The business Two businesses, actually: a five-year-old brew pub and the linked microbrewery whose branded, award-winning beer has recently been hawked on its own (in 13 states, at present). Like most brew pubs, this one is just a restaurant with a twist; 65% of its 1994 revenues came from food sales to its skiing and summer-festival-going clientele. But microbrew sales through distributors are growing; they were expected to reach $547,000 in 1995.

Financial summary (in $ thousands) 1993 1994 1995*Gross revenues $904 $1,293 $1,797Recast earnings $70 $59 $176 (before depreciation, interest, taxes, and owner compensation) *projected

Price $800,000 without the land and the building; $1.4 million with them

Outlook Mixed. Beer consumption is down but not in the brew-pub and microbrew niches. In 1994 there were 332 brew pubs nationwide, up from 240 the year before, and the craft-brew piece of America's $50-billion beer market grew 51% (to $1.3 billion) over the same time.

Price rationale The sellers' price rests on discounted future earnings projected through 2000, but industry valuation experts aren't buying. Brew pubs are too sensitive to ownership changes to be valued using projections, they say; historical financial results are what matter. Brew pubs are usually priced by taking 30% of gross revenues and averaging that with three times adjusted income. (In this case, adjustments to income include projecting food costs reduced from the current 45% to the industry average of 32%, and payroll rising from the current 22% to the industry's 30% -- the net effect being to restate the income as higher than shown.) Using that formula, the right price here looks like $315,000 for the pub. The microbrewery, based on $60,000 in expected 1995 earnings (the only results available) divided by a 35% industry risk factor, should sell for $171,000. The experts' combined price: $486,000. Oh well.

Pros Hot industry. Cool locale. Two businesses for the price of one.

Cons Do you really want two businesses (one of them a restaurant)? Especially, to judge by the valuators, for the price of three or four? -- Robina A. Gangemi

Inc. has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to First Business Brokers, at 719-635-9000. n

Published on: Feb 1, 1996