When Caribou Coffee started opening its drive-thru-only “cabin” prototypes in 2019, the results were far better than anything CEO John Butcher expected. “Our drive-thru times are a full minute faster at our cabins than our” traditional locations, he said. “It’s wicked fast.”
That’s what happens when you listen to your operators.
The 700-unit Minneapolis-based chain developed the idea with considerable help from some of its best operators, who know best how a drive-thru coffee shop should work. They designed the interior layout and chose the location of the drive-thru window, Butcher said. The result was a concept developed in just nine months that gets its espressos and lattes out faster and generates happier customers.
“We trusted our teams,” Butcher said. “We designed it so the entire experience would be efficient, so we could craft our products as quickly as possible while maintaining a high degree of service.”
In the process, Caribou got a concept that should serve as its primary growth vehicle going forward. The Midwest chain, eager to expand into other parts of the country, is planning to spend much of its development energy expanding the cabin concept using its newly created national franchising strategy.
For the company, it represents a major push forward after years in something of a limbo state.
What is now JAB Holdings acquired the chain in 2012, the second big deal in what would be a long string of them.
The acquisition followed JAB’s acquisition of another coffee chain, Peet’s, and the new owners initially opted to convert some Caribou locations in places like Chicago and Michigan into Peet’s units. Dozens of Caribou locations were closed and the brand lost its presence in a number of markets.
Caribou then shifted focus to cobranding with bagel concepts. First it tried cobranding with Bruegger’s. Then JAB acquired Einstein Bros in 2014 and Caribou began working to cobrand with that concept—and Einstein then started selling Caribou Coffee out of its shops. JAB bought Bruegger’s in 2017.
The cobranding strategy didn’t quite go as planned. “We’ve now sunset cobranding,” Butcher said. The issue, he said, was the different needs of the customer bases. “The frequency of a Caribou customer is significantly higher than the frequency of customers who come in to buy bagels,” Butcher said. “Our best guests come over once per day.”
In August, both Einstein and Caribou were merged with Panera Bread, under the name Panera Brands. Caribou and Einstein operate independently under the Panera umbrella, with José Alberto Dueñas the CEO of Einstein. “Einstein has an outstanding CEO,” Butcher said. “He’s going to lead the bagel company growth and focus on things that matter to the bagel company.”
But, Butcher said, the merger with Panera gives something it hasn’t had before: The resources of a much larger company.
“It lets us outpunch our weight class,” Butcher said. “It provides us with the resources to enable us to move faster.”
Which brings us back to that Cabin prototype. Butcher said the idea for the concept came from its customers. “They want their ‘bou on the go,” he said. “They want to be in and out with a smile. The cabin was designed specifically to fill their needs.”
The cabins are 650 square feet, a third of the size of the chain’s traditional locations. The company now has 17 of the locations.
Caribou was able to generate its speedier results during the pandemic, when consumers shifted nearly all of their spending toward drive-thrus.
“Our teams loved working in the cabins,” Butcher said. “And our customers loved visiting them.”
That gave the company confidence to spend most of its development energy on expanding the cabin concept, though Butcher said there may still be some neighborhoods where a traditional “chalet” café prototype works better.
It also gives the company confidence to franchise. Caribou’s 450 locations are either company owned or licensed to operate inside places like colleges, hospitals and airports. Yet the chain now believes it has a concept that will interest franchisees—which might be able to get the chain out of its Midwestern roots.
Caribou is the dominant brand in Minnesota, not Starbucks or Dunkin’, but the company believes franchising can get its shops quickly into other parts of the country. The chain, which kicked off its national franchising strategy this month, is already talking with prospective operators.
It expects to sell franchise locations in the Midwest, where it is better known, but also the South, where some of its customers move in search for warmer weather.
“A lot of snowbirds,” Butcher said. “If we look where we ship beans, our grocery store business and K-Cup sales, we ship a lot of coffee to the South. There’s a lot of love for our brand in particular.”