Brewery and taproom expansion: the parts worth your attention

What to take away

Why there is no single right size

A brewery with a taproom is two businesses sharing a roof. One makes a product on a schedule set by fermentation. The other sells hospitality on a schedule set by when people feel like going out. Growth means deciding which of those two you are actually short of.

That is why no national answer exists. A taproom in a dense neighborhood with foot traffic every evening has a labor problem. A production brewery selling most of its volume through a distributor has a tank problem. The same revenue number can come from either shape, and the two need opposite investments.

Start by naming the thing you run out of first. If you are pouring out of the last keg at nine on a Saturday, you are short of beer.

If the beer is fine but the line at the bar is six deep and people leave, you are short of staff or of bar stations. If you have beer and staff and the room is half empty on a Tuesday, you are short of demand, and adding capacity would make that worse.

Five routes past your current volume

Each of these is a real option. They are not stages of one path, and picking two at once is the most common way to run out of cash.

Read that table against your own week rather than against a generic growth story. The route that looks smallest on paper, adding taproom hours, is often the one that changes the schedule most, because it turns a five day operation into a seven day one and takes the owner off the floor.

The staffing consequence of each route

This is the part that gets skipped. Capacity is easy to picture and payroll is not, so the payroll arrives as a surprise three months after the equipment does.

Adding taproom hours adds front of house time, and that time in most taprooms is a mix of tipped and non tipped work. Whether a role is tipped changes how you schedule it.

The person on the bar is compensated partly by the volume of guests in front of them; the person washing glassware is not. Two people can work the same hour on the same night and have completely different reasons to want or refuse that shift. Do not treat them as one pool.

Brew days add production time that is salaried or hourly but rarely tipped and does not flex with the room. A brewer's Tuesday costs the same whether forty people or four come in that evening.

That is the full argument for measuring the two workloads separately, and why how taproom pricing is set has to account for both.

Packaging is the lumpiest of the three. A canning run is a burst of labor on one or two days, often the same days the taproom is busy. The same person cannot be in both places.

Before you add a packaged line, look at what the draft and packaged product mix actually does to the week, not just to the balance sheet.

Distribution and a second location both add overhead that does not disappear in a slow month. That is their real risk. The taproom hour can be cut. The lease and the delivery route cannot.

What has to be approved before anything ships

Federal, state and local bodies each hold a piece of this, and they do not coordinate with each other or with your build schedule.

The Alcohol and Tobacco Tax and Trade Bureau's Starting a TTB-Regulated Business: Brewery page is an overview, not the filing itself. Identify the Brewer's Notice (TTB Form 5130.10) and confirm whether a Brewer's Bond is required or a bond waiver applies. For packaged products, determine whether the product and sales channel require a Certificate of Label Approval (COLA), filed on TTB Form 5100.31. Beer excise tax returns are filed on TTB Form 5000.24; confirm your reporting and payment schedule with TTB. Premises changes and packaging can change what must be filed, so check with TTB before committing.

Read it before you choose a route. Changing premises, adding a tank farm, or starting to package are events the federal side cares about.

Your state alcohol beverage control (ABC) agency holds the rest: the license class, whether it allows sales to go and self-distribution, and what a second premises requires. There is no single state license class for all U.S. breweries.

Ask them directly, in writing, with your actual plan described. Do not infer answers from another brewery in your state. Their license may not match yours.

The same applies to what your local zoning and building authority will allow in the space you are looking at, which is a separate question from what your license permits you to sell.

The U.S. Small Business Administration: SBA Business Guide covers the general business side of growing: financing, insurance, hiring and the ordinary permits any expanding operation collects. It will not tell you anything specific to alcohol, and it does not pretend to.

Phasing the work so it can be stopped

Write the plan in phases with a decision at the end of each one, and write the stopping condition before you start. A plan with no stopping condition is a commitment wearing a schedule.

The people side takes longer than the equipment side, which is the reverse of what most plans assume. A new bright tank arrives on a date. A trained bartender who can hold a busy Friday alone takes months, so hiring and training the next crew should start before the capacity does, not after.

Costs that are easy to miss

To calculate the added payroll burden, use your actual applicable federal and state rates rather than a generic percentage. IRS Publication 15 (Circular E) covers federal employment taxes; employers report federal employment taxes on Form 941 and Federal Unemployment Tax Act (FUTA) taxes on Form 940. State unemployment insurance rules and workers' compensation classifications and premiums depend on the state and insurer, so check the applicable state agency and policy.

The U.S. Bureau of Labor Statistics: Food Service Managers profile lists what a manager actually handles: scheduling, supply, sanitation, budgets and payroll records.

Read it as a job description for the role you are creating. A second room needs someone doing all of that who is not you.

What to hand to somebody else

Excise reporting, label approval and anything touching your license class are worth professional help the first time. Confirm whether packaged beer needs a COLA (TTB Form 5100.31), and confirm the excise return form (TTB Form 5000.24) and reporting period with TTB. For payroll, the Fair Labor Standards Act (FLSA) governs federal minimum-wage, overtime and tip-credit requirements. Confirm tip-credit notice, tip pooling and dual-jobs treatment with the U.S. Department of Labor's Wage and Hour Division and the applicable state labor agency, since state rules can be stricter. Bring the plan to your accountant before the lease, not after.

Common questions

Should I add hours or add beer first?

Whichever one you run out of first, measured over at least a full seasonal cycle. If you consistently close with beer left and empty seats, hours will not help. If you sell out early on the same night every week, that is the clearest signal a small operation gets.

Is a second taproom easier than distribution?

They fail differently rather than one being easier. A second room fails on staffing and on a slow month you cannot cut. Distribution fails on margin and on the discovery that somebody else now controls how your beer is stored and poured. Ask your state board what each would require of your license before you compare them on economics.

How do I know the event weekend was worth it?

Compare it against a normal weekend using labor cost, not headcount, and include the setup and teardown hours. Events often look profitable because the extra staff hours are counted in a different week than the extra revenue.

Can I plan around a seasonal pattern I have only seen once?

Not reliably. One year gives you a hypothesis. Treat the second year as the test, and keep the flexible capacity, meaning hours and temporary help, until the pattern repeats.