Inspiration on Tap: What I'm Listening to Before the Craft Brewers Conference

Are you attending the Craft Brewers Conference in Indianapolis this week? 

I expect it to be an excellent opportunity to connect and share what works in the craft brewing industry. 

Want to spark a real conversation with your industry peers? Bring up last year’s profit margins. It’s a little uncomfortable—and that’s exactly what makes it powerful.

As part of my mission to bring the best information to our industry, here are the podcasts to listen to as you travel to CBC. These are excellent resources, whether you are looking to prepare for the conference or remind yourself how great of an industry we have.

• Craft Beer & Brewing Magazine Podcast, Episode 404, "Bright Spots in Beer's Economic Data with Contributing Editor Kate Bernot" - This is a great listen to catch up on the latest industry insights. TRDL: Don't just read grocery scan data. 

• How I Built This with Guy Raz Podcast, "Samuel Adams: Jim Koch" - This is one of my all-time favorite podcasts; it helped me get into the beer industry - and helps me to remember why I stay. 

Let me know your thoughts on these podcasts and what stuck in your head on your travel back home. 

Take Control of Your Brewery's Finances with This Metric

Think tracking Prime Cost is complicated? It doesn't have to be! With the right tools and a simple formula, you can easily measure your Prime Cost and uncover ways to improve your margins. 

At Arizona Wilderness Brewery, we introduced a structured prime cost tracking system using QuickBooks and Toast data, providing restaurant management with a simple financial insight that has been utilized in the restaurant industry for decades. We set out to achieve a target of 60% prime cost. The team became more active in financial conversations and intentional about labor scheduling and cost control. As a result, and even under inflationary pressure, in Q4 2024, they achieved their closest result to that goal, improving the restaurant's profitability while upholding their customer service standards. This success highlights the power of financial visibility in driving the profitability of each taproom location.

The bottom line: Hitting a Prime Cost of 60% allows most restaurants to return 20% Profit Margins per location and 10% profit margins across the entire company. When you have the right financial insights in front of decision-makers, you gain the confidence to trial new operating models, adjust pricing, and maximize profitability.

Tracking your Prime Cost regularly gives you the financial insights you need to make smarter decisions, improve efficiency, and boost profitability. 

Want tips on simplifying your brewery's financial tracking? I have some ideas on how to start small or do it all!

Understanding Prime Cost: A Game-Changer for Brewery Profitability

Running a brewery is more than crafting great beer—it's becoming about managing costs effectively. If you’re a part of the new age that is relying more on food, Prime Cost comes in. Understanding and tracking this crucial metric can reduce expenses, improve margins, and keep your brewery thriving. Whether serving food or focusing on your taproom, mastering Prime Cost can unlock serious profit potential.  

In the restaurant world, Prime Cost—the combination of goods sold (COGS) and labor expenses—is the proven metric for managing costs without sacrificing quality. As more breweries expand into food service, understanding Prime Cost is essential for achieving the elusive yet critical slim margins in the restaurant industry. 

Breweries brew their product unlike traditional restaurants, which means a built-in cost advantage. You may not realize it, but you are vertically integrated, which gives you a leg up against other restaurants to boost margins on beer sales while enhancing the customer experience.

How do we implement it? 

Tracking Prime Cost doesn't have to be complex. You can quickly measure and manage this metric with tools like XtraChef, Fathom, or Syft—or even directly from your Profit and loss (PnL) statement.

You should track Prime Cost for each location individually and company-wide to understand what locations are excelling or falling behind. A second-level analysis can tell you if labor or COGS drives any issues. Dive to a third level, and we can see if the overages derive from food, drinks, FOH, or BOH labor.

Key Considerations

• Sell beer to each taproom at market rate (price to retailer) to compare yourself against the restaurant industry benchmark of 60% or better Prime Cost.

• Factor in all direct labor costs—wages, payroll taxes, benefits, and contractors. Coding and allocating taxes and benefits by department may take additional work, but I promise it is worth it. 

Your brewery already has a built-in advantage: you brew your own product! By leveraging that strength and tracking your Prime Cost, you can confidently make decisions that drive growth and improve your bottom line. 

Need help getting started? I have some ideas for you to start small or do it all!