How Much Does It Cost to Open a Craft Brewery?
Updated: a day ago
You’ve been homebrewing for a while, and have just perfected that saison or pilsner. Think you’re ready to start selling it? If so, it might be time for you to start your own craft brewery!
In this article, we’ll cover:
Get the mash mashing and the wort boiling with financing for your startup craft brewery!
Once you have an idea of the costs to start your own brewery, do you know how you’re going to pay for it?
A Honeycomb Credit crowdfunded loan is one option that you can use to pay for part (or all) of your brewery’s buildout - accessing the capital you need and getting some valuable marketing buzz at the same time!
Learn more at www.honeycombcredit.com/beer and sign up below for more information!
Breaking down the overall costs of starting a craft brewery
For the most part, you can expect your new startup craft brewery to cost from $500,000 to $1 million. Of course, this will vary widely depending on the decisions you make about your brewery. Are you gonna start small with just a microbrewery? Build out a taproom and kitchen? What kind of beer are you going to make - is there special equipment you need, like a foeder for making sours? How many people are you looking to employ?
Here’s a really great breakdown of the average cost of a craft six pack, courtesy of the Huffington Post:
As you can see, it’s not just malt and hops. So much goes into making that perfect pint - read on to learn more about the costs of running a craft brewery!
But, before we head on, find out how Honeycomb Credit has helped crowdfund numerous breweries at all different stages of their business journey; from start-up to expanding distribution!
Up-front costs of opening a craft brewery
According to IncFile, brewery equipment can cost anywhere from $100,000 to $1 million. Of course, this depends on the scale that you’re trying to brew, as well as what sorts of beer you want to brew.
How much beer are you wanting to brew at a time? A 120 bbl fermenter, for example, will cost you upwards of $40,000, whereas a 1 bbl is more like $2,000. If you want to make sours or saisons, you’ll have to get a foeder, which can cost from $12,000 to $23,000, depending on where you get it.
Aurochs Brewing Company, a Honeycomb alum, used part of their $150,000 crowdfunded raise to purchase a new mash tun to expand their gluten-free brewery business. This allowed them to increase production and expand across the Mid-Atlantic and the Midwest.
So, it’s best to get an idea of how much space you have for brewing equipment, how much you’ll need in order to meet demand, and go from there. You can always start small and get more equipment as you need it and can afford it.
Of course, this depends on the scale of your brewery as well - are you looking for just a small taproom with a bar, or a full-on kitchen with tons of tables and amenities? Webstaurant estimates that taproom furnishings will cost you from $4,000 to $15,000.
Back Alley Brewing Company, a Honeycomb alum, raised $200,500 total to fund their brewery. While the majority of it went to brewing and canning equipment, they also portioned off about $125,000 for the taproom’s buildout and furnishing.
Bottling and distribution
If you want to be able to sell cans and bottles of your beer to send home with customers, you’re going to need to invest in some canning and bottling equipment. A canning line can cost anywhere from $65,000 to $135,000.
Monkey Wrench Brewing was able to fund part of their canning line using their Honeycomb Credit campaign, which raised $34,550 from 23 investors!
A POS system
While hand-writing out receipts by hand might sound twee, it’s time to bring your craft brewery into this century. A POS system can help you keep track of sales and inventory, and also make it easier to process payments. A POS system often has an up-front cost to install, usually around $600-$1,700, then a monthly payment that ranges from $50-$399. The range depends on the service you pick, as well as how many service stations and other amenities you need.
Licenses and permits
Obviously, you’re gonna need a liquor license. Depending on what state you’re in, this could cost from $3,000 to $400,000! There will also be other licenses and permits to consider, such as if you want to serve food.
Unless your space was a brewery before, chances are you’ll probably have to do a bit of remodeling in order to make it suitable for a brewery. You’d be surprised at the specific needs a brewery has over, for example, a regular restaurant.
Flooring is one such cost - it has to be durable enough to withstand temperature, shock, and acid from the brewing process. Also has to be easy to clean! This can cost upwards of $10 a square foot.
For more information on costs and advice on storefront build-outs, check out this blog post here!
Rent or mortgage payments
Finding a brick-and-mortar location for your brewery is always such a fun experience - finally, you can see your dream come tangibly to life! It can also be costly, though, and be a major part of your overhead recurring costs.
Depending on where you are and how big and nice the space is, expect to pay from $10 to $30 per square foot of your space.
No brewer is an island - you’ll probably need a team of people to help make your business go, and while paying folks in beer for their help is nice for a time, eventually you’ll have to include employees in your recurring expenses.
If you’re not going to be the brewer yourself, or you’re going to hire another head brewer, the average annual salary is $45,016. Part-time staff and assistant brewers usually will be about $14 an hour, or about $29,504 a year on average.
As always, we are big proponents of a living wage for restaurant and brewery workers, so that is something you should consider when budgeting. A livable wage and a great company culture are key to your brewery’s success and growth.
This is especially important in 2021, as women brewers are speaking out against sexist behavior in the industry - being able to pay equitable wages is just the tip of the iceberg of taking care of your employees!
You’re running a brewery. You’re gonna be using a lot of water.
Here’s a great resource for calculating your utility usage especially for breweries. Keep in mind that your water and energy usage are going to fluctuate and be much higher on brew days than on normal days.
Of course, this is going to vary depending on the size of your brewery and how much you produce, but expect to pay about $2,500 a month on utilities.
You’re going to need at the very least property, casualty, and liability insurance for your brewery in order to make sure you’re set in case something bad happens. Furthermore, most banks won’t lend to you if you don’t have insurance, so that’s another reason to have it.
Now for the fun stuff - the ingredients that go into your beer. If you’re using the best ingredients, you might be running a bit of a higher cost, driving up the price of your beer.
The average cost per bbl of a beer can range from $45-$75 bbl, depending on the quality of ingredients, where you source them from, and how much you can get all at once! This is why it’s a good idea to have a bit of working capital ready to go for when you start brewing, so you can pay for the ingredients to make your beer.
There’s also the cost of packaging and shipping if you’re sourcing ingredients from out of state (and shipping out of state), as well as distributor and retailer margins if you opt to sell out of stores.
How can I pay for the costs of starting my craft brewery?
Find investors for your craft brewery
Craft breweries commonly look for investors to supply the start-up capital for their business. Sometimes, brewery owners seek out family or friends to invest in them, or they find other brewers, maltsters, or other people in the industry seeking out investment opportunities.
Seek out a Small Business Loan
A route many small businesses take is seeking out a small business loan for capital. You can get a loan from a traditional financing institution such as a bank, a small business administration, or another lender.
A small business loan can be a great way of getting the money you need, but it’s increasingly difficult for small businesses to get approved for loans, especially if you’re just starting out.
Crowdfund your craft brewery
Increasingly, craft brewers are seeking out alternative sources of funding, like crowdfunding! While some breweries choose reward crowdfunding, like Kickstarter, others prefer debt crowdfunding (like Honeycomb Credit) because it allows them to pay back their customers.
There are many benefits to crowdfunding that go beyond the capital raised. Crowdfunding strengthens your relationship with customers, allows you to build marketing buzz, and gives you a fair source of capital for your business.
On top of that, crowdfunding with Honeycomb has resulted in on average a 60% increase in revenue for small businesses after their crowdfunding campaign.
Breweries such as Back Alley Brewing Company and Aurochs Brewing Company have successfully crowdfunded huge amounts of capital for their businesses. They’ve proven that it’s a powerful model for not just raising money, but getting the word out about their breweries.