🍟 12/1/2022 – The Man Who Owns 900 Pizza Huts (& 450 Applebee’s)
FRANCHISES OF THE WEEK
1) 7 Brew
Fast Facts
Background
- Founded in 2015, franchising since 2021
- Based in Arkansas; 13 locations open at the start of 2022
- A drive-thru coffee concept serving premium coffee via a fun drive thru experience
Fees + Investment
- Royalty: 4.5% – 7%
- Brand Fund: 1%
- Franchise Fee: $45,000
- Initial Investment: $790,800 – $1,582,000 (two Store minimum commitment)
Financial Performance
- The below table disclose information on eight 7 Brew stores that were open for the full year 2021
The Wolf’s Take 🍟
Drive-thru coffee is heating up, but 7 Brew looks to be a formidable contender.
Right off the bat, it’s important to note that their investment range assumes a 2 unit commitment, so the investment per individual store is roughly half the range provided.
Considering that, these numbers are very impressive. ~$2.4 million in average revenue at a ~20% EBITDA implies ~$450,000+ drops to the bottom line. That’s a lot of coffee cash!
7 Brew stores typically are placed on an out-parcel to a shopping center with street exposure in an urban or downtown location with heavy population, preferably with highway exposure or proximity.
The ideal location only needs to be 510 square feet, and just a few employees to manage the drive-thru and prepare beverages
It’s rare to see a food & beverage franchise fall into a low labor + high margin concept, but 7 Brew has tweaked the model to fit that description.
Outside of the operating model and financials, 7 Brew has a clear brand strategy, and it’s paying off via the growth of their social media presence. An instagram account with nearly 60,000 followers is a great place to be barely 1 year into growing as a franchise.
If you’re interested in 7 Brew check them out below!
Resources
2) Biggby Coffee
Fast Facts
Background
- Founded in 1994, franchising since 1999
- Based in Michigan; 281 locations open at the start of 2022
- A drive-thru coffee shop that also serves hot chocolate, tea, and “cream freeze” smoothies
Fees + Investment
- Royalty: 6%
- Brand Fund: 3%
- Franchise Fee: $20,000
- Initial Investment: $276,000 – $439,000
Financial Performance
The Wolf’s Take 🍟
Just like 7 Brew, Biggby is a drive-thru coffee concept that requires minimal square footage, and demonstrates the potential for high margins for a food & beverage concept.
Biggby is more developed than 7 Brew, as they already have 280+ concepts nationwide. But, as demonstrated by big players like Starbucks and Dunkin’, the total addressable market of potential locations can be well into the thousands for coffee concepts.
I would caution a potential franchisee looking at a newer coffee concept to strongly consider their location, as brand recognition can be a major factor in coffee consumers choices (i.e. good luck opening up anything other than a Dunkin’ in the New England area!).
Overall however, Biggby boasts impressive numbers for the second year in a row (their average unit sales are roughly the same despite having DOUBLE the amount of locations).
Just like 7 Brew this is a formidable competitor in the drive-thru coffee game!
Resources
FROM THE POD
Greg Flynn – Flynn Restaurant Group
From 7 Applebee’s to $4 Billion in Revenue
In 1999, Greg Flynn acquired 7 Applebee’s. This year, he’ll do over $4 billion in revenue.
In addition to his Pizza Huts and Applebee’s, he owns:
- 369 Arby’s
- 192 Wendy’s
- 130 Panera’s
- 283 Taco Bell‘s
This makes Greg Flynn the largest franchise owner in the world! It’s truly astounding what you can accomplish with a long term mindset.
Check out our conversation here!
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