Calculation of Revenues
Estimating your potential sales is the first step in determining profitability. You could serve the best beer and food in the world in the best environment, but if no one comes, you go hungry. Here is an example of a revenue calculation. The more realistic the numbers that you use, the more accurate your estimates will be. If you know people in the business, so much the better. If not, you'll have to dig some more. NRA averages are a good place to start; competitors' info, however, is vital in stepping toward reality.*
Lunch Revenues:      Average food check:      Average beverage check:      Seats: $5.95     $2.00     84       Day Turns Food Rev. Bev. Rev. Monday Tuesday Wednesday Thursday Friday Saturday     Total: 1.0 0.8 1.5 1.0 2.0 0.5 $499.80     $399.84     $749.70     $499.80     $999.60     $249.90     $3,398.64     $168.00     $134.40     $252.00     $168.00     $336.00     $84.00     $1,142.40       Total lunch revenue for six days: $4,541.04	Lounge Revenues:      Average food check:      Average beverage check:      Seats: $3.95     $10.00     50       Day Turns Food Rev. Bev. Rev. Monday Tuesday Wednesday Thursday Friday Saturday       Total: 0.75 0.8 1.0 1.0 2.0 2.5 $184.13     $158.00     $197.50     $197.50     $395.00     $493.75     $1,589.88     $375.00 $400.00 $500.00 $500.00 $1,000.00 $1,250.00 $4,025.00   Total lounge revenue for six days: $5,614.88
Dinner Revenues:      Average food check:      Average beverage check:      Seats: $12.95     $6.00     84       Day Turns Food Rev. Bev. Rev. Monday Tuesday Wednesday Thursday Friday Saturday       Total: 08 0.75 1.0 1.0 2.0 2.0 $870.24     $815.85     $1,087.80     $1,087.80     $2,175.60     $2,175.60     $8,212.89     $403.20     $378.00     $504.00     $504.00     $1,008.00     $1,008.00     $3,805.20       Total dinner revenue for six days: $12,018.09	Summary:     Food Beverages Total lunch revenue: Total dinner revenue: Total lounge revenue: $3,398.64 $8,212.89 $1,589.88 $1,142.40 $3,805.20 $4,025.00   Total food sales: $13,201.41   Total beverage sales: $8,972.60 Total weekly revenue: Total monthly revenue:    (weekly revenue X 4.3) = $22,174.01 $95,348.24
*These numbers were collected as part of a feasibility study based on an overall check of competitor's menu prices and information supplied by a very experienced restaurant manager. Back to Article

Is Beer Liquid Gold?

Beer has been referred to as "liquid gold" for a number of reasons, primarily because of its color and because of how rewarding it can be when consumed. For the purposes of an article on the financial aspects of brewing beer, however, we might as well interpret the phrase more literally. Below is a worksheet outlining the ballpark costs associated with brewing an average 10-bbl batch of beer. Costs may vary depending on the style of beer produced.

Costs of goods sold:

Production size: 10 bbl     Malt: 500 lb @ $0.33/lb $165.00 Water: 1,000 gal @ $0.005/gal $5.00 Hops: 5 lb @ $2.00/lb $10.00 Yeast:   $1.50 Filters: 20 sheets @ $1.00/sheet $20.00 Energy:   $20.00 CO2:   $3.00 Sewerage: 1,550 gal @ $0.02/gal $31.00 Cleaning:   $15.00 Taxes: Federal @ $7.00/bbl $70.00   State @ $6.50/bbl $65.00 Worker hours: 15 hrs $450.00 Total costs of goods sold:   $855.50 Total costs per bbl: 2 $85.55 Kegs per bbl:     Costs per keg:   $42.78 Pints per keg: 120 selling @ $3.00/pint $360.00 Gross profit per keg:   $317.22 Profit margin per keg:   88.12%

Now, before you get too excited (and before all the professional brewers out there go into fits), some other costs should be figured in. Remember your spillage, spoilage, waste, overhead, and equipment charges, plus fixed costs such as rent and equipment amortization. Those factors can dig deep into profits and should be accounted for in your estimates. Back to Article