Saskatoon Brew Pub, Guy Keeler
Table of Contents
1.0 Introduction 5
1.1 Overview 5
1.2 Mission Statement 5
1.3 Goals and Objectives 5
1.4 Project Benefits 6
2.0 Policy 7
3.0 Operations Plan 7
3.1 Location 7
3.2 Work Plan and Flow of Work 8
3.3 The Brewing Process 9
3.4 Average Business Cycles 14
3.4.1 The Average Week 14
3.4.2 The Average Month 14
3.4.3 Special Considerations 15
3.5 Capital Budget 15
4.0 Human Resource Plan 17
4.1 Human Resource Strategy 17
4.2 Organization Structure 17
4.3 Job Descriptions 19
4.4 Training 21
4.5 Future Human Resources 22
5.0 Marketing Plan 22
5.1 Marketing Mix 22
5.2 Segmentation, Targeting and Positioning 23
5.2.1 Segmentation 23
5.2.2 Targeting 24
2.2.2.1 Industrial Workers 24
2.2.2.2 Young Professionals 24
2.2.2.3 Middle Aged 24
2.2.2.4 Target Market Summary 25
5.2.3 Positioning 25
5.3 SWOT Analysis 25
5.3.1 Internal Strengths and Weaknesses 26
5.3.2 External Opportunities and Threats 27
5.4 Market Analysis 27
5.4.1 The Market 27
5.4.2 Competition 28
5.4.3 Customers 30
5.5 Marketing Strategy 31
5.5.1 Sales and Profit Objectives 31
5.5.2 Channels of Distribution 31
5.5.3 Pricing Policy 31
5.5.4 Select Markets/Products/Service Mix 32
5.5.5 Selling and Advertising 32
5.5.6 Marketing Plan Budget 33
6.0 Financial Plan 33
6.1 Sources of Funding 33
6.2 Opening Balance Sheet 35
6.3 Financial Summary 35
6.4 Economic Forecast 36
6.5 Sensitivity Analysis 37
6.6 Dividends Policy 38
6.7 Unit Cost of Production 38
6.8 Summary 40
7.0 Conclusion 41
8.0 References 42
Appendix A Financial Projections 44
List of figures
Figure 1. Floor plan of Saskatoon Brew Pub. 8
Figure 2. The brewing process flow diagram. (Source: CDC Inc. Brewing Process from Grain to Glass, 2003). 9
Figure 3. Grain Mill. (Source: The Brewers’ Handbook, 2003) 10
Figure 4. Mash Tun. (Source: The Brewers’ Handbook, 2003) 11
Figure 5. Brew Kettle. (Source: The Brewers’ Handbook, 2003) 11
Figure 6. Heat exchanger and filtration system. (Source: Source: BrewTech Labs, Inc., 2003) 12
Figure 7. Fermentation tanks. (Source: BrewTech Labs, Inc., 2003) 12
Figure 8. Bright beer tanks. (Source: Sound Brewing Systems, 2003) 13
Figure 9. Serving tanks. (Source: IDD Process & Packaging, Inc., 2003) 13
Figure 10. The organizational structure for the Saskatoon Brew Pub. 18
Figure11. Pie chart showing percentage of revenue generated by each product. 40
List of Tables
Table 1. Estimated equipment costs. 15
Table 2. Estimated working capital. 16
Table 3. Estimated building and furnishing costs 16
Table 4. Estimated brewing costs of good sold. 17
Table 5. Estimated capital budget summary. 17
Table 6. Estimated wage and salary costs of employees for 5 years. 21
Table 7. Segmentation of the market 23
Table 8. The average amount of money spent on alcohol/tobacco in Calgary, Regina, and Saskatoon. (Statistic Canada, 2003). 28
Table 9. Saskatoon Brew Pub Competitors. 29
Table 10. Marketing Costs. 33
Table 11. Table showing the sources of financing. 34
Table 12. Opening balance sheet. 35
Table 13. Sales Growth Forecast 2004-2013 36
Table 14. Summary of net income, end of year cash flow and dividends paid when the Saskatoon Brew Pub receives 170 customers per day. 37
Table 15. Summary of net income, end of year cash flow and dividends paid when the Saskatoon Brew Pub receives 149 customers per day. 37
Table 16. Material cost of production of house brew. 38
Table 17. Total cost of production of house brew. 39
1.0 Introduction
1.1 Overview
The Saskatoon Brew Pub is a new business venture to be set up in Saskatoon, Saskatchewan. The founder of this venture is local crop consultant, Guy Keeler. The increased demand for off farm income has caused avid interest in the value added production of a commodity readily produced on the prairies, malt barley. The Saskatoon Brew Pub will provide a link for those interested in investing in the value added production.
The ideal growing conditions in Saskatchewan have allowed it to become the second largest malt barley producing province in Canada. Saskatchewan produces an average of 5.48 million metric tonnes of malt barley per year (approximately one quarter of Canada’s malt barley production). With this large tonnage of barley being produced it is thought to be beneficial for the barley to stay within the province and have value added here instead of allowing the manufacturing to occur elsewhere.
1.2 Mission Statement
“To profitably produce a high quality brew to be served in a relaxing and sociable environment. All products are made in Saskatchewan and will allow everyone to experience the Saskatchewan way of life.”
1.3 Goals and Objectives
The goals and objectives of the Saskatoon Brew Pub are as follows:
- Provide at least 15% internal return on investment
- Establish a well known, respected name within the brewpub industry
Short Term:
o Gain a substantial market share in the brewpub industry in Saskatoon
o Provide excellent customer service for consumers
o Produce a profit which will be used for payments on the long term debt
Long Term:
o Become a leader in the Saskatoon Brew Pub industry
o Profitable growth in percentage of clientele and demand for the house brew
o Expand facilities for function rooms for separate parties
o Expand the menu, and to offer a larger range in meals
o To provide a return on investment in the form of dividends to shareholders
1.4 Project Benefits
The development of the brewpub industry in Saskatchewan will bring numerous benefits to the province:
- By the setup of a brewpub, it will add diversity to the many licensed restaurants found in Saskatoon
- The Saskatoon Brew Pub will provide jobs for Saskatoon residents and add to the economy.
- Allow off farm income for the farmer share holders.
2.0 Policy
Under the SLGA’s policy, in order to have the designation of a “Brewpub” the Saskatoon Brew Pub must:
- Only allow a maximum of 210 customers in the establishment at one time
- Purchase a liquor license under The Alcohol and Gaming Regulation Act for approximately $500 (and a $200 application fee).
- Be licensed under The Liquor Consumption Tax Act for the sale of liquor.
- Pay Liquor Consumption Tax of 10% on the total selling price of beer, wine, and spirits.
- Charge a minimum price of $2.25 per ounce of spirits and the same amount for bottled or canned beer (assuming 12 ounces per container). The minimum price for draught beer is $0.16 per ounce, and for wine the minimum price is $0.35 per ounce. All these prices include the Liquor Consumption Tax and GST.
3.0 Operations Plan
3.1 Location
The Saskatoon Brew pub is located on 51st Street, Saskatoon. The building is situated in a new development site, therefore indicating that there is expansion and development within the area. The 3000ft2 building will be leased yearly at a rate of $42,000. Since the building is new and being leased, fewer renovation costs will occur as much of the construction can be completed while contractors are still working on the site. The location will be in the vicinity for a large number of employees within the industrial area. It will also be within close proximity to Saskatchewan Place, this will allow the Saskatoon Brew Pub to capture customers who are going home from events held at Saskatchewan Place.
3.2 Work Plan and Flow of Work
Figure 1. Floor plan of Saskatoon Brew Pub.
3.3 The Brewing Process
Figure 2. The brewing process flow diagram. (Source: CDC Inc. Brewing Process from Grain to Glass, 2003).
Grain Mill: The grain mill (figure 3) is used to split the husk (preferably lengthwise) to reveal the starchy endosperm to allow for efficient extraction and the husk will act as a filter for the wort. It is important that the grain is not milled too finely, as although there will be a greater surface area of endosperm exposed for extraction, improper infiltration will occur during the subsequent steps. (The Brewers’ Handbook, 2003)
Figure 3. Grain Mill. (Source: The Brewers’ Handbook, 2003)
Mash Tun: The mashing is the process that converts the starch from the milled malt and solid adjuncts into fermentable and un-fermentable sugars to produce wort of the desired composition. The composition of the wort will vary according to the style of beer. Mashing involves mixing milled malt and solid adjuncts with water at a set temperature and volume to continue the biochemical changes initiated during the malting process. (Note: adjuncts are grains such as corn, rice, rye, oats, barley, and wheat. They are used because they provide extract at a lower cost (a cheaper form of carbohydrate) than is available from malted barley and because they are readily available. By adjusting the temperature in this stage, the brew master can produce fuller or lighter tasting beer. Higher temperatures produce a fuller tasting product, while lower temperatures produce a lighter taste (Brewsource.com,2003). Following the mashing process (once all the starch has been broken down) the wort (liquid extract) is separated from the spent grain and adjuncts (solids) (figure 4). The wort separation is important as the solid portion contains large amounts of protein, poorly modified starch, fatty material, silicates and polyphenols (tannins). The remaining spent grains are cleaned and recycled as cattle feed. (The Brewers’ Handbook, 2003).
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Figure 4. Mash Tun. (Source: The Brewers’ Handbook, 2003)
Brew Kettle: From the mash tun the wort is moved back to the brew kettle where hops are added and the wort-hop solution is boiled for approximately 1.5 hours (figure 5). Boiling concentrates the wort, sterilizes it and captures the necessary essence from the hops. Once the hop flavors have been extracted, the wort is transferred to the hot wort tank. The next step is to separate the hop debris and the trubaceous matter (hot break) from the boiled wort before cooling. (The Brewers’ Handbook, 2003).
Figure 5. Brew Kettle. (Source: The Brewers’ Handbook, 2003)
Heat Exchanger: The clear wort is then drawn off and sent to the wort cooler (Brewsource.com,2003). As the wort transfers through the cooler, the temperature drops from boiling to 14 degrees Celsius (figure 6). (The Brewers’ Handbook, 2003).
Figure 6. Heat exchanger and filtration system. (Source: Source: BrewTech Labs, Inc., 2003)
Fermenter: Once cooled, living active yeast is added to the wort, it travels to the fermentation tanks (figure 7). Fermentation is the microbiological process in which yeast converts sugars in the wort into alcohol and carbon dioxide. Fermentation is complete in approximately one week, and the yeast is either removed from the top of the brewing tank (for ale) or from the bottom (for lager). (The Brewers’ Handbook, 2003)
Figure 7. Fermentation tanks. (Source: BrewTech Labs, Inc., 2003)
Filter: Filtration is needed to remove residual yeast, other turbidity-causing materials, and microorganisms in order to achieve colloidal and microbiological stability (figure 6). (The Brewers’ Handbook, 2003).
Bright Beer Tanks: After filtration the beer will be transferred to bright beer tanks where it is stored in bulk until needed to be moved into the serving tanks (figure 8). (The Brewers’ Handbook, 2003).
Figure 8. Bright beer tanks. (Source: Sound Brewing Systems, 2003)
Serving Tanks: The beer is transferred into the serving tanks ready for the customer consumption (figure 9). (The Brewers’ Handbook, 2003)
Figure 9. Serving tanks. (Source: IDD Process & Packaging, Inc., 2003)
The brew pup will initially produce five different kinds of house brews. They will consist of: pale ale, pilsner lager, wheat beer, cream ale, and a special house blend.
3.4 Average Business Cycles
3.4.1 The Average Week
The business day will start at 11am until 2am the following morning, Monday through Saturday. Sunday’s will be a slower pace; therefore, the business will only be open until midnight. Brewing will take place whenever needed. On average, a batch of beer a week will be needed to be made. Inventory will be stock checked during the middle of the week (Wednesday). During the week the busiest days will be Thursday through Saturday, and any other times promotional nights are held. From 6pm onwards will be the busiest period during the day, as people will arrive after work for drinks.
3.4.2 The Average Month
The average month for the Saskatoon Brew Pub will vary depending upon which beers are being produced. The busiest periods will occur on promotional nights and holidays. The brew master, head bar tender, and kitchen manager will each be in charge of ordering their inventory needed. The office clerk will ensure that all bills are paid on time. Since all products will be paid for upon purchase, the manager and office clerk will not have to send out invoices. Wage based employee’s will be paid fortnightly, whereas the salary based employees will be paid monthly with an advance of pay halfway through the month. Monthly financial statements will be produced and analyzed to see how well the company is doing or what improvements need to be made.
3.4.3 Special Considerations
The beer will be produced according to demand with a regular rotation of brewing. Some beers require longer or shorter fermenting times, therefore the brew master will have to organize a brewing schedule to ensure that there will be adequate quantities of beer available at all times.
West Can will be the supplier for the malt and specialty malts. The food will be supplied through a wholesale club such as Costco or Superstore wholesale. The beer will be supplied directly through the local liquor stores.
3.5 Capital Budget
As seen in (table 5) the capital budget, the Saskatoon Brew Pub requires $258,000.00, this includes the working capital, equipment and building expenses.