FDD Talk: What You Need to Know About the Scooter’s Coffee Franchise Opportunity (Financial Performance Analysis, Costs and Fees)

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

• Section I – Background information on the Scooter’s Coffee franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Scooter’s Coffee franchise, based on Item 7 of the company’s 2017 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Scooter’s Coffee franchise, based on Items 5 and 6 of the company’s 2017 FDD

• Section IV – Presentation and analysis of Scooter’s Coffee’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:

• 2016 average, median, high, and low gross revenue, cost of goods sold, and labor costs for the franchised and affiliate-owned Scooter’s Coffee Drive-Thru Kiosks and Drive-Thru Coffee Houses (separately stated) that were open and operating during the entire time period of January 1, 2016 to December 31, 2016, submitted information to the franchisor, and were not the top 3 or bottom 3 performers in the “Cost of Goods Sold” and “Labor Costs” performance categories

• historic same-store sales growth for those franchised and affiliate-owned Scooter’s Coffee Stores that were open for at least thirteen months during each of the five measured periods (2011-2012 to 2015-2016)

Section I – Background Information

12 Things You Need to Know About the Scooter’s Coffee Franchise

Reaffirms Commitment to Conservation

1.  In April, Scooter’s Coffee celebrated Earth Day and National Arbor Day, both of which have messages that align with the company’s corporate message of contributing to a “chain of good” in the U.S. and abroad. The company also reaffirmed its commitment to collaborating with the Arbor Day Foundation to source 100 percent shade-grown coffee in order to protect the rainforests.

2.  On April 22, to celebrate Earth Day, many Scooter’s franchisees participated in local projects and events that commemorated the day. In recognition of National Arbor Day on April 28, for every cup of coffee sold at all Scooter’s locations that day, the company promised to help the Arbor Day Foundation preserve two square feet of rainforest.

3.  Rob Streett, president and chief operating officer of Scooter’s Coffee, said, “Doing the right thing, whether it’s for our customers, employees, and certainly, the environment will always be an unwavering principle. We are making a pledge to minimize the impact on the habitat at the core of our business. We are thankful for Arbor Day Foundation’s ongoing effort to change the world and encourage others to educate themselves and participate.”

Honored Veterans and Active Duty Military on Veterans Day

4.  Scooter’s Coffee recognized the service of veterans and active duty military members on Veterans Day by offering a special promotion. On November 11, customers with a valid military ID or proof of service received a free cup of coffee at all Scooter’s locations across the country.

5.  In addition to honoring the military on Veterans Day, Scooter’s Coffee collaborates with VetFran, the resource providing access and opportunities in franchising to the nation’s veterans and their spouses, to increase the number of veterans pursuing entrepreneurship. As part of the program, veterans receive $20,000 in product, including cups, coffee, and pastries, from Scooter’s. This is triple the amount of merchandise given to non-veteran franchisees.

6.  Todd Graeve, CEO of Scooter’s Coffee, said, “Scooter’s Coffee is grateful for the service and sacrifices of the nation’s military. Veterans are vital to our freedom and way of life in the United States. The free cup of coffee we’re offering this Veterans Day represents the appreciation we at Scooter’s Coffee have for the commitment active duty and retired military members contribute on behalf of our country.”

Limited-Time Summer Items

7.  In early June, Scooter’s Coffee introduced new limited-time Shaken Refreshers. The Shaken Refreshers were infused with green coffee bean extract and were available in two flavors, Strawberry Acai and Citrus Mint. The drinks were different from the typical coffee that Scooter’s serves and featured a mix of fruit juice, pure cane sugar, and the green coffee extract that comes from unroasted coffee beans soaked in water. The extract adds a natural source of energy without the typical flavor of coffee. In addition to being a different kind of energy drink, the Shaken Refreshers contained no artificial flavors, colors, or preservatives.

8.  Rob Streett, president and chief operating officer of Scooter’s Coffee, said, “We recognize the increasing importance of clean label products. Our Refreshers are premium products with no artificial colors, flavors or preservatives. This drink is the perfect option for those seeking a healthy boost of energy.”

Company History

9.  Scooter’s Coffee was founded in 1998 by Don and Linda Eckles in Bellevue, Nebraska. The Eckles were inspired to open their own coffee shop while they were living in California where they witnessed the growth of the specialty coffee industry and drive-thru coffee concepts. They moved back to where they both grew up in Nebraska and named their new business after their daughter.

10.  The Eckles combined the drive-thru coffee concept with a few key business principles, such as finding a great location, committing to high quality drinks, offering speedy service, maintaining a clean store, and having a friendly attitude.

11.  After opening the first location, the Eckles opened a few more locations in the Omaha metro area. They began franchising the concept in 2001. Today, there are nearly 200 Scooter’s Coffee shops across the U.S.

Entrepreneur’s Franchise 500

12.  Scooter’s Coffee appeared on Entrepreneur’s annual Franchise 500 list six times in the past ten years. The company’s highest rank was No. 234 in 2015, while its lowest rank was No. 379 in 2007.

Section II – Estimated Costs

• Please click here for detailed estimates of Scooter’s Coffee franchise costs, based on Item 7 of the company’s 2017 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Scooter’s Coffee’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.

Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis

• As of December 31, 2016, there were 140 franchised Scooter’s Coffee Stores in operation and 18 affiliate-owned Scooter’s Coffee Stores in operation.

• Of the 140 franchised Scooter’s Coffee Stores in operation as of December 31, 2016, 67 were Drive-Thru Kiosks, 56 were Drive-Thru Coffee Houses, and 17 were Non-Traditional Stores.

• Of the 18 affiliate-owned Scooter’s Coffee Stores in operation as of December 31, 2016, 7 were Drive-Thru Kiosks, 8 were Drive-Thru Coffee Houses, and 3 were Non-Traditional Stores.

• This Item 19 does not include financial performance information for any of Scooter’s Coffee’s franchised or affiliate-owned Non-Traditional Stores.

• This Item 19 is separated into two sections. Part 1 identifies the average revenue, cost of goods sold, and labor costs for both Scooter’s Coffee’s Participating Franchised Stores (as defined below) and certain of Scooter’s Coffee’s affiliate-owned Stores (owned and operated by Boundless Operations).

• Part 2 of this Item 19 identifies the historic same-store sales growth for those franchised and affiliate-owned Scooter’s Coffee Stores that were open for at least thirteen months during each of the five measured periods noted in Part 2 below.

Part 1 – Average Revenue, Cost of Goods Sold, and Labor Costs

A.  Participating Franchised Stores

• In March and April 2017, Scooter’s Coffee contacted each of its 123 Drive-Thru Kiosk and Drive-Thru Coffee House franchised Stores that were open and operating as of December 31, 2016. Of the 123 franchised Scooter’s Coffee Stores that were contacted, Scooter’s Coffee received information from 80 of its Drive-Thru Kiosk and Drive-Thru Coffee House franchised Stores that were open and operating during the entire time period of January 1, 2016 to December 31, 2016 (the “Measurement Period”).

• Of the 80 Drive-Thru Kiosk and Drive-Thru Coffee House franchised Stores that provided Scooter’s Coffee with information, 63 are included in the financial performance information (the “Participating Franchised Stores”). Only those Participating Franchised Stores that operated a Scooter’s Coffee Store during the entire Measurement Period are included in the information below.

• Of the 63 Participating Franchised Stores which were in operation during the entire Measurement Period, 38 are Drive-Thru Kiosks and 25 are Drive-Thru Coffee Houses.

• 17 Drive-Thru Kiosk and Drive-Thru Coffee House franchised Stores that provided Scooter’s Coffee with information were not included in the financial performance information below because they were the top 3 or bottom 3 performers in the “Cost of Goods Sold” and “Labor Costs” performance categories below.

Drive-Thru Kiosks (38 Stores)