If you’re dreaming of opening your own craft brewery you’re probably wondering how much it costs to open a brewery. Will you be able to fund the project with your own capital or will you need financing or investors? The cost of opening a brewery depends greatly on the type of operation you want to launch. Will it be a simple, bootstrapped microbrewery with a humble tasting room? Or are you wanting to open a production brewery with a large taproom and restaurant?
To answer this question, we hosted a live event with Tom Hennessy of Colorado Boy Brewing. He has helped dozens of breweries get started in Colorado and beyond. In the video below you’ll find the complete recording of our live event with answers to these questions and more.
What type of brewery do you want to start?
Tom starts us off by asking what type of brewery do you want to start? There are three types of craft breweries:
- Packaging – The most expensive option. A packaging brewery is focused on producing commercial quantities of beer that are packaged and sold via distributors to local and regional liquor stores.
- Tasting Room – The most affordable option. This typically consists of a small brewing operation and a small tasting room. Typically these breweries are not packaging beers for distribution at this stage.
- Brew Pub – This is one of the most popular options, especially if founders are able to find an existing restaurant and convert it into a brew pub. This type of setup will have brewing equipment and a commercial kitchen.
Establish your legal structure
The next step after determining what type of brewery you want to start is establishing your legal structure. This could be an LLC or S-Corp depending on the goals of the company and the number of investors contributing to the project.
Determine where you will source your seed money
Where will you be sourcing your seed money to launch your project? Will you be proving the initial capital? Will you be working with investors? Or will you be financing your project with a company like Brewery Finance? Tom advises that you determine where your seed money is coming from before you start shopping for a location.
Find your location
Next, it’s time to identify your location. There are two options for craft brewers; new builds and retrofits. New builds are definitely the most expensive option, as your location will require a ton of construction for things like floor drains and brewing equipment. Tom recommends that craft brewers try to find a restaurant that can be retro-fit into a brewery. This type of location will likely already include infrastructure like floor drains and functioning commercial kitchen spaces.
Equipment decisions; DIY or turnkey
The next pivotal expense for craft breweries is the brewing equipment itself. Tom recommends an approach he calls “Franken-brew”. Using this method brewers source used equipment and piecemeal their setups. This approach can save craft brewers thousands of dollars, especially during the startup stages. For doing this, Tom recommends a few Colorado-based companies such as Rocky Mountain Vessels in Montrose and Forgeworks in Ridgeway. For brewers with access to more capital, sourcing brand-new equipment can offer a turnkey solution. Brewery Finance can help craft breweries get the capital needed to purchase turnkey equipment solutions as well as provide capital for used equipment purchases.
Contact Brewery Finance today if you’re interested in learning more about financing a craft brewery startup.