wasn't motivated by the money, and he was used to working all the time.

Now he gets to work with his hands, make something real people enjoy, and be accountable only to himself. I think he's pretty happy.

Reply on news.ycombinator.com