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 2020 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 2020 FDD
- Section IV – Number of franchised and company-owned Scooter’s Coffee outlets at the start of the year and the end of the year for 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD
- Section V – Presentation and analysis of Scooter’s Coffee’s financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:
- 2019, 2018, 2017, 2016, 2015, and 2014 average, median, lowest, and highest gross sales for the franchised Scooter’s Coffee Kiosk Stores and Coffeehouse Stores that were open and operating during the entire 12-month period ending December 31 of the calendar year identified
- 2019 average and median ticket sales for the franchised Scooter’s Coffee Kiosk Stores and Coffeehouse Stores that were open and operating during the entire 12-month period ending December 31, 2019 and that provided complete information
- 2019 average gross sales, discounts, net sales, cost of goods sold, gross margin, labor costs, rental expense, royalty, card processing, overhead, total expenses, and earnings before depreciation, interest, taxes, and debt service for the franchised Scooter’s Coffee Kiosk Stores and Coffeehouse Stores that were open and operating during the entire 12-month period ending December 31, 2019 and that provided complete information
- historic same-store sales growth for those franchised Scooter’s Coffee Stores that were open for at least thirteen months during each of the five measured periods (2013-2014 to 2018-2019)
Section I – Background Information
19 Things You Need to Know About the Scooter’s Coffee Franchise
Partners with DCV Franchise Group to Improve Lending Process for Franchisees
1. In late June 2020, Scooter’s Coffee partnered with DCV Franchise Group, a division of SingerLewak, the leading professional end-to-end services provider in the franchise industry, to provide the support and guidance franchisees need to navigate the financing and loan application process.
2. Many franchisees seek financing through the 7a Loan Program from the Small Business Administration (SBA). And while the SBA’s 7a Loan Program certainly has its advantages, the application process can be daunting due to a series of complicated rules and regulations. This makes securing and applying for financing both confusing and intimidating for first-time applicants, as well as experienced borrowers.
3. Tim Arpin, vice president of franchise sales for Scooter’s Coffee, said DCV’s care, commitment, and attention to detail provides franchise candidates with the support and guidance they need to be successful. Arpin added, “Where we really see the benefit for our franchisees is in the ability for DCV to offer that concierge service to our franchisees. There are moving parts to the SBA process, regardless of what you need. Whether you’re an experienced operator or this is your first time, DCV has the capabilities to guide you and help you through that entire process.”
4. Anthony Byrd, director of business development for DCV Franchise Group, said the support from Scooter’s Coffee and its partnership with DCV are vital to providing franchise candidates with a foundation for future success. “We hear time and time again that you’re getting into business for yourself, but not by yourself,” said Byrd. “Scooter’s Coffee as a whole has the strength and capacity to really grow a unique and prosperous franchise system for an individual, and we’re that key to the vault.”
5. Byrd says that DCV Franchise Group has a perfect success rate in securing funding for its qualified candidates. “If we take somebody on and present their package to the lender, the success rate is 100 percent,” said Byrd. By crafting and developing lending presentations for candidates, DCV not only improves the lives of franchisees, it also makes banks happier. “We’ve had lenders come in and tell us that it is like a birthday present,” Byrd said. “We’ve pretty much wrapped it up and put a bow on it.”
6. The biggest bumps in the road for business owners often come with expansion. As multi-unit franchisees seek to open new locations, partnering with a team that has the solutions to make this expansion as effective as possible is crucial. Arpin said, “One of the challenges franchise owners face is road mapping how to strategize their capital outlay to make expansion happen. We coach our prospects to really work with DCV and ask how they can deploy their capital most effectively, and DCV helps with that.”
7. Byrd said working together with Scooter’s Coffee has been a positive experience for both companies in their mission to support small businesses across the United States. He added, “It’s been a really great experience. They’re a very responsive team and very committed. You can see and feel that there’s a passion there, and everybody I speak with is great. It’s really a team effort to continue to grow the small business community and fulfill people’s dreams.”
Post-Pandemic Positioning Earns Scooter’s Coffee Its Latest Recognition
8. In late August 2020, Scooter’s Coffee garnered recognition for its strength during and after the pandemic. The Midwest-based drive-thru coffee franchise was again featured by QSR Magazine, listed among the “10 Best Franchise Deals of 2020” in July. The list highlights the best opportunities for franchising in a “new frontier” full of new public health guidelines and economic trends.
9. “Drive-thru is enjoying a renaissance in a socially distant world, and Scooter’s 550-square-foot drive-thru kiosk is perfectly positioned to meet the post-pandemic reality,” QSR said about the franchise’s selling point. That unique position – which QSR predicts will “dominate during and after COVID” – is one Scooter’s Coffee expects to benefit its rapid growth in the coming years.
10. Tim Arpin, vice president of franchise sales for Scooter’s Coffee, said, “We are extremely proud that Scooter’s Coffee has again been recognized on QSR’s list of Best Franchise Deals. Not only has our business model been proven over time, it has become as vital as ever to fulfill our mission of providing ‘Amazing Coffee for Amazing People’ in a safe, efficient manner for customers, employees, and franchisees.”
11. Even before the public health crisis, Scooter’s Coffee had already staked its claim among the top coffee franchises with 281 stores operating across 17 states, and commitments to open stores in 24 states. This recognition marks the second year in a row Scooter’s Coffee has been listed on QSR’s annual list, adding to honors from several other publications in the last few years.
Announces Big Plans for Oklahoma City Market
12. In mid-December 2019, Scooter’s Coffee announced that it was once again expanding its reach across the country, this time in the Southern Plains. According to the press release, in 2020, coffee lovers will be able to visit one of many new drive-thru Scooter’s Coffee locations in Oklahoma City.
13. The first location opened at 122nd & Rockwell (7040 NW 122nd St., OKC, OK 73142). Soon after, in early 2020, two additional locations opened on Route 66 – one at Portland, and the other at Rockwell. This isn’t Scooter’s Coffee’s first foray into the Sooner state. In 2016, the very first location to ever break ground on Oklahoma soil occurred in Tulsa near 71st & Lewis Ave.
14. In addition, Scooter’s Coffee is promoting a fan-participation promotion. Fans are directed to a website to nominate their favorite local non-profit. As an incentive for showing kindness and helping the community by nominating, participating customers receive an email back with an exclusive Scooter’s Coffee coupon offering a free small drink or half off a medium or large drink. Then, toward the end of 2020, the participating Scooter’s Coffee locations will hold a “Day of Giving” for the top-nominated non-profit organization and donate a percent of proceeds.
15. As a kickoff to community efforts and to demonstrate Scooter’s Coffee’s core values, Scooter’s is partnering with The Hugs Project. The Hugs Project, established in 2004, works to make sure every American service member knows they are loved and appreciated by those who remain at home enjoying the freedom they provide.
16. Throughout the year, the organization sends care packages to troops deployed around the world. Boxes include items like snacks, hygiene items, DVDs, CDs, socks, and other much needed items. The Hugs Project’s largest shipment departed in late December. Scooter’s Coffee provided a 12-ounce bag of its Wonderland Roast for each box in that shipment.
17. Scooter’s Coffee was founded as Scooter’s Java Express in 1998 by Don and Linda Eckles in Bellevue, Nebraska. A few years earlier, the Eckleses had seen a man building a drive-thru coffee hut in California and were intrigued by the concept. The Eckleses decided they wanted to open their own coffee shop drive-thru that served high quality drinks. Scooter’s quickly caught on and the Eckleses opened more stores in the Omaha area.
18. By 2001, there were five Scooter’s Coffee shops and the Eckleses decided to start franchising the concept. Over the next decade, Scooter’s Coffee continued to grow. Eventually, Scooter’s Coffee expanded beyond the Midwest and there are now locations across the U.S.
Entrepreneur’s Franchise 500
19. Scooter’s Coffee ranked No. 225 on Entrepreneur’s 2020 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Scooter’s Coffee franchise costs, based on Item 7 of the company’s 2020 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 2020 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 140
- Outlets at the End of the Year: 160
- Net Change: +20
- Outlets at the Start of the Year: 160
- Outlets at the End of the Year: 187
- Net Change: +27
- Outlets at the Start of the Year: 187
- Outlets at the End of the Year: 238
- Net Change: +51
- Outlets at the Start of the Year: 18
- Outlets at the End of the Year: 15
- Net Change: -3
- Outlets at the Start of the Year: 15
- Outlets at the End of the Year: 17
- Net Change: +2
- Outlets at the Start of the Year: 17
- Outlets at the End of the Year: 28
- Net Change: +11
Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis
- The following table summarizes the ownership of Stores in operation as of December 31, 2019:
- Franchised Stores: 139
- Affiliate-Owned Stores: 13
- Total Stores: 152
- Franchised Stores: 74
- Affiliate-Owned Stores: 7
- Total Stores: 81
- Franchised Stores: 25
- Affiliate-Owned Stores: 8
- Total Stores: 33
- Franchised Stores: 238
- Affiliate-Owned Stores: 28
- Total Stores: 266
- This Item 19 does not include financial performance information for any of Scooter’s Coffee’s franchised nontraditional Stores as Scooter’s Coffee currently is not actively marketing non-traditional Stores, and they operate differently from Kiosk and Coffeehouse Stores.
- Non-traditional Stores are carts or small spaces located in specialty locations (e.g. airports, hospitals, stadiums, train stations, malls, military bases, amusement parks, and business atriums), or within other businesses such as large office buildings.
- As a result, non-traditional Stores operate differently from Kiosk and Coffeehouse Stores, as they generally do not have a drive-thru or significant customer seating available, may not have standard hours of operation, and typically are not located in freestanding locations that are visible to the public from outside.
- This Item 19 also does not include any financial performance information for any of Scooter’s Coffee’s affiliate-owned Stores.
- This Item 19 is separated into four sections. In each section, the franchised Stores that meet the criteria in this Item 19 are referred to as “Participating Stores” (for all such franchised Stores), or for a particular type of Store, “Participating Kiosk Stores” or “Participating Coffeehouse Stores.”
Part 1 – Statement of Average Gross Sales
- This statement includes average Gross Sales of Participating Stores (both Participating Kiosk Stores and Participating Coffeehouse Stores) for each of calendar years 2014 to 2019. For each year, Scooter’s Coffee only included Kiosk and Coffeehouse Stores that were open and operating during the entire 12-month period ending December 31 of the calendar year identified (each a “Measurement Period”).
- The information presented in this Part 1 is based on information Participating Stores provided to Scooter’s Coffee. Scooter’s Coffee has not verified or audited this information.
A. Participating Kiosk Stores