Eyeing Starbucks, Scooter’s Coffee Comes to Minnesota
With a focus on drive-thru locations, Scooter’s is making a play for the Twin Cities coffee market.
What does it take to surpass Caribou Coffee? Don Eckles, co-founder and CEO of Scooter’s Coffee, says the secret sauce is focusing on impeccable quality, carving out a drive-thru-focused niche within crowded coffee markets and boldly taking on the industry’s largest players.
Eckles and company is rolling out an aggressive expansion into the Twin Cities, home to Brooklyn Park-based Caribou Coffee, a market he admits is sophisticated, already well developed and, from an outsider’s perspective, perhaps not the company’s most logical move.
From inside, however, Eckles says muscling into the crowded Minneapolis coffee market is a reasoned move emblematic of the Omaha, Nebraska-based company’s wishes to overtake Caribou “by some distance.”
He considers Caribou the second largest coffee chain in America, although Dunkin’ Donuts actually holds that spot at 8,082 locations. (Some sources exclude Dunkin’ because stores don’t derive more than 55 percent of their revenue from coffee.)
Scooter’s has 120 locations primarily located in the southern end of the Midwest, and 88 percent of its locations are franchised.
Much work ahead
With Starbucks at more than 12,000 locations and Caribou’s store count just south of 400, Scooter’s has sizable ambitions—and a lot of work ahead to meet its lofty goal.
“Our coffee product is exceptional, the things we do are really high quality, so we feel like we have an opportunity” to come to the Twin Cities “and not be Caribou, Starbucks or Dunn Bros, and carve out a specific niche in the coffee business,” Eckles says. “We’re excited about it—we don’t have a death wish.”
Scooter’s aims to separate itself from its competitors with a menu of high quality products, from coffee to smoothies.
In Minnesota, Scooter’s is executing a two-pronged approach that includes inking a deal with a large grocery chain, and concurrently building five or six company-owned stores within the next six months, then doubling or tripling that number shortly thereafter as it transitions to franchised locations.
Eckles expects Scooter’s to have 20 stores open throughout the Twin Cities metro area (population: 2.9 million) within 24 months of opening its first location this fall.
“We’re not just going to come up and build a store and try to get it going, and then build another store and try to get it going,” he says. “We’re going to come up and try to establish a little bit of a brand in the area and then build out from there.”
While daring, Eckles says the company isn’t attacking the Twin Cities from “a place of arrogance” but, rather, as part of a reasonable plan to differentiate Scooter’s from the Caribous, Peet’s, Biggbys and countless chains that have grown to several hundred locations, but stalled before approaching the ubiquity of Starbucks.
“We think what we do is different than anybody else, and we’re focused on those differences,” he says. “If you’re going to be the number two coffee chain in the country, you better be something other than Starbucks.”
That differentiation, he continues, lies in its drive-thru properties designed to capture commuters, as well as the quality of its products, from coffee beans to smoothie flavorings that, Eckles says, are the finest in the category.
With the bulk of its locations built with drive-thru bays, 70 percent of the company’s business currently passes through a window, a number he expects to hold steady as the company quickly grows, even as Starbucks continues its own expansion of drive-thru coffeehouses.
“We’re not going to grow at 10 or 20 or 30 stores a year,” he said. “We’re going to start growing significantly and … I do believe there is a real opportunity to establish yourself as the number two coffee chain in the country.”
Coffee’s Biggest U.S. Chains
Starbucks – 12,123 stores
Dunkin’ Donuts – 8,082 stores
Caribou Coffee – 398 stores
Coffee Bean & Tea Leaf – 302 stores
Peet’s Coffee & Tea – 250 stores
Dutch Bros. Coffee – 241 stores
Biggby Coffee – 240 stores
Scooter’s Coffee – 120 stores
*Sources: Company info; Specialty Coffee Association of America