It’s hard to focus on ‘normal stuff’ these days with so much scary news and uncertainty…
In an effort to keep things somewhat normal, and provide you with useful information, let’s talk about your brewery income statement, otherwise known as the P&L.
And if you want to binge on brewery finance classes, I’m offering these for free while we are all in crisis mode. Just scroll to the bottom of this email for details.
And now, for the normal stuff…
What should your brewery P&L look like?
What numbers should you expect to see? How do your numbers compare with what other breweries are doing?
In this post, we’ll give answers to these questions and include an example brewery P&L spreadsheet template to track and compare your financial results.
Income Statement Basics + The Simple Brewery P&L
The income statement measures sales, cost of sales, gross profit, operating expenses and net income (or loss). The statement may include lots of detailed accounts and run many pages in length.
Alternatively, the income statement can provide just a summary of the key financial information. See the example below.
In the example above, the P&L is summarized to just five lines of information. With this approach you can see in just a few seconds how your brewery is performing.
Percentages are included on this simple P&L to make reading and understanding the results easier.
Once you determine expected cost of sales, gross profit and operating expenses as a percentage of sales, you can quickly see where you stand in relation to your financial goals.
Brewery Income Statements + More Detail
Once the Simple P&L becomes a little too simple, you can graduate to more detail on the statement. See the example P&L below.
Benchmarks and KPIs
So what brewery financial benchmarks should you use to compare against?
Cost of sales can range from 50% to 60% of revenues. This will depend on many factors – labor rates, brewery lease costs, raw ingredient costs, etc.
Gross margins may range from 40% to 50% of revenues. Again, many things will influence this number – the costs noted above, the selling price of your beer and the type of sales channels (taproom, distribution, self-distribution, etc).
Operating expenses are all over the map. The key here is to make sure these expenses are lower than gross margin as a percentage of sales. If margin is 40% and you want 15% net profit, the operating expenses need to be 25% of sales or lower.
Benchmark against your financial goals. Benchmark against your past performance.
Use these numbers as general guidance and take them with a big grain of salt. Your own brewery performance is the best measurement to use for comparison.
Wrap Up + Action Items
Create a Simple Brewery P&L so that you can quickly see financial results in your business. Include key metrics and benchmarks to compare your progress. Use the one presented above for starters.
Next, take the Crash Course in Brewery Finances. This course is financial training for non-financial brewery owners and managers. Course tuition is $499, but while we are all in crisis mode, it’s free for anyone who needs it.
Use the discount code financialtraining at checkout to enroll for free.
Already a subscriber? Get instant access to the Crash Course in the Online Courses section of the Member area.
Yours in Normal Stuff…like Brewery P&Ls,