Cost and Inventory Issues for Brewpubs

There are many ways to lose money in any restaurant. One of the most vulnerable areas for squandering big dollars is the management of food and beverage costs and inventory. Spoilage, theft, over-production, waste, poor planning and unrecorded sales can all eat into profits. Most successful restaurants are cognizant of these risks and are very deliberate and diligent about managing their food and beverage costs. Maintaining and managing a perpetual running inventory of certain key products is one of the most fundamental and effective ways to control food and beverage costs, yet many independent operators don’t do it. 

Brewpubs, defined as a bar serving beer brewed at an on-site microbrewery, follow many of the same protocols as restaurants when it comes to inventory management, controlling food costs and improving profitability. However, brewpubs must also navigate issues unique to beer production, such as messy raw ingredients, ordering schedules, contracts with long-term commitments, consistency in the quality of additives and efficient use of the elements needed to brew beer.

A successful brewpub depends on having access to malt, hops, water and yeast, ingredients that are indispensable to the brewing process. But these resources also require particular care and attention when it comes to managing the associated costs and inventory issues.
  • Malt is easy to obtain but hard to handle in a restaurant environment. It must be milled for the brewing process, which produces a messy, flour-like substance that creates dust and poses unique environmental issues for brewpubs. Malt processing facilities must meet strict building codes, and as a result, milling is usually handled by an outside vendor. The brewer is ultimately subject to the vendor’s schedule, which limits flexibility and drives up the cost of grains or malt.
  • Hops, which produce the boldness and flavor of beer, require brewpubs to obtain contracts five years out to guarantee the availability of specialty, highly aromatic varieties to create the beers that are in high demand. This requires a level of advanced planning that more common ingredients typically do not.
  • Water costs are most affected by the consistency of the supply. The more inconsistent the supply, the more filtration required, leading to increased planning and costs.
  • Yeast is easy to source, but brewers must use the same yeast strand over several batches of beer to maximize cost effectiveness.
The inventory considerations do not end once the beer is produced, however. While, ideally, the brewpub moves the product through sales, there must also be plans in place with a distributor to move unsold product in order to free up valuable inventory space.

Brewpubs occupy a unique space in the restaurant industry, and as a result, have some very unique inventory and sourcing issues that a traditional standalone restaurant does not. A brewpub must be ready to manage these items to avoid any disruption in production and meet their customers’ demands.