🍟 12/2/2021 – Lessons From Kat Cole + Biggby Coffee
This is partially a self-plug, but Codie Sanchez featured yours truly (among others) in her latest Contrarian Thinking newsletter.
The article dives into the pros & cons of buying franchises, and includes info from a few experienced franchisees that she’s friends with – one of them being a Massage Envy owner who broke even inside of 1 year, and was profitable shortly after.
Give it a read here (and take a gander at those tweets she references ).
Invest like The Best with Patrick O’Shaugnessy is one of my favorite podcasts, and this is easily one of my favorite episodes .
As the former President of Focus Brands, Kat Cole is intimately familiar with several owners of franchises like Auntie Anne’s, Cinnabon, Carvel and more.
The most interesting part of the podcast is hearing her frameworks for building an enduring brand. If you own any business, your brand can be such a powerful moat against your competitors, yet many owners think it’s no more than the font and colors of the sign on their store.
“The brand is the promise that consumers believe an entity has made to them…the combination of what a brand says and does, leads to a set of [consumer] beliefs about what that brand is, and therefore what that brand has permission to do in the market…”
- Founded in 1994, franchising since 1999
- Based in Michigan; 262 units open as of 2021
- A drive-thru coffee shop that also serves hot chocolate, tea, and “cream freeze” smoothies
Fees + Investment
- Franchise Fee: $20,000
- Royalty: 6% of gross sales
- Brand Fund: 3% of gross sales
- Initial Investment: $202K – $419K
The Wolf’s Take 🍟
Brand recognition plays a massive role for coffee consumers. As a native northeasterner, it’s always interesting to notice the regional presence Dunkin’ has here versus other markets. And then of course you have Starbucks that is competitive everywhere.
All that to say, depending on where you live, be careful about picking a more localized chain given the intense competition. Regardless, Biggby’s unit economics are quite good for a coffee concept – it’s investment range is far lower than most given that it focuses on drive-thru service only, and revenue per location at close to $800k is above average.
Even at 262 units, the ceiling is VERY high for Biggby in terms of unit growth potential. Considering Dunkin’ has 9,100+ locations in the U.S., there’s plenty of territory available if this is the right franchise for you.
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