FDD Talk 2016: The Dunn Brothers Coffee Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

In this FDD Talk 2016 post, you’ll learn the following:

• Section I – Background information on the Dunn Brothers Coffee franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Dunn Brothers Coffee franchise, based on Item 7 of the company’s 2016 FDD

• Section III – Presentation and analysis of Dunn Brothers Coffee’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:

• 2015 average, high, and low gross revenue for Dunn Brothers Coffee Shops open during the entire 12-month period ended December 31, 2015 (grouped according to those open 13-24 months, 25-36 months, and over 36 months)

• 2015 average, high, and low gross revenue for Dunn Brothers Coffee Express Shops open during the entire 12-month period ended December 31, 2015 (grouped according to those open 13-24 months, 25-36 months, and over 36 months)

Section I – Background Information

Ed and Dan Dunn were a couple of brothers who were obsessively focused on getting peak flavor out of coffee. Together they started their own coffee shop they called The Official Home of Taste in St. Paul, MN in 1987.

In 1994, Chris Eilers and Skip Fay were the first franchisees of the company. Four years later, in 1998, Eilers and Fay took over the franchise operation themselves.

From 2008 to 2013, the number of locations declined from a high of 96 down to 78. In recent years that figure has ticked back up slightly and currently stands at 84, four of which are company-owned.

Here’s how Dunn Brothers Coffee keeps its customers wired in the competitive coffee segment:

Fresh-Roasted

The key to peak flavor in any coffee is roasting the beans, which at Dunn Brothers Coffee shops happens on a daily basis. If your beans are roasted off-site and have to travel, the flavor is inevitably compromised to some degree. Roasting on-site guarantees flavor and freshness. You can’t sell coffee weeks after roasting and expect it to have the kind of flavor it should have.

That’s why the big national operations can’t hold a candle to real flavor. Roasting in small batches is the way to go – batches of 7 pounds each that must be sold within 5 days of roasting for maximum aroma and taste.

When you know where your beans come from and how they were grown, you can figure out the best roasting profile for each kind of bean that results in the best flavor. Roasting sets off processes in the coffee bean that release coffee oils that contain all the aroma and flavor. But they also start to oxidize right away as well, which is why using the beans as soon after roasting as possible is so important.

This commitment to flavor and freshness has paid off – Dunn Brothers Coffee has been voted best cup of coffee in the Twin Cities more than ten times.

Cold-Pressed

Coffee is coffee, right? Not so! In their pursuit of flavor, Dunn Brothers began to experiment with cold-pressed coffee, meaning brewing without hot water. Steeping the freshly roasted beans in cold water for 24 hours produces an absolutely amazing cup of coffee – more buzz, incredibly smooth, and with 60% less acid than hot-brewed coffee.

Post-Roast Rules

Ensuring the best flavor also means sticking to some strict post-roasting protocols: No automatic coffee machines; waiting to grind coffee until the milk is already steamed and ready to go in order to lock the flavor in rather than letting it escape as aroma; and making sure brewed coffee is served within 90 minutes, after which time a fresh pot is brewed.

Finding the Beans

But of course great coffee begins with the farmers who grow it, and Dunn Brothers believes strongly in making sure coffee farmers are adequately rewarded for their efforts while also protecting the environment and enriching communities.

Dunn Brothers partners with “sustainably-grown” certifiers such as Fair Trade USA, the Rainforest Alliance, and World Coffee Research.

The process is source globally, roast locally.

Section II – Estimated Costs

• Please click here for detailed estimates of Dunn Brothers Coffee franchise costs, based on Item 7 of the company’s 2016 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis