From Coffee Kiosk To Billion-Dollar Business: How Scooter’s Became One Of America’s Top Franchises |
More than a decade into running his Omaha-based coffeeshop chain Scooter’s, founder Don Eckles wrote a letter to Warren Buffett to see if Berkshire Hathaway might be interested in buying his business. The Oracle of his hometown wrote back asking for additional information and they “went back and forth a couple of times.”
Buffett ultimately determined that Scooter’s—which had been bootstrapped with money borrowed from friends and family—was too small “to move the needle for Berkshire.” But Buffett suggested another Nebraska investor, M-One Capital, and that introduction eventually led to a 2018 deal that freed Eckles up to go all-in on expansion.
“We couldn't and didn't do this ourselves,” says Eckles, who turned 70 last year. “We have been blessed beyond our wildest hopes.”
Scooter’s is still something of a midwestern secret, but it has been growing ever since that deal. The coffeeshop chain founded in 1998 by Eckles and his wife, Linda, now has 912 locations—excepting 19 company-owned stores, all of them are franchises—many of which are in the Midwest. Systemwide, those franchises rang up $859 million in sales last year, translating into an estimated $80 million in revenues for Eckles’s holding company. It’s an insanely profitable model. Because nearly all the costs are borne by the franchisees, Forbes estimates that Eckles booked profits of about $50 on that $80 million for a 62.5% net margin.
That margin means that Scooters has become a hot acquisition target, though Eckles says he prefers to keep his business private. Last year there were reports of an offer to buy the company for $1 billion. (Says Eckles: “That's something we haven't contemplated. For sure, for now, we love being a privately held company.”) Eckles could also take it public; the markets like coffee stocks. Arizona-based Dutch Bros, one of the best-performing restaurant stocks since its IPO in 2021, currently trades at over 4 times sales and 23 times its cash flow.
“It's been one that's been on the scene for a long time and everybody's sort of wondering what's going to happen,” says Jeffries........