There are many levers and dials that as brewery owners you can adjust to make tweaks to your business. But it can be difficult to track and interpret the flood of information flowing in, from production and sales numbers to taproom receipts and more. What metrics are most important in maximizing the productivity and efficiency of the brewery?
Focus on Impact
“The first thing you do is focus on where you can actually have an impact,” says Matt Linecum, co-owner of Fremont Brewing. “Our philosophy has always been there’s no reason to have information or data unless you have the power to do something about it. So that’s how we evaluate our investments and upgrades. Does it matter if I know how much electricity I’m using if I have no money to actually put efficient measures in place? Not really. You should really spend that time, money, resources, and attention—which is probably the scarcest resource—on things that can have impact immediately. Do those and then move on to the next.”
Outside of evaluating which areas you have the funds and ability to directly influence, understanding how the various components of your business work together can also help identify areas where you’re doing well and areas of improvement.
Jaime Dietenhofer, co-owner of Figueroa Mountain, says it’s helpful to evaluate information with an eye toward maximizing efficiency as a bottom line. Are you effectively using your resources to their utmost potential?
“Take production, for example,” he says. “Obviously, the apparent one is barrelage and how much liquid you produce. But along with that is knowing how much of it is produced exactly as you spec and how much of it you are able to package—essentially the yield. Also, of course, things such as healthy yeast viability are a really big deal.”
Monitor Cost Fluctuations and Inventory
Any fluctuations in the cost of raw materials and warehoused goods are also important to keep track of.
“When you’re a very small brewery, it’s much more manageable and your needs aren’t as much and cash flow is much easier to monitor,” he says. “But when you’re buying large amounts of inventory and dry goods and glass goods and all those things, any fluctuation is something that you need to keep your eye on. You also need to make sure that you’re turning inventory because inventory equals cash. And if you’re not doing so on a relatively frequent basis, you’ll see that your cash is tied up. If you’re growing in any market, not just beer, you’re always spending ahead of what you’re making.
“And it’s not just from a production standpoint and how efficient your machines are and your team is, but also looking at the pull through. What’s the consumption like? Whether or not the beer moves off the shelves is really the test of whether or not it’s translating to the consumer.”
Tracking growth with your distributors also provides a picture of the health of the brewery, Dietenhofer says.
“We’ve been fortunate to still be increasing with each one of our distributors. Being in the green is huge, especially in today’s market. And to still have significant, double-digit growth with the distributors is definitely a testament of the team.”
He also emphasizes that it’s important to track and streamline these processes and metrics from the very beginning to help avoid more costly corrections as the business grows.
“At a small level you can make mistakes and still get by, make payroll, and all that stuff, but any mistakes you make at a larger level are definitely amplified,” he says.
John Linn, brand manager at Florida’s Funky Buddha, says that it’s important to ensure that all of the core components of the business are operating harmoniously in order to remain vital. This starts with production and simply “making compelling beers that are interesting and give people a reason to go back to them,” along with strong branding with “a clear sense of direction, perspective, and personality.” Taproom success is also vital in getting your brand and your message out there. The overall well-being and satisfaction of your employees, however, is the most important aspect in the long run, he says.
“You’ve got to have really passionate employees who are ambassadors for your brands and live the brands,” he says. “We are very lucky in that regard.”
Keep Up with Social Media
Ryan Scott, cofounder of Odd13 Brewing in Lafayette, Colorado, was a computer engineer by trade before starting the brewery with his wife, Kristin. Balance sheets and income statements help him better understand how the taproom and overall business are doing from month to month, and tracking the rate of sales from the distributor helps him in production planning and deciding the kind of packaging mix he might need.
But while spreadsheets and statistics are right in Scott’s wheelhouse, when it comes to quickly gauging how a new brand is performing in the market, there’s no substitute for social media.
“The beer-rating sites are not the be-all and end-all, but each of them has a different purpose, and they’re helpful as far as fast feedback is concerned,” he says. “For example when we launch a new beer, we find that Untappd is the fastest way to get simple feedback on how it’s doing,” he says. “They seem to be the ones that have reached critical mass. There might be 100 ratings on Untappd before we have three or more on Rate Beer or Beer Advocate. But Untappd isn’t necessarily aimed at the beer-geek crowd; it’s aimed at the Facebook crowd.
“The slightly more detailed or geeky type of reviews sites are better to get ideas about what overall people are liking, or not liking, about the beer, especially when people are willing to write two or three paragraphs about a beer.”
Social media also helps Odd13 monitor individual batches of beer, since many reviews will include the date code from the bottom of the can. It also helps them track whether people are having a particularly good or bad experience with a specific batch.
Tracking expenses and profits is, of course, essential in successfully running any business, but also staying abreast of areas that have the most impact on running the brewery efficiently and where you can have the most direct impact helps to make those small corrections before they turn into big ones.
Want more business-focused best-practice advice and instructive examples? Check out the Brewing Industry Guide, an independent resource that examines the challenges and opportunities facing the brewing industry today.