Just after 2pm on a recent Saturday, I found myself in an agreeable position:
In my left hand was a pint of craft wheat beer. And in my right hand, I held a warm soft pretzel covered in maple jam and bacon.
I was sitting in a pub called Hopsters in Newton, Massachusetts, just around the corner from where I grew up.
I was in town visiting my high school buddies and this was their favorite new spot. But we weren’t there just to tell old stories and eat and drink:
We were there to brew our own beer!
A couple hours (and a couple hundred dollars) later, we’d completed our mission. It was a blast. In fact, it was one of the most memorable activities I’ve done in years—and one of the most fascinating new business concepts I’ve come across.
So when the manager of the pub told me he was gearing up to expand nationally, I practically begged him to let me invest.
Wait until you hear what he told me next—
And wait until you hear about the profits it could mean for you.
Not Your Typical Start-Up
At Crowdability, we usually tell you about high-growth technology start-ups—young companies aiming to become Silicon Valley’s next overnight success story.
But not all start-ups focus on tech. And not all of them pursue growth at any cost.
Some companies—like restaurants or pubs, for example—aim for slower, more deliberate growth.
From an investment perspective, the risk-return relationship for these companies doesn’t generally make sense: slow-growth companies can be just as risky as tech start-ups, but they don’t offer the same potential for a “homerun.”
That’s why we tend to avoid investments like that.
But there are always exceptions…
And Hopsters might be one of them.
You see, Hopsters has loftier goals than becoming the best pub in Newton.
It’s aiming to build a national brand where you can eat high-quality food, drink craft beers, and—like I did—brew your own beer.
Brewing beer is fun. Here’s how it works:
First, an expert “brewmaster” helps you choose your beer recipe.
Then you go into the “ingredients” room and select your hops and malts. (You even get a laminated card so you can remember the recipe in the future.)
After that, you place your ingredients into a huge kettle, boil them, and add some extras. For example, if you’re making spice beer, you put in some cloves.
Then you transfer your beer into a “fermenter,” add yeast—and a couple weeks later, 72 bottles of it (with your custom-designed labels) are ready for drinking!
The Business of Beer
Hopsters has already built a promising business.
The location I went to in Newton did $1.3 million in sales in 2015.
Hopsters’ gross margins are 76%—meaning, it takes just $2.40 of ingredients to make a beer it can sell for $10. That leaves Hopsters with plenty of capital to cover its overhead and marketing.
And unlike many restaurants or bars that struggle to turn a profit, Hopsters’ profit margins are an outstanding 20%.
Now Hopsters aims to take its successful formula and replicate it—just like McDonalds, Applebee’s, Outback Steakhouse, and many others have done.
For starters, Hopsters is opening a second location in Boston’s Seaport District, a popular neighborhood for events and tourists.
It then plans to open 16 more locations across the U.S. by 2022.
Which is why it’s raising capital today…
Hopsters is currently raising $1 million.
The minimum investment is $500, and because the company is leveraging the JOBS Act, everyone can invest in this deal, regardless of their income or net worth.
Your investment will buy you equity, so if Hopsters turns into the next Outback, you’ll get your share of the upside.
In fact, if the company hits its long-term projections (which is far from guaranteed), investors could make an estimated 17x their money in six years.
But just like any start-up, Hopsters is likely to face challenges on its journey. Which is why it’s decided to do something compelling for its investors:
While you’re waiting to see if Hopsters turns into a national brand (and hopefully goes public in a big IPO), you’ll be receiving a piece of its profits every year.
More specifically, investors like you will receive 80% of the company’s profits until your initial investment is paid back in full. And after that, you’ll still receive 20% of the company’s annual profits forever.
Again, there are no guarantees here, but Hopsters estimates it will take just 2 to 4 years for investors to break even on their investment.
Do Your Homework
To be clear, I’m not recommending you run out and invest in Hopsters…
This is a risky venture that requires substantial investment research.
But if you’re looking for an investment that has the potential to deliver current income and long-term upside potential…
Take some time to dig deeper into Hopsters here »
And if you find yourself in Newton, Mass, drop by and brew yourself some beer—and don’t forget to send me and Wayne a bottle or two!
Please note: Crowdability has no relationship with Hopsters, or with any of the companies or platforms we write about. Crowdability is an independent provider of education, information and research on start-ups and alternative investments.