THOUGHT PIECE the carling team
So You Want To Open A Tap Room?
There seems to have been a lot in the hospitality press lately about brewers opening tap rooms. Are these temples to show off the gleaming products of brewery fabricators like Brewfab, Oban Ales, Industriel Techniques, Grange, PBC, mackled together by A-B UK or even built by the big guys Krones, Moeschle or Musk? Or are they a route to market for increasingly exotic beers which are perhaps more difficult to sell into a more traditional pub trade? Or do people just like drinking in breweries?
The Brewery Tap has been around for ages, this was the pub nearest to the brewery where brewers could wile away the afternoon knowing they were not too far away if anything went wrong! There was no brewery in the Brewery Tap.
Microbrewers have owned pubs since the movement gathered pace in the late 70s. Ted Bruning’s book, the Microbrewers Handbook written getting on for twenty years ago says there were 130 of them. Interestingly Ted lists some of the more successful pub owning new age breweries and I note that Ringwood, Bath Ales and Butcombe have all been since taken over by bigger fish! Today SIBA has 703 members and some 30% say they own pubs which would be around 200 so there has not been a dramatic change.
However the market for the smaller brewer is currently highly competitive. Progressive Beer Duty aka Smaller Brewers Relief has often gone to swell pubco margins rather than being invested in plant, people and perhaps even a microscope. Rupert Thompson at Hogs Back with its 3.5 pint ‘snorters’, own hop yard and the nation’s only tap room with a hop picking machine in the corner is on record observing that the margins on cask beer are the same in real terms as they were when SBR was introduced. He also asked “Is it sensible that 200 new breweries are opening each year while 20 pubs are closing each week?
Pubs are indeed having a pretty torrid time at the moment. There are far fewer of them in a trend which started long before Coronavirus. According to the Altus Group UK the number of pubs in England and Wales has fallen to 39973 against some 47080 a decade ago. A further study by the British Institute of Innkeeping (BII), UK Hospitality and BBPA shows that only 37% of pubs are currently turning a profit. Staff are hard to get on the wages they were paid before the lockdowns and we have not yet seen the bulk of the inflationary pressures caused by covid recovery and Putin’s expedition in Ukraine.
Just last month the BII called for government support to ensure the future survival of pubs as the sector remains extremely fragile. It urged a VAT reduction for hospitality and an energy rise cap for pubs, full cancellation of business rates up to 2024 and further beer and cider duty cuts for draft products. Its survey showed that three-quarters of its members were still down on 2019 revenues and profits are currently being nibbled by inflation. Some 15% said their businesses were no longer viable and will be selling up shortly. Due to staff shortages, half of the pubs surveyed were having to reduce trading hours with one in four closing their doors for at least one of their trading days. 70% had business debts and a quarter of them over £50000 with banks not showing much inclination to support ongoing borrowing.
Ted Brunning wrote that any start up brewer without a retail outlet must be mad. David Smith who consults with some 200 micros says he promoted the idea of tap rooms when York Brewery started out in a very constricted motor cycle showroom within the city walls back in 1995. “The tap room is a shop window for the brewery and great cash flow”, he says. “The term tap room or more latterly, beer hall, have only recently come back more common usage since covid struck but are definitely here to stay. People are definitely enjoying sitting in the brewery environment and drinking beer is something that has caught on big time (at least for now)”.
Retailing is a whole new specialism for the brewer. Retail can be successful but it can also bring down the whole enterprise. You will be used to employment law with your assistant brewers but now you will have bar staff, cleaners and people in the kitchen. An underperforming manager, surly and poorly motivated bar staff who pilfer, poorly cooked food and inadequate footfall are all potential problems. You will want bar staff to be knowledgeable to promote your portfolio but you will lose the best if you cannot pay at least the living wage.
Research shows that these beer halls, tap rooms or sometimes ‘boutique’ breweries are being constructed by well established firms which have outgrown earlier constricted premises probably out of sight of the drinkers in a pub cellar or outhouse. With a sound track record, they are far more likely to attract the capital needed which will most certainly cost a lot more than the brewing equipment. Wiper and True has moved house in Bristol to a 28,000 sq foot building, which should give them plenty of room.
As with any new venture you will first need a solid business plan to attract investors or obtain funding. Outline your goals and strategies for achieving them. Think carefully about the concept for your outlet, what makes it different from the local competition? It is a competitive and volatile market out there but ,as we have seen, uncompetitive businesses have gone to the wall leaving gaps in the market. Think too about tourism, there is lots of help available if you can encourage that sector. Set out your success factors so that the venture does not drift.
You will need to operate within the law. Following the 2003 Licensing Act, the responsibility for issuing personal and premises licences rests with local authorities rather than magistrates. Happily getting the correct licences to operate is relatively straight forward although an all encompassing application form stretches to 16 pages! You need a licence for the premises and one for yourself as the designated official who has agreed to uphold the four bases of licensing law, namely prevention of crime and disorder, protection of children, public safety and the reduction of public nuisance. You will hold a certificate from the BII that you have been on a one day designated training course and have had a criminal records check.
A brewer will probably have a personal licence already since it allows limited activities at the brewery like selling beer on a few open evenings, sampling beers after tours and setting up bars in village halls for beer festivals. Any regular sales like racked bright polypins or a clutch of cans will need a premises licence as well. This latter covers evening entertainment and food sales after 11pm. Local rules need to be observed as consuming alcohol outside may be prohibited and any activities outside on the pavement need delineating. Then you will need public liability insurance.
As you have to provide a site plan, you need to have decided on your location. Are there enough stables at stately homes, old woollen mills, railway sheds or even cowsheds to satisfy aspiring brewer’s needs; you will probably have to compromise and consider closed retail outlets or the industrial estate. A change of building use will require planning permission. Bars are A3 while industrial units for brewing only are B2. You need to inform the police and fire authorities and must advertise your set up intentions and if cars are going to have to park on nearby streets you can expect opposition from the neighbours.
The more people pass by, the greater your chances of attracting newcomers. Being a destination in the middle of an industrial estate, deserted in the evening, may not bring in the numbers you need. Reuse of high street premises particularly historic ones are a better bet – think Wetherspoons but they do not install breweries in their bars. Remember too that the brew plant will need securing as customers may be tempted to take a private tour and twiddle some valves particularly after they have had a few. Floor to ceiling glass allows a good view of the equipment but can be expensive to install. Shilling in Glasgow get over the problem by installing the brewery on a mezzanine level above the bar and put a barrier over the stairway.
Some visitors are welcome if you organise tours of the kit but make sure that the guide is engaging and knowledgeable. Once upon a time your blogger took a tour of a famous Midlands brewery and listened to a succession of howlers. Perhaps send a well informed mystery shopper on a tour occasionally. Make sure too that fingers do not go into bowls of raw materials, remember those infected bowls of peanuts on hotel bars! Hook Norton with vertiginous stairs has a chair at each landing so you can catch your breath!
Having an attractive shop where visitors can browse after the tour is a must. A glass fronted fridge full of 5L cans offers great temptation. Other local tracklements like honey, pickles, jams, cheeses, frozen beer sausages and even soaps add to the take away beer offering. Do not forget logoised sweat shirts and beanie hats.
The hospitality area can display charts of the process and a takeaway leaflet adds to your marketing effort. New breweries necessarily do not have much history but the surrounding area probably will. The Brewery History Society can provide background material and breweriana is readily available at fairs or on-line where you should be careful not to overpay.
As you want to sell your products in the very best condition, do not skimp on the cellar area and dispense system and remember to keep them clean. If product lines proliferate into soft drinks, wines and spirits, investment in an epos system and even beer meters on the lines will help to look after the stock and do a lot of the sums for you. Folk seem not to carry cash these days so a SumUp card payment device is cost effective and saves handling cash.
Food will take you into the realms of the local environmental health people and kitchen areas will need to be fit for purpose. The jar of pickled eggs on the bar and pork scratchings behind it are long gone but a simple offering could involve charcuterie and cheese selections but you will still need to be audited. A chuck wagon in the yard is another possibility leaving all the specialist catering issues to someone else who will pay you a rental or else you pay them a fee to provide the facility. There are so many tap rooms in Fort Collins in Colorado that I am told punters tour around looking out for their favourite chuck wagon and go to the brewery where they like the food offering!
I hope I have not put any aspiring brewers off but you need to enter the world of retailing beer with eyes well and truly open….and you will need deep pockets!