[newrocset]

In all honesty, this came about when a guy came up to me last week during an event at our State Capitol.  My wife and I own a company that makes soaps w/hops and malt, dog treats made of spent grains, and other bath and pet products.  We also launched a small batch brew kit line that we are currently working to promote.

Anyway, this guy who works for the dept. of ag. told me he was looking for a brewer for this restaurant he wants to open.  I told him I'm interested, and he told me he'd be willing to give me up to 50% ownership.  He said he has a business plan, but I don't how detailed it is.  I'd have to look at it.  He seems like a good guy with a lot of passion for good food.  I don't think he knows too much about beer, and has no clue what it takes run a brew pub.  So that's why he's looking for a brewer.  I really don't know where this is going to go at this point, but I do want to steer him (and myself) in the right direction.

As far as I'm concerned, this is an excercise in figuring out what it would take to open a successful brewpub operation.  The state of Oklahoma is just beginning to see an emerging craft beer scene, but the brewpub scene sucks.  There are only a few in the state and the ones that exist are crap.  Given that scenario, this is good time to open a brew pub - as long at is can serve quality 3.2 ABW beer (as per OK statute).  I realize the challenges ahead of me are great, but I would be pretty upset with myself if I didn't try.  What sucks is the attitude among brewers in this state that 3.2 beer is no good.  I'm positive I can prove them wrong.

The least I can do at this point, is to give him an estimate of what it would cost to run a brewpub, and figure out a way to get a full-time brewer on site.  It's really kinda fun...so far!

[hopfenundmalz]

I have been reading this for a few days and I will add my 2 cents to it.

Operating 7 BBL brewery is a full time job.
You need to brew more then one beer.
More beers you have more tanks you need.
You can fit brewing equipment, fermenters, cooler... into 1000 sq ft space. You also need to have additional space for supply like grain, hops, kegs...

Brewpubs are mostly where people go to eat. If you have 125 seats how much beer you will sell a week?
You need to have your sales analysis or at least to understand local market. If you are still not sure excise tax records are public. Check the close by brewpubs how much are they selling. I think in well run brewpub can sell 15 to 30 BBL a month.
Remember. Brewpubs make their money on food.

Now the hard questions you have to answer to yourself.
Who are you partnering with?
Do they have restaurant experience?
Are they willing to spend $0.5 mils on brewing equipment (may be more)?
Why just not to get someone else beer and forget the cost of initial investment and ongoing expense?

And again it is a full time job.

Good luck.

Agree with this. Need to say one local brewpub does >125 bbl a month on 7 barrel system. The brewer has 2 assistant brewers. They just went to a 14 barrel system. It is a big and successful place, that has plans to open a third bar area in the basement, which explains the bigger system. These guys work their butts off, and someone is there on Saturdays. Not a part time job.

[reverseapachemaster]

Anyway, this guy who works for the dept. of ag. told me he was looking for a brewer for this restaurant he wants to open.  I told him I'm interested, and he told me he'd be willing to give me up to 50% ownership.  He said he has a business plan, but I don't how detailed it is.  I'd have to look at it.  He seems like a good guy with a lot of passion for good food.  I don't think he knows too much about beer, and has no clue what it takes run a brew pub.  So that's why he's looking for a brewer.  I really don't know where this is going to go at this point, but I do want to steer him (and myself) in the right direction.

I wouldn't even have a serious thought about going into business with him until I saw the business plan and knew how the equity comes in your name. I would be concerned that not only does he not know anything about beer but that he knows nothing about running a restaurant and nothing about running a business in general. If he doesn't have a solid plan and a good idea about how he is going to put it all together he's no different than every homebrewer that goes to bed at night dreaming about running a brewery.

[nateo]

I would be concerned that not only does he not know anything about beer but that he knows nothing about running a restaurant and nothing about running a business in general.

That was my first thought.

[tschmidlin]

I'm wondering if 50% ownership comes with 50% responsibility for the debt he will accrue.

[tonyp]

There's a local brewpub here that has a 15bbl system and they contract out the brewing to a single guy who comes in on a saturday and brews 2-3 batches a week. He has one assistant that basically just cleans up and carries grain, etc.

They usually have 3 main beers and 2-3 seasonals on tap. I don't remember how many fermenters/brights they have but i could check the next time i go in.

[nateo]

I'm wondering if 50% ownership comes with 50% responsibility for the debt he will accrue.

Actually, depending on how the business is set up, you could be liable for 100% of the debt. In a traditional partnership or limited partnership, the partners or general partners, respectively, are jointly and severably responsible for the entire amount of debt. If your partner is a deadbeat, your business creditors will come after your assets, and it's up to you to sue your deadbeat partner to recover your losses. If he's enough of a deadbeat, a judge could rule him "judgment proof" meaning you'll never get anything back from him.

If your state allows you to form an LLP or LLLP, that'd be a much better way to go. Make sure you're aware of the applicable laws in your state regarding liability in those situations.

[bluesman]

I'm wondering if 50% ownership comes with 50% responsibility for the debt he will accrue.

Actually, depending on how the business is set up, you could be liable for 100% of the debt. In a traditional partnership or limited partnership, the partners or general partners, respectively, are jointly and severably responsible for the entire amount of debt. If your partner is a deadbeat, your business creditors will come after your assets, and it's up to you to sue your deadbeat partner to recover your losses. If he's enough of a deadbeat, a judge could rule him "judgment proof" meaning you'll never get anything back from him.

If your state allows you to form an LLP or LLLP, that'd be a much better way to go. Make sure you're aware of the applicable laws in your state regarding liability in those situations.

+1

Another very strong consideration that you should be mindful of is the compatibility between the business partners. Is this someone that you can work with daily, because you'll be "married" to him and the business as I believe you're aware?

[a10t2]

I think in well run brewpub can sell 15 to 30 BBL a month.

If they have 125 seats, at 4 turns/day and 1 pint/turn, that's 60 bbl/month plus losses. So two brews and roughly 25-30 man-hours a week just for brewing, cleaning, and racking.

[reverseapachemaster]

I'm wondering if 50% ownership comes with 50% responsibility for the debt he will accrue.

Actually, depending on how the business is set up, you could be liable for 100% of the debt. In a traditional partnership or limited partnership, the partners or general partners, respectively, are jointly and severably responsible for the entire amount of debt. If your partner is a deadbeat, your business creditors will come after your assets, and it's up to you to sue your deadbeat partner to recover your losses. If he's enough of a deadbeat, a judge could rule him "judgment proof" meaning you'll never get anything back from him.

There's no actual ruling that one is judgment proof, the facts of life make somebody judgment proof. You could still get judgment against the partner but there's nothing to execute judgment against to sell or lien to satisfy judgment. If the partner has personal assets out there he will most likely declare bankruptcy to limit your ability to recover.

If your state allows you to form an LLP or LLLP, that'd be a much better way to go. Make sure you're aware of the applicable laws in your state regarding liability in those situations.

You can rarely ever have too many L's in your business entity.

[Thirsty_Monk]

I think in well run brewpub can sell 15 to 30 BBL a month.

If they have 125 seats, at 4 turns/day and 1 pint/turn, that's 60 bbl/month plus losses. So two brews and roughly 25-30 man-hours a week just for brewing, cleaning, and racking.

Just been VERY conservative.

[nateo]

There's no actual ruling that one is judgment proof, the facts of life make somebody judgment proof. You could still get judgment against the partner but there's nothing to execute judgment against to sell or lien to satisfy judgment. If the partner has personal assets out there he will most likely declare bankruptcy to limit your ability to recover.

Yeah, thanks for clearing that up. I'd trust RAM on that one. You're in law school, right?

[newrocset]

I would be concerned that not only does he not know anything about beer but that he knows nothing about running a restaurant and nothing about running a business in general.

That was my first thought.

Mine too!  There are certainly a lot of things that can go wrong with this....very wrong!  Actually, when he told me that he would allow me 50% ownership, that raised a red flag.  If it were my business, I would want to own 100% and simply hire the people to handle the areas I don't know (i.e. food prep, management, brewing, etc...), so I'm kinda curious as to why he would want me to own 50%.  Maybe he just wants to make sure I stay - again, kinda weird since he doesn't know me.  I'm sure I'll find out in due time...but I'm not making any commitments until I'm sure of it.
On the liability front, I have been under the impression that an LLC will offer at least some protection to your personal assets?  At any rate, I'm not going to borrow any money for this venture, so I'll be sure to think twice before taking any offers of ownership.

[rjharper]

You're right that brew pubs in OK have an uphill battle because they can only serve 3.2. You mentioned college town, so it's either Sooners or Cowboys! How well do you know your market?

I'm a STW import, and if that's where youre looking, I'd be cautious about bringing in a brewpub, simply because the market is not very deep. Its limited beyond students and they're perfectly happy with cheap domestic long necks. Add in a handle of established bars with good craft selections for good prices, and you'll struggle to shift a bunch of 3.2 at brew pub prices. Especially if I can get a double IPA for the same price or less next door. I just don't see brew pubs in OK being successful until laws change.

[Jimmy K]

The other side of the question, how often does a 7 barrel brewhouse need to be used to pay for itself. Brewing on it twice a month might be convenient for you, but that is really expensive equipment sitting idle for 28 days per month.

- Sent by my R2 unit