Owning Your Building Makes Your P&L Weirder

Buying your building sounds like the obvious next step.

No landlord. No rent hikes. More control over the space. Long-term upside. Maybe even a real estate asset sitting underneath the operating business.

For a lot of brewery owners, that logic makes sense. If the taproom is working, production is stable, and the business has survived enough chaos to think about real estate, owning the building can be one of the smartest long-term wealth-building decisions an operator makes, especially when taking advantage of SBA owner-operator 504 loans.

But here is the part that gets missed:

Owning the building makes your P&L statement weird. Property taxes, large asset balances, and large debt liabilities all start showing up unless you properly split the building financials into their own financial statement. 

The Building Does Not Hit the P&L the Way Operators Think

The building itself does not show up on the Profit and Loss statement as an expense when you buy it.

If your brewery buys a $2 million building, that $2 million does not run through the P&L all at once. It goes on the balance sheet as an asset.

The P&L gets impacted over time through interest expense, depreciation, property taxes, insurance, repairs, maintenance, and potentially sub-tenant rent when the building is owned in a separate entity.

That matters because your P&L can start telling a different story from what is actually happening in the bank account.

Before owning the building, rent was simple. Painful, maybe. Expensive, definitely. But simple.

You paid rent. Rent hit the P&L. Everyone knew what it was.

After buying the building, rent may disappear. On paper, EBITDA may improve because that rent expense is gone.

Great, right?

100% Wrong.

Because you may have replaced rent with debt service, and debt service does not flow through the P&L the same way rent does.

So now you have a fun little accounting puzzle: interest hits the P&L and affects cash, depreciation hits the P&L but not current cash, and principal payments affect cash but do not hit the P&L.

This is why building ownership can make the P&L harder to interpret, not easier.

Separate Real Estate Entities Make This Even More Fun

Many operators do not have the brewery itself own the building directly.

Instead, they create a separate real estate holding company. That entity owns the building and leases it back to the brewery operating company.

There are good reasons to do this: liability separation, ownership planning, tax strategy, future exit planning, and keeping the real estate separate from the operating business.

This is where generic bookkeeping starts to fall apart. The numbers may technically be entered in QuickBooks. That does not mean they are useful for making decisions.

The Better Questions to Ask

The question is not, “Did we book the mortgage payment? That is the bare minimum.

The better questions are:

• What is the brewery operation actually producing?

• What is the real estate actually costing?

• How much cash is available after debt service?

• Is EBITDA improving because operations improved, or because rent moved somewhere else?

• Are we looking at the operating company, the real estate company, or the consolidated picture?

Those questions matter when the stakes get real: expansion decisions, equipment financing, refinancing, partner distributions, ownership changes, multi-location planning, and valuation discussions.

What to Watch

If you own your building, or are thinking about buying one, watch for these red flags:

• EBITDA improved, but cash still feels tight.

• The full mortgage payment is being treated like a normal operating expense.

• Principal, interest, depreciation, and operating costs are not clearly separated.

• The brewery pays rent through a separate real estate entity, but nobody is reviewing the consolidated picture.

• You cannot explain whether the brewery itself is profitable without the real estate noise.

  
  

Once you own the walls, your books need to explain what those walls are actually doing to the business.

This week, look at your P&L and ask: ‘Is this reporting on the brewery or the building?’ If you aren't sure, hit reply and tell me what’s confusing you. I answer every email personally.

We Saw in Q1: Brewery Business Trends 2026

Q1 2026 was not kind to every taproom. But the breweries that knew what to watch for came out ahead. Here are the real numbers and what they mean for the rest of your year.

1. Your Food Cost Is Creeping Up, and Your P&L Is Taking the Hit

Here is a number worth paying attention to. Across the multi-location breweries we work with, food cost as a percentage of food revenue climbed an average of 2 or more percentage points year over year in Q1 2026. That is the difference between a 31% food cost and a 33% one.

That might sound small. On a taproom doing $170,000 in monthly food revenue, it is over $3,400 in margin gone every single month. Annualized, that is more than $40,000 in profit that did not exist a year ago.

The cause is bigger than your menu. Global trade friction has pushed commodity costs up in ways that show up on every food order. Fresh tomatoes and jalapenos sourced from Mexico, proteins tied to imported supply chains, single-use packaging: all of it costs more than it did 18 months ago. This is not a negotiating problem you can talk your way out of. It is a sourcing strategy problem, and the operators responding well are treating it the same way a great brewer treats a volatile hop market.

Think about how your brewing team handles ingredient cost pressure. They adjust the grain bill. They explore alternative hop varietals. They find like-for-like substitutions that protect the flavor without blowing up the recipe cost. Your kitchen team can do the exact same thing, and the best ones already are.

Three moves that are working right now:

1. Shrink the SKU list. Fewer ingredients means higher volume per item ordered, better pricing leverage with suppliers, and less waste. If an ingredient only shows up in one dish, it is costing you more than its invoice price. Audit your order guide and cut anything that is not pulling weight across multiple items.

2. Make like-for-like swaps on tariff-hit items. Fresh tomatoes and jalapenos are among the most tariff-exposed produce right now. Roasted canned tomatoes, pickled peppers, or domestically sourced substitutes can deliver the same flavor at a fraction of the volatility. Your guests will not notice the swap. They will notice if the dish disappears because margins collapsed.

3. Make more from what you already have. Build specials around your existing order guide instead of adding new SKUs to chase a menu trend. A weekly special built from ingredients already on the truck keeps the kitchen sharp, adds interest, and costs nothing extra to source. It is the same logic as a seasonal beer built around a hop you already have in inventory. Creative constraints produce better outcomes.

2. Draft Volume Is Down. Here Is What Grew Instead.

We will say it straight: draft beer volume is down at most of the taprooms we work with. But total taproom revenue is holding, or growing, at the breweries diversifying their mix. Here is what picked up the slack:

Revenue Channel	Q1 2026 Trend	What Is Driving It
Taproom kegged beer	Down in volume YoY	Consumer visit frequency is declining
Wholesale and distribution	Strong growth for small producers	Packaged beer expansion
Non-alcoholic beverages	Up around 10% YoY	Broader consumer base
Liquor and cocktails	Up around 6% YoY	Cocktail menu expansion

On the non-alc side, breweries leaning into this category are not just capturing health-conscious guests. They are keeping tables occupied longer, increasing party revenue, and building loyalty with guests who would otherwise skip a taproom visit entirely.

3. Consolidation Is Happening Right Now, In Real Time

The consolidation we predicted at the start of 2025 is playing out in the places we work every single week.

This is not doom. For breweries with clean operations and strong financials, this is an opportunity. The competitive landscape is thinning in ways that favor operators who understand their numbers.

If your books are not clean enough to underwrite an acquisition or survive a due diligence request, that is the most important thing to fix before Q2 is over.

What to Do Before Q2 Is Over

• Pull your food cost as a percentage of food revenue for each month of Q1. If it is trending up, find out why before it compounds.

• Check your draft volume year over year. If it is down, model what that means for your full year revenue plan and identify which other channels can offset it.

• Review your order guide. Cut SKUs that only show up in one dish and look for like-for-like swaps on tariff-hit produce items.

• Walk your taproom like a first-time guest. Note what feels stale and make a list of low-cost fixes.

• If you run multiple locations, build a one-page location-level P&L summary reviewed monthly. It will tell you more than your consolidated statement does.

What We Saw in Q3: Brewery Business Trends 2025 & Smarter Deals

The third quarter of 2025 has been a mixed bag for breweries: some good news, some not-so-great, and plenty to think about if you run a taproom or kitchen. Shifts in how people spend (and how often they show up), along with some fresh ways to work with food suppliers, are forcing brewery owners to adapt. Here’s how the landscape looks right now:

1. The K-Shaped Economy Is Showing Up in Taprooms

Look around most taprooms lately and you’ll see it: the K-shaped economy is real, and it’s likely showing up in your sales reports.

High earners (>$230K/year household) are still spending, but more selectively. Loyalty now comes through exclusivity: early access to releases, behind-the-scenes perks, or even input into beer design.

Middle-income guests aren’t quitting beer—they’re just going out less. And are increasingly likely to look for value, so consider bundling multiple items, food-and-beer pairings, and customer loyalty perks can help keep them coming back.

You may also want to rethink your hours. Reduced visits lead to reduced customer counts, so consider reviewing your slowest hours and whether they have changed over the past 12 months.

Btw, if you’ve ever wondered about your guests’ average household income, there are tools for that. Some that commercial real estate pros already use for demographic and visitor analytics. Shoot me an email if you’re curious and I’ll point you in the right direction.

2. September’s Dip Was Just an Air Pocket

September was a disproportionately slower month for many craft brewers. Even large restaurant chains reported same-store sales declines. Some locations reported as high as 10% decline YoY.

Cell phone data showed a national dip in retail traffic during the week of Sept 22–29, in line with the decrease in sales, mirroring broader consumer uncertainty rather than brand fatigue.

October showed some signs that things were not so bad, but the American consumer is certainly cautious, and craft breweries are not immune.

3. Food Distributor Deals Are Getting Smarter

If you’ve got a serious food program, this is actually where you can win. Breweries are getting sharper about negotiating with big distributors like Sysco, US Foods, Shamrock, and Chef’s Warehouse.

If you are running multiple restaurants disguised as a brewery, then volume discounts, rebates, and preferred terms are all on the table.

Vendor consolidation can reduce complexity while increasing pricing power, leading to 2–5% savings on food costs. That can add up to $50K+ in annual margin improvement, a meaningful shift for brewery profitability.

Pro tip: Tools like XtraChef and MarginEdge can track item-level costs and strengthen your negotiating position. But often, the simplest strategy wins: maintain relationships with multiple vendors to keep everyone sharp on pricing.

Bottom Line

The end of Q3 and start of Q4 is hinting at some belt-tightening among your customers. Beer generally holds up when times are tough, though, and smart moves (like bundling specials and finding food cost savings) can help cushion your margins if sales start slipping.