Are you looking to elevate your boutique craft beer pub's profitability? Discover nine actionable strategies designed to boost your bottom line, from optimizing your beer selection to implementing effective marketing campaigns. Uncover the secrets to financial success with our comprehensive Boutique Craft Beer Pub Financial Model and transform your business.
Startup Costs to Open a Business Idea
Opening a Boutique Craft Beer Pub involves a range of essential startup costs that are critical for establishing a successful and well-equipped establishment. These initial investments cover everything from the physical space and its necessary upgrades to the operational necessities that ensure quality service and customer experience.
| # | Expense | Min | Max |
|---|---|---|---|
| 1 | Leasehold Improvements and Build-Out | $100,000 | $500,000 |
| 2 | Equipment and Furnishings | $50,000 | $150,000 |
| 3 | Initial Inventory and Supplier Relationships | $10,000 | $30,000 |
| 4 | Licensing and Permits | $5,000 | $100,000+ |
| 5 | Marketing and Branding | $5,000 | $25,000 |
| 6 | Legal and Professional Fees | $5,000 | $20,000 |
| 7 | Working Capital and Operating Reserve | $50,000 | $150,000 |
| Total | $225,000 | $975,000+ |
How Much Does It Cost To Open Boutique Craft Beer Pub?
Opening a boutique craft beer pub, like The Hop Knot, requires a significant upfront investment. Generally, you can expect costs to range from $250,000 to $1,000,000. This broad spectrum is heavily influenced by factors such as the chosen location, the size of the establishment, and the degree of customization needed to create that sophisticated, community-oriented atmosphere that defines a boutique beer bar. Understanding this initial outlay is crucial for long-term boutique beer bar profitability and for budgeting effective marketing campaigns to maximize craft beer pub income.
Industry benchmarks indicate that for a small-to-medium sized pub, typically between 1,500 to 3,000 square feet, construction and build-out expenses alone can fall between $100,000 and $500,000. Securing real estate in prime urban areas, which is vital for maximizing craft beer pub income, can substantially increase this figure. Leasehold improvements, which cover necessary renovations and custom installations, often average between $75 to $150 per square foot. This means a 2,000 sq ft space could see build-out costs alone reach $150,000 to $300,000.
Beyond the physical space, initial inventory is a key cost. To stock a rotating selection of local and rare brews, a budget of $10,000 to $30,000 is realistic. Essential equipment, including high-quality draft systems, refrigeration units, and point-of-sale (POS) systems, adds another substantial layer, typically costing between $50,000 and $150,000. These investments are foundational for ensuring pub operational efficiency and delivering the quality tasting experience that boutique craft beer pubs are known for.
It's also critical to account for working capital, often an overlooked but vital component. Experts suggest allocating funds for 3 to 6 months of operating expenses, which can be estimated at $50,000 to $150,000. This buffer is essential for covering ongoing costs like salaries, rent, utilities, and marketing until the pub achieves consistent revenue streams. This financial stability is critical for brewery business growth and maintaining overall financial health, as detailed in resources like how to open a boutique craft beer pub.
Breakdown of Initial Costs for a Boutique Craft Beer Pub
- Real Estate & Build-Out: $100,000 - $500,000+ (depending on location and size)
- Initial Inventory (Beer & Supplies): $10,000 - $30,000
- Essential Equipment (Draft Systems, POS, etc.): $50,000 - $150,000
- Licenses and Permits: $5,000 - $25,000
- Furniture, Fixtures, and Decor: $20,000 - $75,000
- Working Capital (3-6 months operating expenses): $50,000 - $150,000
How Much Capital Typically Needed Open Boutique Craft Beer Pub From Scratch?
Opening a boutique craft beer pub like 'The Hop Knot' from scratch requires a significant financial commitment. Generally, you can expect the investment to range anywhere from $300,000 to $1,500,000. This broad range accounts for everything from securing a location and building it out to your unique concept, to initial marketing efforts and ensuring you have enough working capital to operate smoothly from day one. This foundational capital is key to establishing that distinctive selling proposition that sets a craft beer pub apart.
A substantial portion of this initial capital will go towards the physical space. For a new build or a significant renovation project, construction and leasehold improvements can easily cost between $200,000 and $700,000. This figure is especially true if you're aiming for a sophisticated ambiance, which is critical for a boutique craft beer pub to offer that premium tasting experience and ultimately boost taproom financial success.
Don't forget the essential, yet often costly, licensing and permit process. Depending on your state and local municipality, acquiring federal, state, and local alcohol licenses can set you back anywhere from $5,000 to over $100,000. Navigating these requirements is a critical step for boutique beer bar profitability.
To generate initial buzz and attract your first customers, a dedicated budget for pre-opening marketing and a grand opening event is crucial. This might require an allocation of $10,000 to $50,000. These funds are vital for implementing early marketing tactics, like promoting special offers or launching loyalty programs for craft beer customers, ensuring a strong start for the pub's financial future.
Key Startup Cost Breakdown for a Boutique Craft Beer Pub
- Property Acquisition/Leasehold Improvements: $200,000 - $700,000+
- Licensing and Permits: $5,000 - $100,000+
- Pre-Opening Marketing & Grand Opening: $10,000 - $50,000
- Initial Inventory (Beer, Food, Supplies): $20,000 - $75,000
- Furniture, Fixtures, and Equipment (FF&E): $50,000 - $150,000
- Working Capital (3-6 months operating expenses): $50,000 - $200,000
Beyond the core build-out and licensing, you'll need to allocate funds for essential operational items. This includes purchasing furniture, fixtures, and equipment (FF&E), which can range from $50,000 to $150,000. Think comfortable seating, bar equipment, kitchen appliances if you plan to offer food, and point-of-sale systems. Initial inventory for beer, food, and other supplies will also be a significant upfront cost, typically between $20,000 and $75,000.
Finally, maintaining adequate working capital is paramount for long-term brewery business growth. It's advisable to have enough funds to cover operating expenses for at least 3 to 6 months, which could amount to another $50,000 to $200,000. This financial cushion helps manage cash flow fluctuations, ensuring taproom financial success and allowing you to focus on maximizing craft beer pub income rather than immediate survival.
Can You Open Boutique Craft Beer Pub With Minimal Startup Costs?
Opening a boutique craft beer pub with minimal startup costs, generally under $150,000, presents a significant challenge, but it is achievable through shrewd planning and strategic choices. This approach focuses on cost-saving measures to kickstart a boutique beer pub business. The key lies in prioritizing essential elements and being creative with resources, as detailed in guides on opening such establishments, like those found at financialmodel.net.
One primary strategy for reducing initial outlay is to lease a pre-existing, turn-key space. Finding a location that was formerly a bar or restaurant can dramatically cut down on renovation expenses. This can potentially save anywhere from $100,000 to $400,000 on build-out costs alone, allowing more capital to be directed towards optimizing inventory for higher beer pub profits. This is a critical step in maximizing craft beer pub income.
Opting for a smaller footprint, perhaps between 500 to 1,000 square feet, and maintaining a simplified menu can also significantly lower startup costs. Initially focusing solely on a curated selection of craft beers with minimal food offerings can cut equipment costs by an estimated $50,000 to $100,000. This approach directly addresses how to boost profits in a small craft beer pub by reducing overhead and simplifying operations.
Further cost reductions can be achieved by leveraging used equipment purchases, negotiating favorable lease terms, and utilizing social media for marketing. Instead of investing heavily in expensive traditional advertising, a strong social media presence can increase pub foot traffic. These combined tactics can reduce initial outlays by 20-40%, freeing up capital to be allocated to acquiring premium craft beer inventory and improving overall boutique beer bar profitability.
Key Cost-Saving Strategies for a Boutique Craft Beer Pub:
- Lease a Turn-Key Space: Reduces build-out expenses significantly, potentially saving $100,000-$400,000.
- Smaller Footprint: A 500-1,000 sq ft space lowers rent and utility costs.
- Simplified Menu: Focusing on beer initially cuts equipment costs by $50,000-$100,000.
- Used Equipment: Purchasing pre-owned bar and kitchen equipment can save up to 40%.
- Social Media Marketing: Increases pub foot traffic cost-effectively, reducing reliance on expensive ads.
What Are Common Financial Challenges For Boutique Craft Beer Pubs?
Boutique craft beer pubs like 'The Hop Knot' face several financial hurdles that can impact overall profitability. High initial capital requirements are a major one, often demanding significant investment before the doors even open. Beyond that, managing the fluctuating costs of inventory, especially for a rotating selection of local and rare brews, is a constant challenge. Achieving consistent profitability in such a dynamic and competitive market requires careful planning and execution of profitable pub management tips.
Rent and utility expenses can be substantial, particularly for pubs located in desirable areas. These operational costs can easily consume 10-15% of gross revenue. Without robust sales volumes, this can severely limit profit margins, underscoring the need for effective strategies for increasing revenue at a boutique brewery taproom.
Key Financial Obstacles for Boutique Craft Beer Pubs
- High Initial Capital Investment: Securing funding for build-out, licensing, and initial inventory can be a significant barrier to entry.
- Inventory Management Complexity: Optimizing inventory for higher beer pub profits while minimizing waste is crucial. Spoilage can account for 1-3% of beer costs, impacting margins.
- Operational Costs: Rent, utilities, and labor can represent a large portion of overhead, demanding efficient operations and strong sales.
- Market Competition: Intense competition from other pubs, breweries, and even retail outlets selling craft beer makes customer acquisition and retention a continuous effort. This highlights why customer retention is important for pub profitability and necessitates creative beer bar marketing ideas.
Inventory management presents a unique challenge for establishments focusing on a rotating selection of local and rare brews. The goal is to optimize inventory for higher beer pub profits. This involves forecasting demand accurately to minimize waste from spoilage, which can represent 1-3% of a brewery's beer costs. Effective inventory control is paramount for maximizing craft beer pub income.
The competitive landscape for craft beer pubs is fierce. Pubs, microbreweries, and even grocery stores offering craft beer options create a crowded market. This makes attracting new patrons and ensuring existing customers return a constant challenge. Therefore, understanding why customer retention is important for pub profitability is key, as repeat business significantly boosts a pub's bottom line. Innovative beer bar marketing ideas are essential to stand out.
How Can A Boutique Craft Beer Pub Increase Its Profit Margins?
A boutique craft beer pub can significantly boost its profit margins by adopting a multi-faceted approach that combines efficient operations, smart diversification, and strategic pricing. By focusing on these core areas, establishments like 'The Hop Knot' can move beyond simply selling beer to building a more robust and profitable business model. This involves a deep understanding of cost management and revenue generation specific to the craft beer market.
Optimizing Inventory for Higher Beer Pub Profits
Effective inventory management is crucial for maximizing craft beer pub income and improving overall pub profitability. This means smart purchasing, which includes analyzing sales data to predict demand accurately and avoiding overstocking. Negotiating with suppliers for better beer prices can lead to substantial savings; for instance, securing a 5-10% reduction on Cost of Goods Sold (COGS) can directly translate to increased margins. Minimizing waste is equally important; spoilage or expired product directly eats into profits.
Diversifying Income Streams for a Craft Beer Pub
To increase brewery pub revenue, a boutique craft beer pub should look beyond just beer sales. Expanding food offerings is a prime example, as food items often carry higher profit margins, typically in the 60-75% range compared to beer's 70-85%. Other avenues include selling branded merchandise, such as t-shirts or glassware, and hosting ticketed tasting events or educational workshops. These diversified profit centers not only add to the bottom line but also enhance the customer experience and brand loyalty.
Implementing Loyalty Programs and Leveraging Events
Boosting customer retention is key to increasing pub revenue and ensuring long-term boutique beer bar profitability. Implementing loyalty programs for craft beer customers, such as punch cards or tiered reward systems, encourages repeat visits and increases the average spend per visit. Furthermore, leveraging events, like live music nights, trivia, or seasonal celebrations, can drive significant foot traffic and sales. Effective staff training, which focuses on enhancing the customer experience and upselling techniques, also plays a vital role in boosting a pub's bottom line.
Strategic Pricing for Premium Craft Beers
A boutique craft beer pub's pricing strategy must reflect the premium nature of its exclusive and rotating selection. Understanding the perceived value of rare or locally sourced brews allows for premium pricing that customers are often willing to pay. Regularly reviewing pricing, perhaps quarterly, ensures that the pub remains competitive while maximizing its profit potential. This might also involve offering curated beer flights or pairing suggestions to encourage higher per-customer spending. For more insights into financial planning for such establishments, resources like boutique craft beer pub profitability can be invaluable.
Leasehold Improvements And Build-Out Costs For A Boutique Craft Beer Pub
Starting a boutique craft beer pub like 'The Hop Knot' involves significant upfront investment in leasehold improvements and build-out. These costs are crucial for creating the sophisticated, community-oriented setting that attracts craft beer enthusiasts and directly impacts your capacity to increase brewery pub revenue. For a 2,000 sq ft space, expect build-out expenses to range from $50 to $250 per square foot, totaling anywhere from $100,000 to $500,000 depending on the existing condition of the property and the desired aesthetic. This investment covers essential elements like plumbing, electrical systems, flooring, bar construction, and custom finishes designed to enhance the pub's ambiance and support your craft beer sales tactics.
Specialized installations are a key driver of these costs but are vital for a superior customer experience. For instance, a high-quality multi-tap draft system, which is fundamental for showcasing a rotating selection of local and rare brews, can add between $20,000 and $70,000 to your build-out budget. This includes the necessary plumbing and refrigeration to ensure each beer is served at its optimal temperature. Properly investing in these features is a direct strategy for maximizing craft beer pub income by offering an unparalleled tasting experience that encourages repeat visits and boosts taproom financial success.
Beyond the physical bar and seating, remember to budget for essential professional services that are part of the build-out process. Permitting and architectural/design fees typically account for 5-15% of the total construction cost. These fees are not merely overhead; they ensure your pub complies with all local regulations and that the layout is optimized for pub operational efficiency. A well-designed space can improve service flow, enhance customer comfort, and ultimately contribute to better craft beer pub profit strategies by minimizing bottlenecks and maximizing table turnover.
Key Build-Out Components for a Craft Beer Pub
- Bar Construction: Includes framing, countertop materials (e.g., granite, quartz), shelving, and backbar design.
- Draft System Installation: Specialized plumbing, refrigeration units, glycol chillers, and multiple tap towers are critical for serving diverse craft beers.
- Seating and Ambiance: Custom furniture, lighting fixtures, flooring (e.g., polished concrete, hardwood), and soundproofing to create a unique atmosphere.
- Kitchenette/Prep Area: If offering food, this includes ventilation, cooking equipment, and storage, impacting the ability to diversify income streams beyond beer sales.
- Restroom Facilities: Ensuring compliance with ADA standards and maintaining a clean, inviting space.
- Permitting and Design Fees: Costs associated with architectural plans, engineering, and securing necessary building permits.
Equipment And Furnishings Costs For A Boutique Craft Beer Pub
Starting a boutique craft beer pub like 'The Hop Knot' involves a significant initial investment in essential equipment and furnishings. This foundational outlay is crucial for both the operational success and the ambiance that defines a premium craft beer experience. Typically, expect to allocate between $50,000 and $150,000 for these necessities. This figure covers everything from the core beer dispensing systems to the customer seating, directly impacting your ability to maximize craft beer pub income.
The heart of any craft beer pub is its draft system. For a boutique establishment, a commercial-grade setup with 10 to 30 taps is common. This, along with robust refrigeration units to keep those craft brews perfectly chilled and a reliable point-of-sale (POS) system for efficient transactions, represents a substantial portion of the initial equipment cost. These core operational components can range from $30,000 to $100,000. For instance, a modern POS system can incur annual software fees of $1,200-$2,500, plus the hardware cost.
Beyond the functional machinery, the furnishings play a vital role in creating the sophisticated and comfortable atmosphere that 'The Hop Knot' aims for. Investing in quality tables, chairs, bar stools, and decorative elements that reflect the brand's identity is key. This category of expenditure can add another $15,000 to $40,000 to your startup budget. Choosing durable, aesthetically pleasing furniture isn't just about looks; it's a long-term investment that enhances customer comfort and perception of value, contributing to overall boutique beer bar profitability.
To further increase brewery pub revenue, many boutique craft beer pubs strategically expand their food offerings. If 'The Hop Knot' plans to serve food, the required kitchen equipment can add a substantial cost, ranging from $10,000 to $50,000. This depends heavily on the menu's complexity, from simple bar snacks that pair well with beer to more elaborate culinary creations designed to complement the artisanal beer selection. Effective food pairing can be a significant driver for increasing beer sales in a pub and boosting overall taproom financial success.
Initial Inventory and Supplier Relationships Costs for a Boutique Craft Beer Pub
Starting a boutique craft beer pub like 'The Hop Knot' requires a significant investment in initial inventory and building strong supplier relationships. This foundational step is critical for offering the exclusive, rotating selection that defines such an establishment. The initial outlay for stocking a diverse range of craft beers, including local favorites and rare imports, along with non-alcoholic options and any initial food items, typically falls between $10,000 and $30,000. This investment directly impacts your ability to optimize inventory for higher beer pub profits from day one.
The cost per keg or case can vary widely depending on the rarity and demand for the brews. For instance, a diverse selection of 20-30 unique beers might cost anywhere from $500 to $1,500 per keg or case. These figures underscore the importance of careful selection and financial planning to ensure a robust initial stock that appeals to discerning craft beer enthusiasts.
Supplier Relationships for Better Profitability
- Establishing strong relationships with local breweries and reputable distributors is paramount. These connections can lead to preferential pricing and early access to limited or sought-after releases. Over time, this can result in savings of 5-10% on the cost of goods sold, directly improving boutique beer bar profitability and overall brewery business growth.
- Good supplier relationships also ensure a consistent supply of high-quality products, which is essential for maintaining customer satisfaction and encouraging repeat business. This is a key aspect of maximizing craft beer pub income.
For a pub aiming to provide an unparalleled tasting experience, managing inventory freshness and rotation is key. The average inventory turnover for a bar is typically between 8 to 12 times per year. This metric highlights the necessity of efficient stock rotation to minimize spoilage and prevent lost revenue, a crucial element of profitable pub management tips and taproom financial success.
Licensing and Permits Costs for a Boutique Craft Beer Pub
Starting a boutique craft beer pub like 'The Hop Knot' involves significant upfront costs for licenses and permits. These are essential for legal operation and can range from $5,000 to over $100,000, heavily influenced by state and local regulations governing alcohol sales. Understanding these expenses early is crucial for accurate financial planning and maximizing craft beer pub income.
The Price of a Liquor License
The liquor license is often the most substantial permit cost. In some states, this is a one-time fee of approximately $3,000 to $10,000. However, in quota-restricted states, such as California or New Jersey, these licenses are bought on the open market and can cost anywhere from $75,000 to over $100,000. This variability means thorough research into your specific location's requirements is paramount for profitable pub management tips.
Additional Permit Requirements
Beyond the liquor license, several other permits are necessary. These include general business licenses, food service permits if you plan to offer food, health department inspections, fire safety permits, and signage permits. Each of these can add a few hundred to a few thousand dollars annually or as a one-time fee. These costs directly impact the initial capital outlay and the timeline to opening your doors, affecting your brewery business growth.
Key Permit Costs Breakdown
- Liquor License: $3,000 - $100,000+ (depending on state and market conditions)
- Business License: $100 - $500 annually
- Food Service Permit: $200 - $1,000 annually (if applicable)
- Health Department Permit: $100 - $500 annually
- Fire Safety Permit: $100 - $500 annually
- Signage Permit: $50 - $300 one-time fee
These varied costs highlight why detailed financial projections are vital for a boutique beer bar's profitability. Failing to account for these expenses can lead to cash flow issues, hindering your ability to implement effective craft beer sales tactics or marketing ideas to boost taproom financial success.
Marketing And Branding Costs For A Boutique Craft Beer Pub
Establishing a strong brand presence is crucial for a boutique craft beer pub like 'The Hop Knot' to attract its target audience. Initial marketing and branding efforts typically require an investment ranging from $5,000 to $25,000. This foundational spending is essential for creating a sophisticated, community-oriented atmosphere that appeals to craft beer enthusiasts.
This budget directly supports key activities that build initial awareness and drive foot traffic. These include professional logo design, the development of a user-friendly website, and the setup of social media profiles. Furthermore, initial online advertising campaigns, such as Google Ads and targeted Facebook or Instagram ads, are vital. Don't forget grand opening promotions; these create immediate buzz and bring in those first crucial customers.
Key Branding Investments for The Hop Knot
- Logo Design: A memorable logo is the visual cornerstone of your brand.
- Website Development: A professional online presence showcases your offerings and ethos.
- Social Media Setup: Essential for engaging with the community and announcing new brews.
- Online Advertising: Targeted ads reach potential customers actively searching for craft beer experiences.
- Grand Opening Promotions: Creates initial excitement and encourages first-time visits.
Beyond the digital realm, physical branding materials significantly contribute to a pub's unique selling proposition. Allocating between $3,000 and $10,000 for these items enhances the customer experience. This investment covers thoughtfully designed menus that highlight your exclusive beer selections, clear and attractive signage that draws people in, and branded merchandise like glassware or apparel. These elements reinforce the boutique nature of your establishment.
To further amplify your marketing reach and foster community engagement, consider allocating funds for initial public relations or local outreach events. Collaborating with local breweries for special releases or partnering with community groups can generate significant buzz. Such initiatives not only attract early adopters but also build goodwill and strengthen your position within the local craft beer scene. This is a powerful strategy for brewery business growth.
Legal And Professional Fees For A Boutique Craft Beer Pub
Establishing a boutique craft beer pub like 'The Hop Knot' involves essential legal and professional fees to ensure a solid foundation. These costs are crucial for setting up the business correctly and protecting it from future issues. Generally, expect these fees to range from $5,000 to $20,000. This investment covers critical aspects like business formation, contract review, and intellectual property protection, laying the groundwork for maximizing craft beer pub income.
Attorney fees form a significant portion of these initial costs. They are necessary for various legal requirements, including forming the business entity, such as a Limited Liability Company (LLC) or Corporation. Attorneys also draft essential operating agreements and meticulously review lease agreements. Furthermore, ensuring full compliance with alcohol beverage control laws is paramount. These legal services can typically cost between $2,000 and $10,000, directly impacting the pub's operational efficiency and taproom financial success from the outset.
Accountant fees are also vital for setting up robust financial systems. This includes initial tax planning to understand liabilities and setting up payroll services for staff. These services generally incur upfront costs ranging from $1,000 to $5,000. Accurate financial management allows for effective sales data analysis, which is key to improving pub profitability and implementing effective marketing for a profitable craft beer establishment.
Additional Professional Consulting Costs
- Engaging industry experts for specialized guidance can add to the initial investment. These consulting fees, typically ranging from $2,000 to $5,000, offer invaluable insights.
- Consultants can assist with developing comprehensive business plans, conducting thorough market analysis, and refining specific craft beer sales tactics.
- This expertise contributes to sustainable growth strategies for a small brewery pub, helping to boost profits in a small craft beer pub by identifying niche opportunities and operational improvements.
Working Capital And Operating Reserve For A Boutique Craft Beer Pub
Securing sufficient working capital and establishing an operating reserve are foundational steps for any boutique craft beer pub aiming for taproom financial success. These funds are critical for covering initial operating expenses before the business becomes self-sustaining. For a venture like 'The Hop Knot,' a boutique craft beer pub focused on local and rare brews, this initial financial cushion is non-negotiable.
For a boutique craft beer pub, the typical requirement for working capital and an operating reserve can range significantly, often falling between $50,000 to $150,000. This capital is essential to bridge the gap from opening day until the pub generates enough revenue to cover its costs. Without this, cash flow crises are almost inevitable, hindering brewery business growth and the ability to implement effective marketing for a profitable craft beer establishment.
This essential reserve directly addresses immediate operational needs. It covers crucial expenses such as:
- Monthly rent payments.
- Utility bills (electricity, water, gas).
- Staff salaries and wages.
- Business insurance premiums.
- Ongoing inventory purchases for beer and other supplies.
For a small pub, these monthly operating costs can easily fall within the range of $15,000 to $30,000, making a 3-to-6-month reserve a vital component for sustained operation.
Ensuring adequate working capital is paramount to prevent cash flow crises during the initial ramp-up phase. This financial buffer allows the pub to absorb unexpected costs, such as equipment repairs or supplier price increases, and to invest strategically in marketing initiatives. These investments are key for maximizing craft beer pub income and fostering a profitable craft beer establishment. A well-funded reserve provides the flexibility needed to execute these growth strategies without immediate financial strain.
A robust operating reserve contributes significantly to the long-term viability and resilience of a boutique brewery taproom. It empowers the pub to respond flexibly to market changes, such as shifts in consumer preferences or new competitor entries. This financial stability supports proactive strategies for increasing revenue at a boutique brewery taproom, such as introducing seasonal beer flights or expanding food offerings, without compromising day-to-day operations or forcing premature cost-cutting measures.