Yo,
I hope everyone had a great weekend! Probably couldn’t have beaten mine, but its time to get moving. Didn’t feel like writing at all so far this week, but still had to deliver. Let’s dial in.
The Background
What’s up with all this cycling? First, Peloton and now Pedal Pubs, people are dying to get on a bike – even if takes alcohol as an incentive. Pedal Pubs first came up around 2007, starting in Minneapolis and quickly infiltrating many cities across the US. Now you see them all over the place hosting anything from a bachelorette party to a work social event.
Yea but like what is it? Pedal pubs are a fun way to bar crawl, where the group pedals the trolley to each bar that the “tour guide” (AKA commercially licensed driver) steers to. Drinking the whole way while pedaling, of course.
So, what’s the catch? Well, while it may be fun from a peddler’s perspective (speaking from firsthand experience here), it not so much fun from a government and regulatory standpoint. Some state rules state that bicycles must be “dry”, whereas other states or towns technically classify it under the same category as a limousine or chauffeur service, where open bottles for the passengers is okay Not to mention the top speed on these suckers is about 5 mph, which is a traffic violation itself.
This is why you will see loads of them in some cities, and none in others. And in the cities where they do exist, most of the current companies do a really good job at ridding themselves of any liability due to any of the passengers.
“Blah, blah, blah, who cares about the regulatory stuff, let’s talk numbers”
From a strictly numbers perspective, these pedal pubs are awesome for the following reasons:
- Little to no real estate cost: most of these businesses just lease out an independent garage in the downtown area or operate out of a local parking lot/structure.
- Low maintenance cost: the bikes themselves are really the only things that would ever need maintenance or renovations. And anything bike related you could expect to be relatively cheap.
- BYOB: Part of the liability strategy is that you don’t serve the liquor, the party is responsible for bringing their own.
- No gas, all feet: this one is pretty self-explanatory.
- Low headcount: most are operated with a general manager and 4-5 drivers. Seems hands off to me.
But every rose has its thorn so let’s talk about the downsides:
- Is it legal? As mentioned above, starting one of these in your city may not even be an option.
- Seasonal: If the city has a winter, then this is going to be a summer-only activity.
- Nobody goes out on weekdays: You can bank on most weekdays going unbooked, but Thursday through Saturday being busy.
Typically, these carts can hold up to 16 people and, on average charge minimally about $30 a rider. So let’s conservatively that you only have 10 riders, that’s $300 per ride. Then, let’s assumer 9 rides per weekend (also conservative) which comes out to $2,700 per week. Lastly, let’s say you can only operate half of the year because of the snow. That’s $70,200.
TLDR: the least you will make is $70,200 a year. Of course, you still have to pay people, but their average day is only 2-3 hours.
Some reports even say that the average take home is around $300K.
The Idea
If you haven’t gathered what the idea is then just stop reading.
For those still here, there’s two ways to go about it: the franchise model and just starting it yourself.
In my opinion, just start one yourself. As long as you’re first to market and can make a decent website then it’s much cheaper this way. The bike is about $10K, then just go talk to some local business owners about setting up shop in their parking lot. Scale from there.
But even, the franchise performs well when compared against other franchise models. The biggest franchise in the space called, you guessed it, Pedal Pub, advertises a $100-300K startup costs, but boasts take home earnings of over $300K plus in good markets.
That’s a complete return on your investment in 1 year of operating. If not 1 year, then definitely 2. Yea yea, there’s the royalty and stuff, but still.
And this offer drastically overdelivers compared to what one typically thinks of when you hear the word “franchise”. McDonalds not only requires an average investment amount of $1.8 million and takes owners over 5 years to make back their money. Not to mention all the headaches that probably come with owning a McDonalds.
Lower startup cost, and quicker ROI, sounds good to me.
The Market
Location, location, location. Obviously, you’re going to want to see if it’s even legal and ideally somewhere that is warm year-round. But above all of these, the locations that perform best are those with a heavy brewery presence, good to decent bar scene, or a college town. I mean check out Houston, almost all their stops are on the same street.
If it were me, I’d pick somewhere with a strong micro/craft brewery scene with some cool arcade bars to try and accommodate a bigger audience.
Being first to market actually matters. Most of these big companies are either closely monitoring, or even lobbying for a change to the town’s rules, so once it becomes legal the markets become saturated quickly. And expect these laws to change, because these bike pubs are increasing business for the local watering holes, and we are starting to see more restaurant and bar owners getting behind the movement.
But who knows, maybe they’ll sympathize more with the local.
The Gut Check
For me, this all checks out. Whether you franchise or try to bootstrap this thing on your own, it seems like a low maintenance, hands off business that could be fun.
from, matt