← Take-Away with Sam Oches
Take-Away with Sam Oches
Black Rock Coffee Bar CEO’s tips on winning in the booming beverage category
00:47:58
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- [00:00]
A
Are you a leader at an emerging restaurant chain that's ready to level up? Then create the event for emerging Restaurateurs Is yous ultimate destination. This July 20th through 22nd, join your fellow restaurant entrepreneurs for three action packed days of connection, inspiration and growth. Meet potential new partners through our Speed Dating Style one to one meetings and get face to face with potential investors at the Investment Summit. Keynote speakers include Netflix star Phil Rosenthal, Chipotle founders Steve Ells and Panda Express founders Andrew and Peggy Cheung. This one of a kind restaurant event is set against the stunning backdrop of Terranea Resorts California coastline. And hey, bring the whole family for vacation while you're at it. By registering for Create Today, you'll unlock specially discounted prices for Disneyland. Don't miss your chance to connect, innovate and grow your business. Register for create today@create.nrn.com welcome to Takeaway with Sam Okas, a podcast for leaders of growing restaurant companies looking to take businesses to the next level. In nearly two decades covering restaurants, I've gained access to some of this industry's most influential decision makers and I'm letting you in on the conversations. In today's episode, you'll hear from the CEO of a growing coffee chain about what it will take for brands to win in the booming beverage category and about the things that you should consider before taking your company public. Mark Davis is The CEO of BlackRock Coffee Bar, a beverage brand that has grown to around 200 locations in seven states in its 18 years in business. Now, you have probably heard some variation of this story before. A drive thru coffee shop opens in Oregon and scales around the west coast before going public and accelerating growth across the country. But the team at blackrock believes that they have a differentiated model that will help the brand compete against the likes of Dutch Bros 7 brew and scooters for one. BlackRock has a lobby in more than half of its locations rather than being drive thru only, but also its investment in engaging in hospitable baristas has generated incredible loyalty to the brand while also keeping turnover extremely low. Mark joined the podcast to talk about what it takes to win in the beverage category today. Which menu platforms and day parts are likely to drive incremental growth in the future, and why going public last year was the right move for for BlackRock. In this conversation you will learn more about why you should build a performance culture if you want to win with hospitality, why you should treat your teams like their parents would want you to, and why if you want to go public, you must make sure Your whole team is aligned on your goals. If you learned something from this episode, go follow takeaway Wherever you listen to podcasts and leave some feedback, it is the best way to get these lessons into the hands of a fellow restaurant leader. Jumping now into my interview with BlackRock Coffee Bar's Mark Davis. Also, don't forget to stick around after the interview as I will share my four takeaways from this discussion. Actionable insights that you can take with you on the go. Okay, I'm sitting down with mark Davis, the CEO of BlackRock Coffee Bar. Mark, thanks for joining me today.
- [03:09]
B
Thank you for having me, Sam, very much.
- [03:11]
A
Mark, Coffee is one of my favorite subjects to discuss. In fact, it's actually kind of a cold, dreary day in Ohio where I am. And so I guarantee you as soon as we're off the conversation station, I'm going to go get myself a cup of coffee. It's kind of a coffee day. But Mark, right now is a coffee moment for the restaurant industry. Holy cow. So much demand in coffee and other beverages. BlackRock really kind of meeting that moment right now. But for anybody who's not familiar with the brand, tell me just a little bit more about BlackRock. What's this brand all about?
- [03:40]
B
You bet. So BlackRock is currently coming up on 200 openings. We are going to have 200 units here. Call it by shortly after the end of the second quarter. We are in seven states and one of the things that differentiates in a big way is going to be that not only are every store drive thru only, but you're going to see that 70% or so are going to have lobbies and we like that very much. The reason the lobby is so differentiated is we have these unbelievable baristas that do such a strong job for us. Really strong guest satisfaction. And while we have the ability to serve you through the drive thru only through the app through third party, we think that that human connection, that engagement is the big point of difference. And they do an outstanding job for us. So we're really proud of them and how they differentiate for us for sure.
- [04:37]
A
All right, so I was doing a little research. I know BlackRock opened first, I believe in 2008 and it was one of these drive thru stands in Oregon. There's something in the water in Oregon, you know, the drive thru stand, obviously there's a real culture of it there in Oregon. At what point did the lobby become important to the brand? At what point was that kind of an addition to what this brand stood for?
- [04:58]
B
So to your point Daniel Brand Jeff Hernandez Original Founder started 2008 Beaverton, Oregon and to your point, it was a drive through only 2013. Jeff realized, hey, great idea to have the lobby, gives people a chance with the great furniture, the lighting, the music, garage doors come up, it's going to be a really cool environment. And then you have these great baristas. And I think what that does, especially for people like you and I, we can go in, sit down, have that coffee, have that beverage, have that point of difference. And what we believe long term is while there are occasions where you'll go through the drive thru, there are occasions where you'll want to use the app or use that third party. I think you and I having a chance to be able to go in and sit down, we really think that's important. And what it's shown at least in our history is it's really made a difference for us.
- [05:55]
A
Sure, yeah. I mean, two things here. First is everybody, especially in beverage, with beverage exploding like it is right now, those points of difference are really important for brands in the beverage space. The, the second thing is, I mean, you know, obviously your biggest competitor out there being Starbucks, Starbucks themselves in the Brian Nicol era, have kind of announced that they want to go back to the third place, which is essentially acknowledging, we think that that lobby is an important experience for the customer to have. Let's talk about that sort of difference maker first though, because again, you mentioned the barista experience, hospitality. I'm just back from the restaurant show where this was such a point of conversation for everybody. That human component, especially in an age of AI slop, people still want human beings to interact with. Tell me about how you lean into the baristas in particular in creating a unique experience in the beverage space.
- [06:47]
B
So I think when you think about it, and I'll take a step back for a minute, there are people that will come forward and say, hey, do you want to have automatic espresso pulling shots? The whole bit. One of the things we've leaned into is no, we want the baristas and we want them to pull the shots. And I think, you know, when you and I walk in and you smell the coffee, you hear the coffee making, you get to engage with the teams, all the above, that really is a point of difference. You know, when you think about a cup of coffee, call it specialty drink, 6, 6, 50, you know, on average cost, and then you turn around and you and I have this great experience, it's pretty rare that you have that, especially at that price point. And so I think, you know, as. As you talk to our baristas. And again, there is an ownership. There is. We do profit sharing. We have a performance culture. There's an engagement part of it. And even when we're hiring and we have people come in and they run a shift with our teams, one of the things we're looking for is how well do you engage, how well do you recognize our guests as they come in and treat them well and invite them to come back? And. And I think in a world where everything is so pushed to a, hey, we want to do this in a way where there's less engagement and we want to be faster and we want smaller spaces, we believe that engagement really makes a difference, and it's so rare now that it's something that differentiates and we want to be a part of.
- [08:24]
A
You know, one of my favorite quotes of all time is that Maya Angelou quote, which is, people don't remember what you say, but they will remember how you made them feel. And I kind of think with restaurants, it's like, I'm not gonna remember what I ordered at any, most any place unless I have a go to regular order, which, you know, certainly at a coffee place, I would. But, like, I do remember, did I have a good experience that was, you know, smiling, happy team members in a warm environment that almost means more to me than what I ordered sometimes. So that certainly resonates with me. And again, in this age of AI everything, I think humans, you know, consumers, we want those human beings more and more. So, as I understand it, too, you have a pretty. You guys have pretty great turnover metrics. I mean, your baristas, not only are they responsible for creating this great experience, they seem to be very happy to be doing it. If your turnover is what it is, how do you. How do you do that? How. How are baristas themselves embracing the role that they have in all of this?
- [09:22]
B
Yeah, I. I would start with. And you and I spoke about this prior to. To starting the podcast, having started as a team member. I remember what it was like when you were a team member and whether you were explaining the whys, you were engaged in the business, you saw it as your own or you didn't. And so we work really hard to make sure that the team has great acumen. I think right out of the gate, we're teaching them how to run a business, how to grow the sales, how to retain the team, how to have great satisfaction, and how to leverage all of that into profitability. We have profit sharing where we look at them and say, hey, you have a budget but if you exceed the budget, you're going to share in the profits. And so there's an ownership mechanism, there is a scorecard where we literally sit with each one of them and we go, you're going to get ranked on how you grow your sales, how you retain your team, how you take care of your guests and how you leverage that profitability. And then we're going to take the top 25% and we're going to take them to a JW Marriott and there's a top quartile meeting and there's a casino night. And all of this, and all of this rowing together creates this engagement in this ownership. You know, there's a, a pretty famous quote out there that especially in the restaurant industry, your guest experience will never be better than the team member experience. And so when you think about that, we look at that 50% turnover number which is really strong and we think about it and we go, boy, if they're learning and they've got a career and they're understanding how to run a business, they're sharing in the profits, they've got this great performance culture and then they get to go on these cool meetings where they learn about their company, that really resonates and I think that drives that experience for sure.
- [11:18]
A
All right, so obviously We've talked about BlackRock Coffee Bar in this moment. I mean the wave right now that is cresting. I don't even know if it's cresting. Honestly, it's still rising of especially the drive thru beverage. Obviously Dutch Bros is out there right now doing big things. Seven brew scooters. I mean, you know, this I imagine does one of two things. I mean it does do two things. First off, I imagine this is bringing great attention to blackrock Coffee Bar in that people's interest in that that beverage experience is increasing broadly and they're probably discovering BlackRock through that simultaneously. You also have this competitive environment where you're also competing for employees. So I mean, tell me about like, I mean you just. What you just described to me is obviously a great culture and you're taking care of your people in order to create a great experience. How much does that also help you just in the broader competition that's going on right now, which I'm sure is a competition for people as much as it is for consumers.
- [12:15]
B
Yeah, I think first off the beverage part of the consumer base is super strong and has done really, really well. As you spoke to. We get the privilege of competing with Some of the very best companies out there, and I think they're obviously performing at a very, very high level. I think you said earlier, you have kids, I have kids. I think when you think about your kids, kids, you want them to work at a place where people care about them, where people teach them, where their voice matters, and they get to impact the business. And so, you know, I always look at that and go, that should be the number one way that we look at taking care of our teams. And then I think you take a step further and they are such a differentiating point of the business that making sure you're treating them well and they understand that when Sam comes in, how they treat him and how they encourage him to come more often is the key to running a great business. And I think so we have the privilege of having really, really great teams. I think that has driven this really strong same store sales, strong transactions, and in turn, that's what's made our company do so well over the past couple of years.
- [13:32]
A
Sure. All right, so we've been talking about, obviously, points of differentiation. Let's talk about the product too, because obviously the product, you have to be able to innovate in that regard so that you're also differentiating there. Tell me about BlackRock's menu and how you guys are really leveraging the menu to set yourselves apart.
- [13:50]
B
So we are going to be predominantly coffee again. You know, when you go back to Daniel and Jeff that originally started, we source highest quality beans and we again want to make sure that the roast is of the highest quality. When you look at our top 10pmix, coffee is going to be about 55%. So what that means is it's going to have a little bit older in a demographic, call it 18 to 45. And again, when you think about that demographic, it's going to have a little bit more disposable income. And I think coffee is more resilient. So that's great. Two years ago, we rolled out frozen fuel, which is our energy drink. And it's going to be a Slurpee version, frozen version of an energy drink. And you've watched our energy jump from about 18%. We're pushing upwards of 25% now. And so as you think about our day parts, we were originally going to work taking the kids to school, some lunch, and then it would dissipate through the day. And what you're seeing is that lunch and that afternoon day part is growing. I think that's still our opportunity. But generally speaking, from a mixed standpoint, we're going to have the coffee, we're going to have the energy. You know, food again, we have a really strong food proposition and food again has gone from about that 9% up to about that 13%. We've got the breakfast tacos, the egg burritos, the pastries, the egg bites, which is new about a year ago. And all of those has really helped to make us a one stop shop where when Sam comes in and gets his Americano or his cold brew, he can also get a great food quality product that he can eat and it works out really, really well.
- [15:40]
A
Yeah, it seems too like so much of the sort of white space in the beverage category. Food. Food is really kind of that direction that I know has been identified by a lot of the other bigger players. But it also seems like as your day parts start to spread out a little bit, you get some more business in the afternoon. It seems like food especially, especially the menu you just described, perfect for snacking, right? You're gonna have people come in for an energy drink and egg bites as a snack, not just as breakfast.
- [16:06]
B
Well, and Jessica, who is our CMO and has done great things for us, she rolled out loyalty, all the above looking at a grilled cheese in the afternoon. And so we're going to do some things that help that afternoon day part and certainly drive more business to that part. But yeah, I think again, we will always be beverage first. We want to deliver everything within 90 seconds. Speed matters, accuracy matters, but we want food to be that attachment and that incremental lift that allows you to enjoy the experience and have both.
- [16:39]
A
So going back to the fact that you do have a lot of lobbies in your locations, you know, especially considering the drive through only field and how quickly especially it helps them to find real estate when you only have to work with that drive through. Does real estate become a little bit more of a challenge for BlackRock because of the lobby preference? Or have you guys figured out a way that you can still find a lot of real estate that fits the model you built?
- [17:04]
B
So growth again is going to be over 20%. When you look at our long term algorithm, we have told everybody we will grow our sales at 20% or greater, we'll grow our EBITDA at 20% or greater, and we'll grow our units at 20% or greater. We have done that for many years and especially since September 12th when we went public, we've hit that every single quarter. I think when you look at the units, one of the big things different from our peer group with the lobby, we have the ability to have conversions and spaces we can take over where as you think about drive thru only, it requires a certain size of pad, it is going to require more Runway from a drive through standpoint and it is harder to come by. And so I think when you look at our growth, not only do we have a great pipeline for this year, the cohort's doing really, really well. But when you look at 2027, John Ted Tyson team have done a really good job and we're already full on that pipeline for the 20% growth for next year. And so I think really the main point of that is our footprint print allows us to be adaptable. And again, the size of our company allows us to be nimble. And so you see really quickly that we can find deals, make the deal work for our concept. And it's. And if you're a landlord, if you and I were a landlord, that resonates really, really well.
- [18:38]
A
And I'm curious too, especially because again, when I consider how many players are in this field for coffee, but beverage broadly, how many of them are emphasizing drive thru, how many of you are just west coast based primarily? I mean, I imagine there's quite a race to try to find those good locations, you know, and it reminds me, a couple of weeks ago I spoke with the CEO of Lane's Chicken Fingers and we were talking about things in the context of chicken and kind of the same thing going on, which is there are so many brands and there's only so much real estate to go around and only so many consumers. But on the flip side, the demand for chicken is basically infinite and is continuing to grow. I feel like coffee is in that same place where, yes, you have a lot of competitors. Yes, there's a big demand for real estate, but simultaneously, the demand for coffee is only going up. And you have basically hundreds of millions of people in the United States who drink coffee. So how would you sort of, how would you illustrate what's going on in the category right now for coffee or beverage? And then how you guys are all, how are you finding the real estate considering how much competition there is out there? There?
- [19:41]
B
Sure, I think, you know, I'd go back to. And you and I joked about it, everybody starting in the Pacific Northwest, there has been that kind of competition for a long, long time, you know, plus 20 years. And so when you think about it, we have competed against that peer group for, since the beginning of when we started. You know, I think when you look at some of the energy, I'll use McDonald's as an example coming in. We've competed with McDonald's since way back when on coffee and things like that. And so I think when you look at coffee, it is about the only thing that you do just about every day. You know, you and I talked about your personal habits and how much coffee you drink. And so I think coffee is resilient. It is going to be around for a long, long time. And I think that helps the overall peer group. And the idea of beverage energy is growing and I think the idea that more people are selling it is great. I think being able to customize, which makes us different, is certainly a big part of that and something that we lean into. And then I think as you look at the call it national footprint, there is still an abundance of growth for everyone. I really think the point of difference is how are you going to serve it. And again, going back to those great baristas and how they perform, that really, really matters. And so, you know, we look at it again that if we take care of our teams and do right and we have the right people running these shops, we do incredibly well. And so we're trying to grow in a way that we're picking the appropriate real estate. But more importantly, I want to have the right people running the shops.
- [21:32]
A
Yeah, for sure. Okay. You mentioned going public last September. That's where I really want to dig into the here because I think such a fascinating part of the blackrock story and I think really interesting for those listening about, you know, the decision to go public because I have to imagine a lot of brands are really considering that route now. But to set the stage for that, I want to get first into your career because you came into this business in 2023, you became CEO and looking back in your career again, you have experience at Bakery Cafe Concepts, you worked at Breckenridge Brewery. You. So you have experience in beverage in particular. And I'm just curious, you know what how you feel like when you were brought into this brand. How do you feel like your career to that point has really kind of benefited BlackRock as a business?
- [22:18]
B
Yeah, I had the benefit of working at Panera during the time when Panera was in its heyday. And I think I worked. What I probably learned more than anything is I was able to get to work with some exceptional people, some very bright people. And I think strategically and having process and having a medium to long term plan and executing against stays with me to this very day. I think the second thing that I probably learned is having an employee base that you can count on really matters. You know, if I were going to give anybody advice about being public, I think you've got to have a model that's replicatable. I think the model has to work with the right returns because I think especially as you become public, one of our learnings, it's pretty unforgiving. You have to show up and you have to show up and do the things you say you're going to do and you've got to do that day in and day out. And so that model needs to be replicatable. But even more importantly, you've got to have an employee base that wants to be a part of that model and wants to help you grow the brand. You know, anything national, you have to be able to scale and you have to be able to prove you can scale. And that all comes back to your team base, your baristas, how you lead, how you retain them, all of the above. And so, you know, I think when I look at my experience, what I would say is making sure you're taking care of the team, making sure they understand why we're doing what we're doing and then staying true to what you medium to long term told everybody you were going to do. 20% system wide sales, 20% EBITDA growth, 20% unit growth. There are going to be days and weeks where it doesn't go your way. And I think you always have to come back to am I doing what we said we were going to do, medium and long term. And my belief as long as you do that and you take care of the team, it all works out.
- [24:28]
A
Yeah. So again, you came in two years before BlackRock goes public. I imagine you knew when you coming into this business that that was a goal to go public. Tell me what goes into that decision. So then you become a part of this. Two years after you join BlackRock, you guys go public. Why was that the route that was chosen versus private equity or some other capital raise.
- [24:53]
B
So actually coming in the discussion was always, do you grow it in someday, monetize you sell it to private equity or whatever the case may be, or do you take it public? I think we had such strong success. We had great sales, great transactions. Clay and team run store level ebitdas north of 30%. I mean it's miraculously good. And when you look at the unit growth model, we've got cash on cash in the first year, that's going to be around 35% lifts in the second year. All of those, as long as you can Replicate them work very, very well for a public company. I think the decision to go public was based upon the performance. But the second part of it was we've got this great team base and again they're on the ground level. And if we perform and do the things that we want to do, we open eight stores, we add an area manager, we open four stores, we add another multi store lead, you know, we're going to open, we've committed, we've guided to at least 36 stores this year. We're going to have 36 baristas that are going to get promoted up to be store leads. 95% of our promotes are internal. And so you know, if you go back to when I was a young guy working in a restaurant, I look back at this and go, hey, we've got this great opportunity to lift the team, have this great team that can lift the company. And by the way, we get a chance to introduce BlackRock to guests every day. It's really fantastic. I think to your second point, the opportunity being small is harder. I think when you get compared, we get compared to Starbucks, we get compared to Dutch Brothers and these are big, very well led, very successful companies. And I think when you're a smaller company you will hear this as you're contemplating being public. Any issue is magnified when you're smaller and when you're bigger you have the ability to kind of spread it out. And so I think, you know, one of the things when you look at our EBITDA growth and all the above, as we each year are public and get bigger, this becomes easier. I think when you're smaller and you know I had said to you earlier our first quarter on a two year stack, we're going to be about 14 to really strong. Yeah, when you're 10 a year ago and you're 52 this year, people tend to look at it and go, hey, I wish you were more. And I think, you know, those are the things where as you're balancing this, you have to always go back to that mid to long term algorithm and go, I am going to hit my growth, I am going to do the things I'm going to do. And be it a day, a week or a quarter, I'm going to have to be able to absorb and take some of the criticism that comes with it.
- [28:01]
A
Well to that point, you know, I'm often making the comments of my colleagues that I'm glad I'm not the CEO of a public brand because talk about a thankless job in so many ways, because even if you do well, even when you report positive sales growth, if you didn't meet expectations, in some ways, shareholders may respond negatively. So, and you, you see this happen all the time. And I'm sure you guys have had this experience as well where it's like, we're doing great, but it's not great enough. And you know, then you end up with this sort of negative headline of oh, stock price tumbles or whatever it is. How do you maintain some sort of humility through all of that? Because you as the CEO, the leader of this brand, you have to make sure that no matter what the messaging or narrative is from shareholders, from analysts from Wall street in general, you know, success, you have to measure success as the company measures success. Not necessarily, I guess, by how shareholders measure success. How do you do that?
- [28:57]
B
Yeah, Sam, it's been a learning. I mean, I would tell you it has been the hardest part of the last nine months. And I think when you look at our company as a public company, you know, the first quarter we were 24% system wide sales growth, it's really strong. Yeah, we were 24% EBITDA growth, really strong. And I'd say the unit growth was 23, which again is at the very top box of the industry. And I think what you have to remember is that is what got you here and that is what people wanted. I think you've got to continuously learn. I've had the benefit. We've got eight analysts that follow us and each day they teach me and show me better ways of doing this, better ways of speaking to the business, whatever. And I try to learn from that. I think as far as the humility goes, I think going into it, you should realize that there are going to be days that don't go your way and you've got to come back to great company, great engagement, really strong guest satisfaction. We've got teams that love us, guests that love us. And again, on a long term algorithm, I am hitting the commitments I gave. And I think you have to take solace in that and realize that that is success. And if you do that long enough, it will come around.
- [30:22]
A
Yeah, for sure. So I am by no means an economist, but the sense I get from the economy today is that it's acting very strangely. Right. This is sort of an unprecedented moment in history where economically a lot of signs would have pointed that we were in a recession a couple of years ago and we had inflation. And yet through so much of this, the stock market just continues to grow and that that's historically not really the case that usually the economy and the stock market are kind of riding the same roller coaster and now they've kind of diverged in a funny way. I'm just curious, from your perspective, how would you describe the public markets today and how they're behaving and how that behavior is benefiting a business like BlackRock?
- [31:11]
B
Yeah, I would say first and foremost, being public has given us the privilege of having more people know about us. And I think secondarily they try it, we get more trial, we get more frequency and we get a chance to grow the brand. And we would not have had that without the market. And so every day I'm grateful for that opportunity. I think when you look at the economy, when we were doing our earnings call, we had questions about gas prices and things like that. And there is no world where gas prices double that. It doesn't have an impact on a business. I mean, it has to. But I also think that there is a world out there where every day Sam goes out and has a choice where he's going to spend his hard earned dollars and we want to make sure that we give him a quality product, that the experience is so great that he comes back more often, that there's a great value proposition that goes with it. And I think ultimately that rules the day and that will ultimately make us a company that is around for a long time and does great things. You know, to your point earlier in the podcast, the economy is going to fluctuate up and down and the stock market's going to go up and down and I don't really have the ability to control that. And so we try to focus on making sure the experience is great, the quality of the product is great, and that you love it in a way that you're going to come back more often. And that's all we can do.
- [32:45]
A
Sure, yeah. What would you suggest? You had a little bit of advice earlier, but I'm curious getting further into this idea of like, for those listening who think maybe going public might be for them, what's some advice? What are some of the things that you would recommend for other restaurateurs on things they should remember as they're going into this process, things that they should look at specifically why they shouldn't maybe underestimate what this process looks like. What is your word of advice?
- [33:16]
B
So we had the luxury of having great bankers who helped us and we went out and we had meetings with over 300 investors where we talked about our company and why it was Differentiated and why it was great. People understand the story. I think the first comment I would make is that you have to not only be incredibly successful going into it, but you have to have results that are well above the peer group to continue to have success within the market. And so I think there's got to be a long Runway of things you're going to do to make sure you sustain what you told people you were going to do. I think when you go back to all those meetings, there will be days where it goes our way, there will be days where it doesn't go our way. But I think having all of those investors come into blackrock, spend time, see it, understand it, allows you to overcome the ups and downs of the economy, of the market, of, you know, everything that way. And then I think back to what I had said earlier. You've got to have a strong model that's replicatable. I think you've got to have great return on investment. But most important, you've got to have a team base that can sustain and deliver on the experience that you're telling everybody you're going to do day in and day out, wherever you grow, whatever market. If we come to Columbus tomorrow, where you live, we have to deliver on the same experience that we do in the Pacific Northwest from 2008 to Colorado, one of our strongest markets, five years old. All of that's gotta be consistent and that's not easy. And so I think back to the model and the team member base that really matters. Yeah.
- [35:15]
A
Going back to the beverage consumer and what you're seeing from the industry in general right now, what do you think the beverage consumer, where do you think the beverage consumer goes from here? Because obviously it's very obvious that coffee drinkers and beverage drinkers right now, they want afternoon and late morning pick me ups. They want a lot more diversity in their product mix. Certainly loyalty seems to be a big part of this too. Where does it go from here? What does the beverage consumer want next in your opinion?
- [35:48]
B
Yeah, 66% of our transactions are loyalty transactions. It is among the very highest in the consumer groups. And so when you think about that, that tells you that not only are you going to get a guess, but you're going to get them frequently if you take care of them and do well. Loyalty provides us a chance to reward Sam for coming in. He's going to get rewards that provide more of a value proposition. And so I think that's really, really important. When you look at what does a beverage consumer want, I think it's what people have wanted since, you know, the restaurant industry has been around. They want friendly, they want engaging, they want fast, they want accurate, and they want a great value proposition. And when you look at beverage, I think it really delivers on all of those. Again, it's the only place where someone can talk to you personally about what's going on with you, and you can do that for a very value proposition. Push price point and you get this great product that you are going to get three, four, five times in a week. And that's really, really strong. And so, again, I don't take that for granted. I think we have the luxury of. Of having fantastic guest space. And I think we got to deliver every day upon that, that promise.
- [37:14]
A
To that end, you know, obviously value being so big this year, but, you know, my sense of things is that value, obviously price being a big part of that, and for the longest time, speed and convenience. But increasingly, it really feels like experience is a part of the value equation. And so, yes, you can get them through the drive through as fast as humanly possible and maintain a relatively low price point. But to me, it feels like that experience piece is increasing in importance. As far as the value equation goes, does that line up with what you're seeing, too?
- [37:46]
B
Yeah. And I think back to the point of difference, we have great baristas that'll go out and line bust when you're in the line for drive thru. And I think when you pull up at the window, they're gonna hang out of the window and they're gonna talk to you and they're gonna ask you about your day and what's going on and. And you're going to build a relationship. But I think when you go back to those lobbies, there is some part of you where you're compartmentalized and you're in your house and you're in your office and you're in your car that you like the idea that you can go out and have a place where you can have that type of experience. I think secondarily, Daniel, from the beginning and where we sit today, Justin, who is our roaster, we go out of our way that not only do I want to deliver on the experience, but I want a quality product. And the roast is exceptional. And I think when you combine those with the right price point, I think it works really, really well.
- [38:44]
A
Yeah. All right, Mark, last question. What's next for BlackRock Coffee Bar? What should we be paying attention to for this brand going forward?
- [38:52]
B
You know, I think you'll see a push into the afternoon day part. We're going to do some things to try to grow that, but most importantly, I think we're going to try to stay with the long term algorithm. Again, I think you're going to see we committed to that growth. You know, you're going to see great sales growth, you're going to see unbelievable profitability as a public company and you know, our company. But I think most important, you're going to see our brand grow in a way where we deliver that experience everywhere we go. And so again, really proud of that. We are going to deliver upon that and I certainly look forward to our future.
- [39:31]
A
Exciting to watch and good luck to you in all of that. Marc Davis, CEO of BlackRock Coffee Bar, thanks for your time today.
- [39:37]
B
Thank you, Sam, very much.
- [39:39]
A
That was my interview with BlackRock Coffee Bar's Mark Davis. So what should you learn from this interview? Here are my four takeaways. My first takeaway is that you should build a performance culture if you want to win with hospitality. If you couldn't tell from this interview, BlackRock Coffee Bar is all about differentiating itself through that fun, friendly, hospitable experience that the baristas are creating in its shops. Now, it's one thing to talk about hospitality. A lot of folks are talking about hospitality today as customers express that desire to have a unique experience in the restaurants that they visit. But BlackRock is really putting its money where its mouth is with its employees by focusing on that experience between employee and guest very, very intently. And as Mark said, it's about creating a performance culture. Now you can hear performance culture two ways. You can hear this performance culture as you know, doing a great job performing at your job. That's something that we all expect out of our employees. But the other way that I think you can hear him talking about a performance culture is truly in a performance, in that your employees are putting on a performance with every guest that they interact with. And if you see that as being a performance, that performance is one in which they are happy. They're smiling, they're friendly, they're remembering the guest's name. If they're a repeat customer, they are creating this little world within every interaction with guests that is designed to make that guest want to come back again. It is a performance of hospitality. And so Mark says that that is a culture that they build. They recruit employees for their ability to perform, to engage with guests. They train them how to engage better with guests. They reward their employees based on how well they are engaging with their guests. It is a Performance culture. And I think if you are looking at winning at hospitality, which so many restaurants are looking to do today, you have to similarly focus on that performance that your employees are putting on in that hospitality. And you have to really bake that into your culture that you have to hire and train and retain. With all of that in mind, my second takeaway is that you should treat your teams like your parents would want you to. I thought this was such a great point. You know what, maybe Mark was just pulling on my heartstrings when he called out that I'm a father, he's a father. He talked about the fact that when you're a parent, of course you want the best for your kids. And when your kids go and get jobs, which my kids are not yet old enough to do, but I'm sure when they are old enough to go out and get their first job, you know, we want them to work for somebody who respects them and takes care of them, invests in them and wants to see the best for them. And he made this point that, you know, the employees, he didn't. He stopped short of calling BlackRock employees like his children, which is good. But you know, he said that the way that they invest in the teams at blackrock is in such a way as to be very respectful and mindful of, you know, this isn't just somebody who's coming in to fill a role. It's somebody who is a part of the family. That's really, I think key here is seeing your team, your system as a family. And again as a family, if you're the owner, the franchisee, you are theoretically the parent and your employees are the children. And when in your own family, you know, you, you want to do what's best for everybody. Now, now that's not without some, you know, hard decisions. That's not without some discipline. That's not without taking very seriously that it's not always, you know, happy hunky dory that you're going to have to course correct sometimes as you would as a parent. But if you invest in those employees to make sure you're getting the most out of them and treating them again like their parents would want you to, as if it was their family, you will create that very family like atmosphere. You're going to have employees who want to stick around, who want to do what's best for your company, who are going to perform very, very well. So think about that the next time you're hiring. Think about what would this person's parent expect me to do for them as their boss. When you look at your teams in the future, think about them not necessarily as your kids, but as people who are somebody's kids who want to, you know, deserve that respect and also discipline, you know, that their parents could give. My third takeaway is that service could be what separates the good from great in beverage. One of the reasons I wanted to talk to Mark for this episode is because of just this, this explosion in beverage that's happening out there today. Obviously, I'm sure you've been following it just as much as I have, coffee especially, but the broader beverage category is just absolutely white hot right now. And of course on the coffee side of things, you see a lot of these drive thru only, especially brands like Dutch Bros. And seven Brew scooters. BlackRock a part of that, even though they're not drive thru only and then many, many others. I could go on and on naming all of these other brands in that category. And obviously, you know, as Mark said, there's plenty of room for beverage brands today. The white space here feels almost infinite because really your potential demographic is 100% of America. If you're offering, especially if you're offering drinks beyond coffee or energy drinks, you're going to have a potential customer base of just about everybody. So there's a lot of space here for the category, but there will still be winners and losers. That always happens in a free marketplace like we have here. Right. And so what is it going to take to win, to be on the winning side of this beverage category and not be one of the ones who ends up falling to the competition? Mark really believes it's service. It's not necessarily what you're serving, but how you're serving it. The product quality, of course is critical, and that's no different than at blackrock. They are very hypercritical of that quality of beverage they're putting out there. But as Mark said, he's, you know, it's in how you're serving that great quality product that is going to separate the good from great in this beverage category. You see a lot of equalization on the menu front. You see everybody's playing in energy drinks now in Boba or soda refreshers, whatever that might be. And so it's not enough to have a differentiated product. You have to differentiate in how you are serving that product. My fourth and final takeaway is that if you plan to go public, make sure your whole team is aligned on the goals. Mark had lots to say about the fact that BlackRock went public last September. And if you're seriously considering going, taking your company public, this conversation is one you'll want to come back to again and again. Because I thought Mark had a lot of really great thoughts about that process, what it takes, what you should be thinking about if you go through that process. But this is the one that stuck with me the most, is that your whole team really has to be aligned on this. You know, Mark said that going public is unforgiving. I can see that in the media when we cover public restaurant companies. You know, the way that you can just see all the dirty laundry for these public companies and the way they're held to such high standards from shareholders, you know, you wouldn't think it's fair, but all the companies really chose to do this. So it is fair, I guess. But at the end of the day, what he says is, you know, he says you have to show up and do the things you say you're going to do. At the end of the day, when you're public, the accountability is the most intense. And if you say you're going to do something, you have to have a team that's there to help you do it. That's why he says it's so important to align everybody on your team behind your goals. And he points out those goals should be midterm and long term. Because if you say you're going to do something and you have that accountability to go out and do it, you want to be realistic about when you're getting those goals accomplished. Some of those are going to be in the shorter term, in the midterm and in the long term. So align your team on all of those goals, Understand? Be realistic about how you're going to go accomplish those goals. If you can do that and you can withstand some, as he said, harsh criticism by being public, you can too also succeed on the public marketplace. Those are all my takeaways for today. I hope you enjoyed this episode. Please remember to subscribe to takeaway wherever you listen to podcasts, leave some feedback. You can also email me at Sam Okas at informa. Com. Thanks again and talk to you next week.