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Scooter’s Coffee Franchise Payback Faster With Sales Increase (2023)

Written by: Spencer Huang
Last Updated: January 18, 2023
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This article is based on its 2022 FDD

Scooter’s Coffee is an American chain of coffee stores specializing in quick service of espresso drinks, smoothies, and baked goods founded in 1998 and has grown to about 250 stores in the United States. Boundless Enterprises, a Nebraska-based LLC, serves as the parent company for Scooter’s. The parent company also owns two affiliate companies – Harvest Roasting and Boundless Operations.

Contents

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Scooter’s Coffee offers two types of franchises:

  • a Drive-Thru Kiosk ( the “Kiosk”) and
  • a Drive-Thru Coffeehouse (the “Coffeehouse”).

Kiosk stores are smaller and sales originate from drive-thru customers; these stores have no carry-out or in-store seating options. On the other hand, Coffeehouses offer inside seating as well as drive-thru options for customers.

Donald Eckles co-founded the Scooters business and has served in senior leadership ever since. He currently serves as Chairman.

Stepping into the Beverage Industry – and more specifically the quick service coffee industry – can be a daunting task, considering the significant start-up costs and the increasingly competitive nature of the industry. This article will break down the Financial Disclosure Document for Scooter’s Coffee and provide all the information that prospective franchisees should know before making an investment decision.

How is Scooter’s Coffee Positioned in the Food and Beverage Industry?

The quick service coffee industry is well-established and highly competitive in America. Scooter’s expects its franchises to compete with nationally established chain stores, such as Starbucks, Peet’s Coffee, and Dunkin Donuts, as well as local stores and independent restaurants.

How Much Does a Scooter’s Franchise Cost?

The estimated total initial investment for a Scooter’s Franchise depends on the store type. A kiosk may cost anywhere in the range of $512,400 to $890,600 while a coffeehouse may set you back anywhere from $375,300 to $1,046,000. Potential franchisees who intend to open multiple Scooter’s stores will be charged a nonrefundable $5,000 Development Fee for each additional store opened.

A full breakdown of the costs is shown below. Note that regardless of the type of store, an initial franchise fee and opening support fee totalling $50,000 is due at signing. Much of the variation in costs come from Free Standing Building and Leasehold Improvements, which are costs associated with remodeling an existing retail space to meet the square footage and location requirements of Scooter’s Franchises. 

Scooter’s Franchise Costs

Type of ExpenditureAmountTo Whom Payment is to be Made
for Kiosk Storefor Coffeehouse Store
Initial Franchise Fee$40,000$40,000Us
Initial Opening Support Fee$10,000$10,000Us
Free Standing Building and Leasehold Improvements$255,300 to $506,900 (not including the purchase of land)$146,500 to $679,900 (not including the purchase of land)Other Suppliers
Architectural and Engineering Fees$10,400 to $38,400$9,000 to $30,900Other Suppliers
Equipment, Fixtures and Furniture$135,500 to $153,300$116,600 to $177,900Harvest Roasting and other Suppliers
Signs$23,700 to $40,000$15,700 to $35,300Other Suppliers
Point-of-sale system and software$7,000 to $11,000$7,000 to $11,000Other Suppliers
Deposits and Licenses$2,500 to $7,000$2,500 to $7,000Other Suppliers
Initial training: travel and living expenses$4,000 to $7,000$4,000 to $7,000Other Suppliers
Opening inventory, Suppliers, and Smallwares$14,000 to $17,000$14,000 to $17,000Harvest Roasting and other Suppliers
Additional Funds – 3 months$10,000 to $30,000$10,000 to $30,000Other Suppliers and Your Employees
Total$512,400 to $890,600$375,300 to $1,046,000

Franchise Requirements

Certain requirements must be met in order to own a Scooter’s Franchise.

The Scooter’s Franchise must be operated in compliance with the Franchise Agreement. Scooter’s will provide an Operations Manual that will contain standards that must be followed. These standards include what proprietary items may be sold and restrictions on store build-out, computer software, and supplier and product approval.

Additionally, Scooter’s requires new franchisees to participate in two training sessions, both based in Omaha, Nebraska. The 3-day Immersion Training workshop occurs between 90 and 120 days of signing the Franchise Agreement and discusses the business management principles of owning a franchise. The 4-week Operations Training workshop must be completed 6 to 8 weeks before store opening and details the day-to-day practice of running a store. A full breakdown of the training programs, broken down by hours of training, is shown below.

Immersion Training Program

Subject Hours of Classroom Training – Estimated Hours of On-the-Job Training-Estimated Location
Orientation 1 0 Omaha, NE Training Facility
Speed, Consistency & Tools 2.5 0 Omaha, NE Training Facility
Success Factors 4 0 Omaha, NE Training Facility
Training Roadmap 1 0 Omaha, NE Training Facility
Supply Chain 1 0 Omaha, NE Training Facility
Human Resources 3 0 Omaha, NE Training Facility
Finance & Accounting 1 0 Omaha, NE Training Facility
Construction 1 0 Omaha, NE Training Facility
Marketing 1.5 0 Omaha, NE Training Facility
Franchisee Panel 2.5 0 Omaha, NE Training Facility
Action Planning 1.5 0 Omaha, NE Training Facility
Total 21
scooters

Operations Training Program

Subject Hours of Classroom Training – Estimated Hours of On-the-Job Training-Estimated Location
Orientation 4 0 Omaha, NE Training Facility
Customer Service 18 26 Omaha, NE Training Facility and Scooter’s Coffee location
Daily Operations 12 20 Omaha, NE Training Facility and Scooter’s Coffee location
Marketing 2 0 Omaha, NE Corporate Headquarters
Scooter’s Accounting and Reporting 2 0 Omaha, NE Corporate Headquarters
Inventory Management 2 4 Omaha, NE Training Facility and Scooter’s Coffee location
Staffing Recommendations 2 4 Omaha, NE Training Facility and Scooter’s Coffee location
Station Deployment 2 10 Omaha, NE Training Facility and Scooter’s Coffee location
Beverage Recipes/Drink Preparation and Practice 10 30 Omaha, NE Training Facility and Scooter’s Coffee location
Culture and Engagement 2 10 Omaha, NE Training Facility and Scooter’s Coffee location
Total 56 104

Ongoing Fees

The main fees associated with owning a Scooter’s franchise are as follows:

  • 6% royalty fee for all gross sales accrued per reporting period, and
  • 2% marketing fee.

While the royalty fee is higher than the Food And Beverage Industry average of 5.3%, Scooter’s 2% marketing fee is slightly lower than the industry average of 2.3%.

Additional minor fees, such as Local and Regional Marketing Cooperatives, Technology Fees, and Insurance Premiums, vary depending on location and circumstances.

Company Trends

Scooter’s as a company has seen growth in the number of franchised kiosk and coffeehouse stores every year from 2014 to 2020, the most recent year for which there is data.

Company Trends

Measurament Period Total Franchised Kiosk Stores Operating at Year End Participating Kiosk Stores Total Franchised Coffeehouse Stores Operating at Year End Participating Coffeehouse Stores
2020 187 140 79 75
2019 139 101 74 62
2018 103 84 63 54
2017 85 70 54 52
2016 67 51 56 39
2015 56 41 41 32
2014 46 37 34 31

Additionally, both Average Gross Sales and Median Gross Sales among participating Kiosk and Coffeehouse stores have increased in each successive year from 2014 to 2020. In particular, Average Gross Sales increased by 34.7% for Kiosks and 16.0% for Coffeehouses in 2020, which represents the largest year over year percentage growth in the most recent six years.

scooters franchise owners

Average Gross Sales – Participating Kiosk Stores

Calendar Year Store Type Average Gross Sales Number and Percentage that Attained or Exceeded the Average Median Gross Sales Low/High Range
2020 Kiosk $637,104 59/42% $587,723 $161,902/$1,299,039
2019 $473,012 44/44% $453,470 $129,969/$1,045,297
2018 $429,289 42/50% $428,577 $92,100/$989,614
2017 $404,761 39/56% $426,610 $73,217/$878,061
2016 $397,895 28/55% $404,480 $72,563/$881,732
2015 $384,208 23/56% $396,639 $79,793/$807,320
2014 $327,341 18/49% $325,004 $111,635/$626,438

Average Gross Sales – Participating Coffeehouse Stores

Calendar YearStore TypeAverage Gross SalesNumber and Percentage that Attained or Exceeded the AverageMedian Gross SalesLow/High Range
2020Coffeehouse$691,95338/51%$710,292$142,198/$1,656,587
2019$596,54332/51%$620,484$106,487/$1,286,052
2018$539,31727/50%$540,588$88,190/$1,100,713
2017$506,28022/42%$472,137$77,845/$1,037,554
2016$535,63419/49%$533,879$82,512/$990,567
2015$533,67017/53%$532,201$67,176/$950,407
2014$441,40616/52%$446,332$79,424/$878,504

 

scooters

A healthy increase in the number of stores and gross sales is a positive sign for prospective franchisees.

How much do Scooter’s Coffee Franchise Owners Make?

As shown above, median franchise sales in 2020 were $587,723 for Kiosks and $710,292 for Coffeehouses.

Based on a midpoint investment of $701,500 for a Kiosk

Initial investment (midpoint) %Profit margin of median franchise sales Estimated Profits Time to recoup investments
$701,500 10% $58,772 13 years
15% $88,158 9 years
20% $117,555 7 years
scooters

Based on a midpoint investment of $710,650 for a Coffeehouse

Initial investment (midpoint)%Profit margin of median franchise salesEstimated ProfitsTime to recoup investments
$701,65010%$71,02911 years
15%$106,5438 years
20%$142,0586.5 years
Note:

Many factors affect the sales, costs, and expenses of your Franchise. There is no guarantee that these numbers will be reflective of the time it takes for your Franchise to recoup your initial investment.

Is the Franchise Profit Worth the Cost?

While Scooter’s is a growing company and has seen increasing gross sales over the past six years, the 7-14 year timeframe that you could reasonably expect to recoup your initial investment may be a long period of time for one to wait. Other companies in the food and beverage industry may provide a better investment opportunity. For more examples, check out other businesses offered on Vetted Biz.

What are Alternatives to a Scooter’s Franchise?

Since there are so many plates in the Coffee Industry, these are some players you might want to consider:

Bigby

Biggby is a community coffee shop chain with offerings of espresso beverages, sandwiches, baked goods, etc. Their franchise is generally operated from either a free-standing, storefront or strip center location or a prefabricated modular structure. Biggby has a very high focus on community integration which they credit for their economic recovery after COVID. Robert P. Fish is a Co-Founder and Co-CEO of Biggby since April 2016 along with Michael J. McFall. Both of them are managing members of Global Orange, Biggby’s associates.

A 15% profit margin would mean it would take nearly 4.5 years to recoup your investment. Based solely on the Franchise Disclosure Document, Biggby may be an exciting investment opportunity for potential franchisees. The company presents itself as an up-and-coming player in the industry focused heavily on community values and engagement. It is offering a chance to be a part of an industry that has been long present. While still in its early stages, Biggby Coffee’s growth seems to be accelerating.

coffee shop startup costs

Dunkin’ Donuts

Dunkin’ Donuts, also known as Dunkin’ and DD, is an American multinational coffee and doughnut chain. It was founded by Bill Rosenberg in Quincy, MA in 1950. It began rebranding as a “beverage-led company”, and was renamed Dunkin’, in 2019 with stores in the U.S. beginning to use the new name. The rebranding is to eventually be rolled out to all international locations. With approximately 12,900 locations in 42 countries, Dunkin’ is one of the largest coffee shop chains in the world. At the close of 2021, there were 8,000+ Dunkin’ franchised locations in the US. It is led in the US by David Hoffmann as CEO & President and former CEO Nigel Travis in the role of Executive Chairman.

Based on the median sales provided by Dunkin’s Drive-Thru franchise locations, at an average of a 15% profit margin it will take around 5.5 years to recoup your investment. This is in the same range as other franchise opportunities. You may not get a 15% profit margin which would elongate getting a return on your investment. Dunkin’ Donuts offers people the opportunity to be a part of a business that has high net sales and is rapidly expanding. It is impossible to understate the brand recognition that Dunkin’ has in the US market.

dunkin

PJ's Coffee

PJ’s Coffee is a retail coffeehouse chain in the south. It was founded by Phyllis Jordan (and, thus, PJ) in 1978. Since 2004, they have been competing with Starbucks in the local areas and aim to go countrywide. They had 121 franchised and 11 affiliate-owned locations as of 2021.

The estimated total investment necessary to begin the operation of a PJ’s Coffee Franchise ranges from $406,000 to $1,024,000. Based on the median sales provided by PJ’s Coffee franchise locations, at an average of a 15% profit margin it will take around 8.5 years to recoup your investment. This is longer than other franchise opportunities. You may not get a 15% profit margin which would elongate getting a return on your investment.

pj's coffee franchise

Conclusion

While Scooter’s is a growing company and has seen increasing gross sales over the past six years, the 8 – 9 year timeframe that you could reasonably expect to recoup your initial investment may be a long period of time for one to wait. Other companies in the food and beverage industry may provide a better investment opportunity. For more examples, check out other businesses offered on Vetted Biz.

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