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11/09/2022

Exclusive Q&A: Bad Ass Coffee of Hawaii brews up store expansion

Deena Amato-McCoy
SPECS Program Director
Deena Amato-McCoy profile picture

Bad Ass Coffee of Hawaii’s store expansion is heating up, in its headquarters state and beyond.

The company’s roots date back to 1989 when it operated coffee shops and kiosks on the Big Island of Hawaii, as well as coffee carts in major tourist areas on several other islands. Bad Ass Coffee, which sells premium Hawaiian coffees as well as blended drinks, signature lattes, cold brews, teas, foods with a Hawaiian twist and branded merchandise, jumped into franchising in the late 1990s.  

In 2019, the brand was acquired by Denver-based Royal Aloha Coffee Co., which relocated the company’s headquarters to Colorado and crafted its long-term franchise expansion strategy, which calls for the opening of 150 locations during the next five years.

Chain Store Age’s Deena Amato McCoy spoke with Bad Ass Coffee’s CEO Scott Snyder about the company’s aggressive expansion plans. (Shortly after the interview was conducted, the retailer announced the signing of a 20-unit development agreement along the Florida Gulf Coast – the largest deal in its history.)

Opening 150 new locations in five years is an ambitious goal. Tell us more about the strategy.
We currently have 27 stores and another 13 are under construction. We also have 79 units sold via signed franchise agreements. They are in our growth pipeline and will open during the next four and five years.

We are focusing heavily on the Southeast and Southwest and also expanding in areas around the existing stores we acquired. Based on this pace, we’re confident that we’ll reach — and exceed — our initial goal of 150 stores.

Where will the first round of new stores be opening?
It’s important for us to establish the brand in our home state of Colorado, so we plan to open three new locations here.  Stores in Colorado Springs and Pagosa Springs will open in the first quarter of 2023, followed by a new Denver location. This will bring our Colorado store count to four locations.

What is the store size and what’s on the menu for the new locations?
The average size of each location will be approximately 1,650 sq. ft. The stores will offer a full menu of hot and cold beverages, including coffees, teas, energy juices, blended drinks, as well as a full food menu and grab-and-go items.  Each store will also have a retail merchandise section.

How would you describe the look and feel of the stores?
Customers feel the “Aloha Spirit” as soon as they walk through the door. We honor the Hawaiian Islands with photos of surfing, beaches and framed coffee bags from Hawaii.  Music with an “island vibe” plays over the speakers.

What about the retail section?
The merchandising wall is an important area in our stores. Here, guests can choose from a variety of packaged coffee ranging from our most popular 100% Kona and other Hawaiian blends to our famous flavored coffees.

The wall also helps customers connect with their ‘inner badass" through branded merchandise through shirts, hats and drinkware. 

What impact does a franchisee have on a location?
Each franchisee brings their own ‘secret sauce’ to their store and the role that they play in their community. We provide all of our franchisees with systems and processes that ensure a consistent performance for the Bad Ass brand.

But what makes each location stand out is the culture, influence and passion that each franchisee brings to their team. This energy extends through the customer experience that they deliver in their stores and the community they operate in.

What challenges does the company face as it expands?
The biggest challenge — for all restaurants — expanding in the COVID era has been the unpredictable nature of materials, labor and equipment availability. It has forced us to be nimble, flexible, creative and adaptive.

We’ve also had to modify our design and equipment specifications from time to time to accommodate for certain unavailable elements in our store design.

How do you expect to stay on track and achieve your goals?
Our ability to expand is dependent on ensuring that our new stores perform well from day one. To do this — and have a viable opportunity to meet our short and long-term goals — we need to have the right resources to match our growth. This will come in the form of corporate support staff, technology, innovation and marketing, among other resources, that will support our franchise performance.

Bad Ass Coffee reported a 66% increase in average unit volume compared to last year, and a 76% increase compared to 2019. What do you attribute the increases to?
The increases were largely realized by the legacy franchise locations we acquired in 2019. We made systemwide investments and enhancements, including building a new infrastructure of services for franchisees. This included increased marketing, training, development, menu innovation and reduced cost of goods, among other benefits. We believe the results are an amazing combination of these actions and strong partnerships with our franchisees.