Three concepts to consider when launching additional business entities in your brewery like a new taproom, brewpub location, or barrel program.
As competition in craft beer has increased, it has become increasingly difficult — and less profitable — to abide by the traditional beer distribution models. As a result, many breweries are looking to the taproom model, separate production facilities, restaurants, or event venues to expand their horizons and increase their ability to get beer in front of the consumer.
While these are all great ways to grow production numbers, consider how you will handle the business complexities of multiple entities or locations. How quickly will you be able to determine if your new location will be profitable and make necessary adjustments?
The decision to bump production and capacity can quickly become costlier than anticipated if your new model doesn’t keep the business side in mind.
Here are some concepts to consider:
1. Handling Inventory
If you’re opening a taproom or secondary location, how are you accounting for the inventory transfers between locations? If you’re creating a sour ale or barrel-aging program, how are you tracking barrels?
Successfully handling inventory in multiple locations depends on the following:
- Maintaining visibility into regular inventory movements (Keg transfers from warehouse to the taproom)
- Accounting for shipping & receiving with fluctuating freight
- Tracking barrel attributes like age, cost of liquid in barrels and QC
- When and where your product is heading
- Purchasing and sales for each segment or location
Make sure you have a consistent, reliable system to update inventory counts, track inventory movement between locations and monitor and protect valuable assets like your barrel inventory.
2. Managing Financials
Once you’ve got inventory under control, determine how you’re going to separate financial transactions for each location.
Opening a brewpub or second taproom can introduce new complexities like:
- Taking out a loan or new line of credit
- Taking on new investors to expand business
- Pub or restaurant POS transactions
- Managing Invoices
- Selling merchandise
- Tracking cost of goods sold
- Costs for the expansion project
While you’re unlikely to have different bank accounts for each of these segments, you should be creating specific G/L accounts. Segmenting your accounting will allow you to closely monitor account balances and quickly identify efficiencies and properly rectify any discrepancies.
Having total visibility using a brewery-specific chart of accounts, generating financial reports, and seeing a real-time measure of where you stand financially are all possible with the right software. This often means upgrading from QuickBooks to accounting software more suited for breweries and the process of batch manufacturing.
3. Monitoring Production
Monitoring what’s happening at each location or entity is the final piece of the puzzle. Here are some questions to ask on the production side:
- Can you track efficiencies, yields & costing of beer by batch?
- Can you see production schedules at each facility on a given day, week or month?
- Have you determined how to account for your production totals for your TTB report?
- Do you have a centralized system to plan, edit and execute production runs in real time?
- How do you update accounting and inventory with what was used during production?
Putting processes or systems in place to process daily production activities without having to toggle through multiple brewery tools and multi-tab spreadsheets can minimize costly production mistakes. You’ll need to track production efficiencies like tank levels, batch costs, and liquid transfers from one tank or warehouse to another. This will keep everyone, no matter their location, on the same page.
A Single Source of the Truth
Whether you’re opening a new taproom, brewpub location, or starting up a barrel program, you’re bound to encounter new challenges on the business side. Keep in mind that you’re not just running a brewery anymore, you’re a growing business.
The future success of your endeavors will rely on whether you have the right systems in place to handle these complexities and empower your team to make the best business decisions in an increasingly competitive market.
OrchestratedBEER empowers breweries to make the best business decisions using an all-in-one solution, providing a single source of the truth.
Click here for a live demo to experience how OBeer helps “Conduct Your Craft.”