By: Mike Walls, Certified Cicerone®, Operations & BeverageWhen it comes to craft beer, the potential to make money is simple math. Let’s say you buy a keg of Miller Lite from your distributor. That keg contains 15.5 gallons or 1,984 oz. or 124 16-oz. pints. Assume you purchased that keg for around $90, about $.045 an ounce. That means every 16-oz pint of beer costs you $.72 to put on the table. According to BeerMenus.com, the average price of a Miller Lite 16 oz. draft in the Chicago suburbs is about $3.75, roughly a 20% cost. Most product and loss statements would like to sell beer around that 20% cost sweet spot. What this boils down to is $2.90 in profit per pint of Miller Lite. With 124 pints in a keg, that’s $360, minus the initial $90 investment which nets $271 profit for the restaurant. On the other hand, an average keg of craft beer costs in the neighborhood of $160. Following the same math and charging around $6.50 (the average price of a craft beer and 20% cost) nets the restaurant $480 for the same amount of liquid. It sounds too good to be true that something unique and local that complements the menu, builds the restaurant reputation and supports local businesses can bring in more money than the cheap stuff. But the numbers don’t lie. The catch? You have to do it right.In his book Restaurant Success by the Numbers, Roger Fields writes, “In the restaurant business, the more homogeneous the concept--burger joints and pizzerias, for example--the more resistant the menu items are to price increases. Fine dining or upscale restaurants, however, can charge more because customers differentiate their products by identity, not by price." The same is true for a great craft beer program at any restaurant and is the reason why consumers will willingly pay more for a craft product regardless of whether they are purchasing it at a Michelin-starred brew pub or a local dive bar serving that same beer. Therefore, it is far easier to raise the price on a unique craft product than it is a homogeneous product like Miller Lite or Budweiser and why the market doesn’t resist the $6.50 price tag. The brewery or beer’s reputation follows the beer where ever it goes and it is easy to ride those coattails to increase profitability if the product is properly stewarded.Success is a byproduct of responsible stewardship in all parts of the restaurant business and establishing a craft beer program is no exception. When the cost per ounce of a micro craft product is nearly double that of a macro product, things like staff education, rotation and pour training are of paramount importance. Bi-weekly line cleaning is mandatory in most states and inevitably results in some beer going down the drain to purge the lines. Many new breweries are mitigating this loss by using technology like beer pumps rather than the traditional beer gas propelled system, even for shorter draw systems. Pumps were previously only seen in venues like stadiums with extra-long draw systems whose product would over carbonate on its journey from the keg to the tap with the traditional beer gas mix. The necessity for a different delivery system coincidentally reduced waste because the pumps use thinner lines than the traditional beer gas system. There is the higher upfront cost of parts and installation, however, that is decreased by eliminating the need for nitrogen and reducing the diameter of the beer lines to minimize waste when cleaning. A restaurant with less than 100-foot lines on a 24-tap system could save almost 3,000 pints of beer from the drain per year during cleaning alone, not to mention keg changes and line bleeds.When it comes to staffing, the labor market is becoming rich with beer enthusiasts and even certified professionals like Cicerones ®, who can help to guide a well-balanced craft beer program and garner a reputation of quality for the restaurant. Reputation is important when it comes to making money from craft beer in the same way that a reputation for a great wine program or food menu brings in more guests. If the staff is not able to speak to the product and guide the guest into the best experience with their beverage, the guest reverts to what they know and is much more likely to order the Miller Lite in a bottle over the local pilsner on the draft menu despite its superior quality.The craft market is growing and local breweries are popping up everywhere. Now is the best time to tap into the cash flowing from this industry. Local craft breweries are becoming a part of the fabric of communities and craft beer sounds less strange to the uninitiated than ever before. As the market and craft popularity grows, it will reduce resistance to the previously foreign sounding local brew. There is money to be made in running a solid craft program and Synergy Restaurant Consultants can help you develop a program to increase sales and maximize profitability.Mike is a Certified Cicerone® and all-around restaurant guy. He lives in the Midwest but works all over the country as an Operations and Beverage Consultant for SYNERGY Restaurant Consultants.mikesynergyconsultants.com