For much of its 20-year history, Scooter’s Coffee had been a sleepy little chain, slowly expanding out from its Omaha, Neb., headquarters.
But Scooter’s recently woke up, speeding its growth in the past couple of years, and now it’s received an injection of caffeine, thanks to a recent investment from Omaha-based private-equity firm McCarthy Capital.
As a result, the 180-unit company plans to put a lot more of its drive-thru coffee shops throughout the Midwest. The chain’s goal is to get to 1,000 locations.
“There’s been a lot of excitement around the office the past few days,” Todd Graeve, CEO of Scooter’s parent company Boundless Enterprises, says in an interview with Restaurant Business. “Us partnering with McCarthy Capital really signals to others how serious we are about growing. The intent is to accelerate that growth.”
Don and Linda Eckles founded the chain in 1998, opening the first location in an Omaha suburb, and Don is still involved in the company as its chairman. The chain started franchising, first to friends and families, and then to developers.
The company began ramping up its growth in 2016. “In 2016 we went from opening three to 10 stores a year to opening 24,” Graeve says. “The next year we opened 33. We began to see some fruit from some of those commitments playing out.”
The company is entering a complicated and challenging market. Two of the 10 largest restaurant chains in the U.S. specialize in coffee, according to data from Technomic’s Top 500 Chain Restaurant Advance Report. That includes Starbucks, No. 2, and Dunkin’ Donuts, No. 8. In addition, No. 1 McDonald’s sells a lot of coffee, as do numerous smaller chains as well as convenience stores.
But Graeve believes there’s an opening, especially in the Midwest, which he calls an underserved market. “There’s a real opportunity in the Midwest and some other markets to accelerate growth,” he says.
That was the impetus for the deal with McCarthy, which is a minority investor in Scooter’s. “It wasn’t about a need for capital,” Graeve says. “What McCarthy brings is a capital opportunity if we ever need it. That resource is available as we expand.”
In addition, McCarthy can provide the chain with guidance and resources, he said. “We’re at this inflection point,” Graeve says. “We can accelerate in the Midwest and nationally. They are a smart group out of Omaha, and they can help us.”
The company offers a typical selection of coffee shop fare, with coffee and espresso-based drinks, served hot or cold, along with smoothies and teas. The chain also sells a selection of pastries, such as cinnamon rolls and muffins. Scooter’s roasts its own coffee and bakes its own pastries and delivers them to the store. But 85% to 90% of sales come from drinks.
Scooter’s is “known for offering high-quality products,” Matt Breunsbach, vice president of McCarthy Capital, said in a statement. “We plan to accelerate growth and build on the impressive track record of Scooter’s Coffee.”
Most of Scooter’s locations are drive-thru only, with no inside business, and only 450 square feet. The chain plans to grow mostly with that type of concept, which Graeve says larger developers tend to prefer.
The drive-thru nature of the concept means location is vital. “You have to have a certain amount of cars,” Graeve says. “And you need to be visible. If they don’t see you, they do not stop. You have to be reasonably accessible, right-in, right-out.”
But the location has inspired a lot of loyalty among its customers. “Many of our customers come in every single morning, and sometimes twice a day,” he says.