Welcome to my new series!
I’ve looked at thousands of businesses for sale and it’s a fun way to learn business. Every issue, we will do a deep look at a listing and learn something. Then I’ll rate the deal using a nonsensical rating scale.
So, yeah, this is like you asked ChatGPT to do the most “Girdley” newsletter possible. (But we didn’t.)
This week’s listing: Since I like pain, our first listing makes no money. It’s two brew pubs in San Antonio making a whopping $0 profit. To me, this is a classic case of someone trying to turn a passion into a business. SPOILER: it usually is a disaster.
The numbers: 2 locations, $3M combined revenue, includes $1.5M FF&E… $0 profit?
Green flags
I know these places because they are here in San Antonio.
They started nearly 15 years ago and haven’t made any money for the last few years. It was a couple of guys who thought they could make their hobby pay for itself.
There are many places like this in seemingly every town in the US: a couple of guys decide the coolest thing ever would be a job where they brewed beer, served it to their friends, grew beards, hung out, and were big timers in the beer community.
Fun should have a place in our lives. You might have a great time if you're passionate about brew pubs. Not everything has to be about making money.
If you do want to make money, there might be some opportunity to cut costs and raise prices. This place has been run in a sort of kumbaya artsy fartsy fun time manner the best I can tell, so you could run a tighter ship.
Red flags
The Kumbaya culture is a downside, too.
Because if you want to turn it into a real business, you must be the bad guy. You’ll probably lose most of the team, and as soon as you raise prices, most of your customers will probably be gone too.
And that sounds like a bad time.
I also get scared when a quick Google shows 17 or 20 brew pubs that look just like this one in the area.
Feels like hard mode to me if I want to make money. Fun mode though if I want an excuse to drink beer 24/7/365 and expense it!
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What I’d ask
So I’m definitely not buying this business. But if you’re beer-crazy and want to wade into this deal, here are the first things I’d ask the seller:
What differentiates this business?
Is there something unique about this beer, or location, or offering? Can we double down on whatever that is?
How would you make this business profitable? Why haven’t you done those things so far?
The sellers have thought this over how the listing is written, but something’s holding them back. Find out what they’re unwilling to do — because you’ll probably need to do it yourself.
My rating
I don’t think this was ever meant to be a profitable business. Or the folks who started it deluded themselves into thinking that.
Sometimes, people try to make their passion project pay for itself without thinking about whether it’s a viable business.
So it’s a hard pass for me. But if you want to buy yourself a really expensive hobby, have a ton of free time and an interest in pain, you do you.
Here’s a long shot idea:
OK, so yeah, I hate this but that doesn’t stop me from having a creative idea to share:
More and more people are deciding to stop drinking (me included!).
And lots of Texas brands and beyond are moving into the non-alcoholic drinks space.
So what about a specialty brewery that brings unique microbrew taste to non-alcoholic beverages?
Keep the regular beer happening, but get in front of this no alcohol trend.
Not even sure it could work, but it’s the best idea I have for this one.
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What do you think of this deal? What about this format?
We’re going to 2x a week on the newsletter (one Deal Breakdown like this, plus my regular send on Saturday), so this is an experiment and would love your feedback.
Hit reply and let me know! Yay? Nay? Slay?
Thanks,
Michael
