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Ive heard its easy to get money for real estate.. Right?

I've heard it's easy to get money for real estate.. Right?

The location of the brewery is a rather important topic that I’ve sort of skimmed over until today. Where we brew is directly related to how much we brew, and vice versa. Brewing in my garage means we can’t have a 30bbl system. Aiming for a 30bbl system means we can’t use my garage. Causation goes both ways there.

The net revenue from brewing is very much related to the size of the batch as well. A bigger batch costs less per beer, and since the beer sells for the same price, a bigger batch is more revenue per beer, and more revenue overall. But, systems of that size, and locations to house those systems, cost a lot more money. A lot more money than we have right now.

I see five main options for possible locations of this brewery: a big property in an ideal location, a small property in an ideal location, and big property in a non-ideal location, and small property in an non-ideal location, and my garage. Let’s look at the pros and cons of each. Please feel free to tell me that I’m completely off base here, and offer your perfect solution in its place.

Flying Dog's old location

Flying Dog's old location

Big Property, Ideal Location

I have one property in mind here: Flying Dog’s old space. It’s huge. Around 34,000 square feet. It’s equipped. Most of their brewing equipment is still there. It obviously works well. Flying Dog is pretty successful. It’s in an amazing location. 24th and Blake is a home run away from Coors Field. Blake Street Tavern is next door. And… it’s expensive. $10/SF NNN. That means about $12-15 a square foot (depending on utilities). Do some math, and that’s between $34,000 and $42,500. A month. Just for rent. In list form:

Pros

  • Great location
  • Proven location
  • Huge – easy to expand
  • Equipment already there

Cons

  • Ridiculously, prohibitively expensive for a startup

Small Property, Ideal Location

I don’t have any properties in mind for this idea. But essentially, find a really small industrial mixed-use property downtown. Brew beer in it. Serve some in house. The main problems I see are 1) it’s still going to be super expensive, especially when we don’t have secured revenue and 2) expansion becomes a problem, especially with that much money sunk into rent. I feel like if we go with a location that we hope cannot house us for very long, we shouldn’t sink all our profits into it.

Pros

  • Great location

Cons

  • Prohibitively expensive
  • No room to grow

Big Property, Non-Ideal Location

A warehouse somewhere far from downtown, such as Broomfield or Englewood, is a much cheaper option. We’d still have the tasting / tap room, but chances are no one would be coming to say hi. The size allows growth in that location, while the cost allows us to hold on to a little bit more of the profits than the downtown version.

Pros

  • Cheaper than downtown, though still not cheap
  • Room to grow

Cons

  • Idea of a tap room or storefront is useless out in the boonies
  • Still expensive

Location, Location, Location!

Location, Location, Location!

Small Property, Non-Ideal Location

Based on our current conversations about size and starting up smaller, this is becoming one of the top two options. A small (3,000 – 8,000 square foot) property somewhere in a cheaper, industrial area, would suit our needs pretty well. It’s still overhead, which is inevitable at some point, but not $40k a month.

Pros

  • Good size for how we want to start
  • Potentially inexpensive enough to allow for profits

Cons

  • No room for growth
  • No store-front / people coming to say hi

That's our garage, on the right. Brewery?

That's our garage, on the right. Brewery?

My Garage

This is quickly becoming the ideal location, at least for getting started. Of course this location requires my landlord’s approval (I don’t own my house.. oops), so pending that, this option might get crossed off. Until then though… Low overhead, light commute, decent size, decent (not ideal, but not bad) location. Some problems include the fact that it’s a residence. Waste is sort of an issue for a brewery of any size, and our neighbors may not be too pleased with commercial beer production in their backyard.

Pros

  • Cheap. My rent is cheap right now as it is
  • No commute
  • Close to potential accounts

Cons

  • Small – no room for growth
  • Waste issues
  • Residential neighborhood issues
  • Delivery issues – trucks can’t drop pallets off in a back alley

The first option, the big ol’ warehouse downtown, is the goal. Eventually, I want the brewery to succeed, and to show enough growth and growth potential to afford such a location. But I don’t think that’s this year, or next. I do see some growth happening in the first few years, and moving is never cheap, so the first location, even if we’re there for 5 years, needs to be affordable above all else. If my landlord and the law say that my garage is ok, I think we’ll go with Option #1. A small warehouse somewhere on South Santa Fe or something would be the next best option. After that? Well, we’ll have to see what happens.

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