One Blog |March 28, 2018 | Line Cleaning Software
Draught Line Cleaning - More Than a Best Practice
Poor Draught Beer Quality Starts with Poor Hygiene
No supplier, distributor, retailer or consumer wants to even think about the impact of improperly or infrequently cleaned draft lines on the beer that flows through them.
According to several sources, notably draughtquality.org:
“Keep draught beer lines clean to maintain brewery-fresh flavor."
The number one factor affecting draught beer quality is poor hygiene.
Whether you as a wholesaler provide line cleaning service or not, it’s a good idea for you to play an active role in making sure lines are cleaned properly and regularly.
"Poor hygiene and improper cleaning and/or rinsing will result in loss of sales and reflects poorly on the entire industry.”
Having said that, I’m not going to focus this blog on the merits of draft line cleaning.
We’ll just take it as a given that beer tastes better when it flows through clean tap lines.
Line Cleaning – An Expensive Proposition
Some of our customers who use our line cleaning software, LineTrak, have told us that, for them, keeping track of line cleaning activities from scheduling to reporting is a Best Practice. A practice that they are firmly convinced distinguishes them from their competitors.
Pay a Third Party
Even distributors who hire third-party line cleaners are looking for scheduling and reporting (tracking) data, and take an “active role in making sure lines are cleaned properly and regularly.”
Let’s face it, line cleaning is an expense.
We asked a distributor outside of a top-50 market to share some of their costs for line cleaning on an annual basis.
In round numbers, this wholesaler services over 265 on-premise accounts. The distributor contracts the line cleaning activities to a third party and maintains a schedule of bi-weekly cleaning.
The annual costs – paid by the distributor to the third party for nearly 7,000 account cleanings per year (265 accounts cleaned 26 times per year) – exceed $100K.
This averages out to about $372 per on-premise customer, per year based on a cost figure of exactly $100K. The actual cost per account is actually greater.
Do It Yourself
Some LineTrak customers – distributors – have their own line cleaning organizations complete with a dispatcher, line-cleaning personnel, a fleet of trucks, chemicals, equipment, and spare parts.
For these larger customers, the costs can easily run into seven figures.
This certainly appears to be a very expensive best practice, doesn’t it?
There is, however, another way to look at draft line cleaning. And that's as an income generator, and more than just a Best Practice.
Line Cleaning – Something Other Than an Expense
In some of the examples that follow, I’ll be using “average” 2017 published costs. You’ll need to use your own actual costs to determine your top and bottom line numbers.
The range of the wholesale price for a ½ barrel keg is rather large – $50.00 to $300.00. For the following analysis, revenue per keg will be assumed to be an average of $112.
As a distributor, assume you have 100 on-premise customers each with 6 tap lines and that each line has 1 keg of beer flow through it per week.
You will sell 600 kegs per week or 31,200 kegs per year. Your revenue based on a per keg revenue of $112 will be $67,200 per week or $3,494,400 per year.
If your average selling price is higher or lower, you need to adjust these revenue figures accordingly. And f your customer sells more than 1 keg per line per week, you’ll have to make that adjustment, too.
Next is your margin, which is key to helping you to determine your profit per keg.
Assuming you have an average margin of 33%, your gross profit would be $22,176 per week or $1,153,152 per year – from 100 customers with 6 taps each.
Cost To Clean
Now, let’s see how much line cleaning will cost for your 100 customers assuming a cost of $4 per line cleaned.
The cost to clean 600 lines is $2,400. To clean these 600 lines 13 times per year will cost $31,200. Cleaning according to recommended standards – 26 times per year – will cost $62,400.
An argument could be made that the extra cleaning above 13 times per year increases the cost of the beer by $31,200 per year, which means less profit for the distributor. Right? Not so fast.
New Math? – No, Just New Data
Let’s add some new data to our formula: The economic value (aka revenue) of your beer running through cleaner lines.
According to several studies, distributors’ on-premise accounts who have their draft lines cleaned every two weeks sell an average of 3-4% more beer than those who clean every four weeks.
Using our distributor with 100 customers each with 6 taps, the weekly revenue attributed to bi-weekly cleaning would rise to $69,552.
An increase of 3.5%. This would raise annual revenue to $3,616,704 and increase profit to $1,193,512.
For an investment of $31,200 per year, your profits rise by $40,360, just by increasing your line cleaning from 13 to 26 times per year.
The return on your investment is 23%.
Of course, the results are even more dramatic for craft and import keg beer. These brands drive more revenue, and therefore more margin per keg.
The line cleaning costs are the same to clean your customer’s lines regardless of the cost of the beer flowing through them.
It Can Be Complicated To Manage – Without A System
Some distributors have told us that before they adopted an integrated line cleaning software tool to help them manage the scheduling and reporting of their on-premise tap line cleanings, they often found themselves falling behind due to the sheer volume of work required even for a few hundred accounts, let alone thousands.
However, we’re pleased to report, once they adopted LineTrak, OnTrak’s line cleaning tracking software, they were able to keep up with the workload, increase customer satisfaction and reduce their costs.
They now spend less on the overtime costs required to “catch up” with scheduling and work completion issues.
Also, as the above example demonstrates:
If you’ve not been able to keep up a bi-weekly cleaning schedule, you could be missing out on increased top and bottom line benefits, too.
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
To request a live, 30-minute demonstration of our line cleaning software and tap handle survey software, please click this button and select LineTrak.
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
If you’re interested in learning more about how OnTrak Software helps beer, wine and spirits wholesalers determine the impact of their investment in POS marketing campaigns, please call 513-936-4041, or click the following button:
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _