THE PROBLEMBrewpub

“I want to drink real beer, not Bud Light.”“I’m tired of drinking the same old beer.”

“I would like to get a larger variety of beer.”

Solutions

Create a Brew Pub that will provide locals with fresh creative craft brews.

Give people a selection to what they drink.

Offer brews that change with the seasons.

Industry According to Beverage Marketing

Corporation (www.beveragemarketing.com)

2003- 2008 there was an increase in sales from 205 million barrels to 214.6 million barrels

Many breweries such as Sam Adams attempt to remain in the craft brewery market, so that they can maintain the number one seller status. They have become too large.

Market Gender: Male- 77%, Female- 23% Age: 21- 27= 23%, 28- 34= 18%

35- 44= 26%, 45 and older= 34% African-American- 12%

Caucasian- 74%Hispanic- 11%Other- 3%

“I want a real beer that is not mass produced.”

Tlapa, C., Miller, R., & Washington, K. (2010). BEER. Restaurant, Food & Beverage Market Research Handbook, 227-232. Retrieved from Business Source Complete database.

Competition According to BeerNews.org, Boston Beer

Co., Sierra Nevada Brewing Co., and New Belgium Brewing Co., were the top ranked beer companies in 2009 by beer sales.

Strength: Produce a quality product. Weakness: Not able to mass produce

without compromising quality. Opportunities: Expansion regionally or

nationally Threats: Competition from larger breweries.

Business Model

Create a place for people to drink amazing beer while enjoying music.

Seasonal and Traditional brews. Different beers monthly Sell beer to consumers and retailers. Drink specials during sporting events. Live music Offer free buffet during happy hour

Pro Forma Statements

Startup Expense: $155,500 Startup Assets: $110,000 Cash for Recurring costs: $306,000 Total Startup Costs: $571,500

BrewPub 3 yr forecast Year 1 Year 2 Year 3

Total Revenues

$180,000

$207,000

$216,000

COGS20,000 23,000 24,000

Gross Margin160,000 184,000 192,000

Operating Expenses

Wages10,000 11,500 12,500

Rent27,000 27,000 27,000

Utilities14,400 16,560 17,280

Insurance12,000 12,000 12,000

Selling Expenses

5,000 5,000 5,000

Depreciation3,000 3,000 3,000

Total Operating Expense

71,400 75,060 76,780

Operating Profit88,600 108,940 115,220

Interest expense8,600 8,600 8,600

Profit before taxes

80,000 100,340 106,620

Income tax expenses(@25%)

17,500 22,210 23,780

Net Income62,500 78,130 82,840

Sales forecast 1 year

$500 a day in sales $180,000 first year 15% increase in

sales during year 2 20% increase in

sales during year 3

Cash Flow StatementCash Flow Statement

Year 1 Year 2 Year 3

Net income $160,000 $207,000 $216,000

Depreciation 3,000 3,000 3,000

Net working capital 1,700 1,355 125

Cash available for Investing

164,700 211,355 219,125

Cash flow from Investing

Equipment purchases (50,000) (57,500) (62,500)

Cash available for Investing

114,700 153,855 156,625

Cash flow from financing

Mortgage payments (27,000) (27,000) (27,000)

Loan payments (24,400) (25,900) (26,900)

Net Cash Flow 63,300 100,955 102,725

Balance SheetBalance Sheet

End year 1

End year 2

End year 3

Current assets

Cash $10,000

$11,500

$12,500

Accounts receivable

1,500 1,725 1,875

Inventory 20,000 23,000 24,000

Total current 31,500 36,225 38,375

Property 14,400 14,400 14,400

Buildings 27,000 27,000 27,000

Equipment 50,000 57,500 62,500

Total long-term

91,400 98,900 103,900

Total Assets 122,900

135,125

142,275

Liabilities &Shareholders equity

End year

1

End year

2

End year

3

Current liabilities

Accounts payable

10,200

12,330

13,750

Wages 10,000

11,500

12,500

Short-term debt 9,600 11,040

12,000

Total Current 29,800

34,870

38,250

Long-term Liabilities

Bank Loans 24,400

25,900

26,900

Mortgages 27,000

27,000

27,000

Total Long-term 51,400

52,900

53,900

Shareholder equity

Contributed capital

13,000

14,950

16,250

Retained earnings

28,700

32,405

33,875

Total Equity 41,700

47,355

50,125

Total Liabilities &Shareholders equity

122,900

135,125

142,275

Key Ratios Year 1 Year 2 Year 3

Profitability Ratios

Gross Margin % 89% 89% 89%

Return on Equity 383% 437% 431%

Net Operating Income 2.8% 2.4% 2.3%

Net Profit Margin 49% 52.6% 53.3%

Liquidity Ratios

Current Ratio 1.06 1.04 1.0

Quick Ratio .39 .38 .38

Leverage Ratios

Debt/equity ratio 1.9 1.85 1.83

Operating Ratios

Days Payable 186 days 195 days 208 days

Collection Ratio 3 days 3 days 3.1 days

Inventory turns 1 1 1

Days inventory carried 363 365 363

Cash Flow Ratios

Cash Flow Cycle 1.07 day 1.07 day 1.08 day

Cash flow debt coverage 1.1 1.08 1.08

Valuation Ratios

Price/Earnings ratio No Stock No Stock No Stock

Milestones Raise Capital and find

financing for Top of the Line Brewing Company.

Find a Brew Master, materials, and location by Jan. 15, 2011.

Begin advertising with multiple media outlets by Feb. 23, 2011.

Open store by Apr. 1, 2011.

Increase employment to decrease owner work load by Apr. 1, 2012.

Expand retail distribution to regional stores by 2013.

Call of Action Attend Brewing festivals,

advertising to locals. Use many different media

channels, such as the internet, direct mailing, flyers, and cold calls.

Increase the size of the brewery with in the first five years.

Find a competitive advantage and understand the competition’s competitive advantages.

Become a successful local brew pub that provides entertainment for the community.