On April 24, 2015 Governor Hickenlooper signed into law Colorado House Bill HB 15-1204, creating a Distillery Pub Alcohol Beverage License. This new license was shaped in a manner similar to the Brewpub License, which requires that at least fifteen percent of an establishment’s gross sales come from food sales. All other requirements to obtain any liquor license, such as needs and desires of the community, good moral character of the applicant, etc., are the same. A Distillery Pub licensee can also hold other ‘on premise’ licenses, for example, a Hotel and Restaurant liquor license or a Brewpub license, but he or she cannot have an interest in a Colorado retail liquor store.
Colorado is one of only a few states to require a Distillery Pub license. In Utah, for example, where no such license exists, pioneers like Bardenay Restaurant and Distillery have identified the niche, taken advantage of the lack of a requirement for a specific licensure, and are successful and expanding.
In addition to the liquor law similarities between brew pubs and distillery pubs, I believe that the business model will also be similar in Colorado. Although many brewers disagree, the true brewpub model is still a food-driven business, with the majority of on premise gross sales derived from food. In my experience reviewing dozens of brewpub income statements, and as the owner of a successful brewpub in Pueblo, Colorado, I’ve found that most high volume brewpub operations derive more than fifty percent of their total sales from food. In fact, food revenue sales of up to 60 percent are not uncommon in the industry. Keep in mind that both Brewpub and Distillery Pub licenses also allow the licensee to sell liquor and beer that was purchased from a distributor; for example, Fat Tire, Jack Daniels, etc.. Therefore, depending on many variables, 20 – 30 percent of total gross sales from brewed beer is not uncommon.
To avoid upsetting my brewpub clients and employees, let me be clear; craft beer is a very important part of the brewpub model. A high quality product and beer culture are necessary for long-term success. It has been my experience that great food drives craft beer sales, and great craft beer drives food sales. I have never found a successful brewpub that did not have both.
It will be interesting to see how the Denver and Colorado markets embrace distillery pubs; if our love for craft beer, explosive growth, and economy are any indication, your neighborhood distillery pub will be opening soon. As the craft beer market becomes oversaturated, one thing is clear; craft distilling has a wide open market, and the potential for this market has yet to be tapped, or distilled in this example.
How to Use this information
Sanborn and Company is Colorado’s leading restaurant real estate company. If you are considering opening a distillery pub or simply need a commercial real estate broker that truly understands your business and needs, email us at [email protected] or call one of our restaurant brokers today at 303-220-7919.
