Drive-though brews success for first-time franchisee
A few short years ago, Dan Richardson was a bank vice president in Southern Oregon. He had no aspirations of owning his own business, and while he liked his morning coffee, he certainly wasn’t obsessed with it.
“I remember driving to work one day in 1992 and there were these two guys on a street corner with a blue tarp,” Richardson said. “I didn’t even know what espresso was back then.”
In 2002, personal circumstances led the Richardson family to relocate to Chico, and shortly before Dan left Grants Pass he ran into an acquaintance who was about to open a Dutch Bros. franchise.
“I said, ‘Oh, yeah, whatever.'”
Then he got to thinking about it.
“I knew that it was a proven entity. I saw what the lines were,” Richardson said. “I knew that their business philosophy was really customer-oriented, really upbeat, and I knew it would go well down here.”
That, and the coffee was great.
Less than a year later, Dan and his wife, Michal, opened the first Dutch Bros. in California. The East Park Avenue drive-though opened in June 2003, giving away between 4,000 and 5,000 free coffee drinks during the two-day grand opening.
Chico was hooked.
Mid-morning on a recent weekday, nearly every driver passing through the kiosk had something to say to Richardson, who perhaps ironically comes off as a little shy. One customer was excited about his new job, another had recently married, two more ribbed him about getting his picture taken for this story: “Smile, Dan!”
Besides quality, Richardson said Dutch Bros. hopes to be known as the place with genuinely friendly employees. “You have to be sure that you’re hiring real, likable, outgoing types of individuals,” he said.
“We really do care about the people who are coming through the window. It’s not just a line,” Richardson said. “When you see hundreds of people every day you get a bond with them.”
Somehow, Dutch Bros. has been able to maintain the friendly feeling amid growth of chainlike proportions.
The guys Richardson had seen peddling coffee in front of a Grants Pass Wal-Mart almost 14 years ago were “Dutch Bros.” Travis and Dane Boersma, whose business has grown from one push-cart to 76 drive-through franchises in the Western United States. In Southern Oregon’s small cities, it’s hard to drive a mile without seeing the distinctive blue painted windmill and tulips. In 1996, the company began roasting its own coffee.
Following their “Dutch Creed,” which oozes optimism, the founders have laid out a multi-phased “growth spiral” that includes the launching of a nationwide franchise campaign this year.
Richardson, who had no experience running his own business, is glad he got in on the concept fairly early.
“I was basically buying the Dutch Bros. name rather than trying to do it myself,” he said. “If you get the right franchise, you’re not having to reinvent the wheel.”
However, he cautioned, “If you’re getting into one it’s a lot like a marriage and you have to be really sure who you’re jumping into bed with. You’ve got to be sure it’s a company you want to be with, because it’s a long-term commitment.”
According to the Dutch Bros. Web site, new franchisee applicants must have a net worth of at least $500,000, including $125,000 in cash. There’s a $30,000 franchise fee up front, and after that royalty fees are 5 percent of gross sales or $1,300 a month—whichever is greater. In addition, franchisees pay a marketing fee that’s 1 percent of gross sales.
While the Chico franchise has done well for him money-wise, Richardson said, “it’s not all about the money. It’s really part of my life. It makes no financial sense to give away coffee for a day. We don’t advertise it. We just do it.”
He figures 90 percent of sales are not just “repeat” customers, but those who drive by or walk up several times a week, daily or even more than once a day. “That’s our bread and butter—people on their way to work,” Richardson said. “Just about everyone that comes through has our stamp card.”
Richardson said he’s never felt restricted by the company’s rules such as what drinks can be offered and which specials to advertise. “They want to stay consistent—when people see Dutch Bros. they know what they’re going to get,” he said. “But if a customer wants a particular drink [that’s not on the menu], we’ll try to make it.”
And while some corporations don’t care if out-of-town investors buy into a franchise and hire a manager to run it, Dutch Bros. wants the franchisee to be very involved in the day-to-day operations.
Richardson will soon have to divert his attention just a few feet: The Richardsons and business partners Dennis and Loree Snyder are wading through the city planning process to build the Crazy Kahuna Car Wash—which is not a franchise—on a small dirt lot next to the existing Dutch Bros.
“I was looking out on this vacant lot all the time and it just seemed like a waste,” said Richardson, who now has a ground lease on both properties.
But he still has what company T-shirts call the “Dutch love.” Richardson wants to open a second Dutch Bros. location in Chico. “It’s just a matter of finding the right location.”