Cali Coffee: Taking On Big Coffee

Join Fast Casual Nation host Paul Barron as he interviews Craig Avera, founder and CEO of Cali Coffee, a Florida-based drive-thru coffee chain that's doubled from 13 to 20+ locations by focusing on exceptional customer service and operational excellence. Discover how Cali Coffee competes with Starbucks and Dunkin' through strategic real estate positioning, achieving an impressive 85% drive-thru sales mix and 90% loyalty program participation. Learn about their unique "lid love" customer experience, relay ordering system inspired by Chick-fil-A, and expansion strategy that prioritizes regional dominance over scattered growth.

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Episode Transcript

Speaker 1 (00:00):
We are back here on the Fast Casual Nation podcast,
and today is going to be a good one because
we're going to be diving into the coffee business with
the professor himself, mister Craig Gavera. How are you, mister
Craig Rivera.

Speaker 2 (00:12):
I'm doing great man. How are you, Paul?

Speaker 1 (00:14):
Excellent? You guys will probably notice that Shaa Candler is
missing today. The reason is she is having a epic
time in Mexico having some fun with some friends. So
she'll be back next week. Don't worry about it. Today
we're going to do a one on one Craig. I
think you guys will love this. Stay tuned right here.

(00:53):
My name is Paul Baron. As the early pioneer in
fast casual, I've seen the industry evolve from just a
few opera readers. It's the most sought after segment by
consumers around the world. Now we're planning to shape its future.
Tap into decades of my expertise identifying the emerging brands
and tech winners in the space saber capital. We'll be

(01:17):
fueling the next generation of fast casual innovation. All right,
we're back here with Craig Rivera, who is kicking it
off with Cali Coffee. Craig. First of all, let's just
kind of jump into the brand Cali Coffee. Some people
may know this brand. I know it because it's here
in South Florida. There you go and give us a
rundown on where you guys are today, How many units

(01:39):
all the good stuff?

Speaker 2 (01:40):
Yeah?

Speaker 3 (01:40):
Sure, So my wife and I moved over and business
partner also moved over from California to kind of start it.

Speaker 2 (01:47):
We didn't have a location picked out.

Speaker 3 (01:49):
We just kind of had the idea in our head
and serendipitously landed in Florida, right south Florida. It just
felt like California. We were kind of like, all right,
it's the East Coast version, let's do this. And we
started the first one in twenty eighteen, had no idea
really what we were doing or how to get it done,
but we willed the way through, and since then we've
kind of had some slow, steady, gradual growth and are

(02:11):
starting to kind of find our feet. So it was
kind of like a you know, we at our first
store for three years before we even thought about a
second one. Really and really okay, we had kind of
you know, dipped a tow I guess you could say,
but it takes so long too, and we knew that, right,
So if you want to get a store opened on
a vacant piece of land, you got to do it.

Speaker 2 (02:30):
You got to be signing at least two years prior
to that.

Speaker 1 (02:32):
Yeah, no kidding. It's a slow process, man, it's a
slow it's a grind, no pun intended.

Speaker 3 (02:38):
Yeah exactly, And nobody realized that nothing can really prepare
you for that until you do it yourself.

Speaker 1 (02:44):
And that's right, right.

Speaker 2 (02:46):
You know.

Speaker 1 (02:46):
We we get into working with a lot of different
brands with Saber Capital, which is our our funding arm
where we work with fast casual startups and so on,
and the more CEOs and founders I talk with, which
I've been talking to ceo and founders for twenty five years,
so I get the vibe of where they're coming from.
But I think one thing that you just mentioned that

(03:08):
a lot of people don't realize it used to actually
be a lot faster, it felt like in getting a
brand launch. Why do you think now we're dealing because
everybody's saying the same thing is that it is such
a lethargic process. Is it now getting to all the
regulations for building and construction. Is it the hiring, the training,

(03:28):
what's holding you guys up to really go at speed.

Speaker 3 (03:31):
Once we actually get to where the ball is kind
of in our court and we can control the game,
it's fine.

Speaker 2 (03:37):
We have a very good systemized approach to that.

Speaker 3 (03:39):
It's really more you talked about with Each municipality is different.
They all have a set of kind of nuanced codes
and you got to get through them all, and you
know they're similar but different, and it's just it's an
arduous process. We walked into building departments where they're still
you feel like it's nineteen eighty in there, right, They.

Speaker 1 (03:55):
Go, oh god, yeah, I know what you mean.

Speaker 2 (03:57):
Plans up.

Speaker 1 (03:58):
Why do we get this thing done faster?

Speaker 2 (04:00):
It's not real?

Speaker 3 (04:01):
And then they're trying to convert to digital. But every
all the planner of years are have been there for
twenty five years. They don't want to change, right, They're
used to their system that takes forever. And so there's
just this whole kind of like systemized approach that it's
impossible to get through in a good way.

Speaker 2 (04:15):
Like it's just tough, so you gotta be built for it.

Speaker 3 (04:18):
And I think a lot of people just kind of
get through it and they decide, hey, this is too
much for me, and they kind of say, all right,
well I'm gonna do it once and that's it. And
you know, I think that's why brands fail to grow
to scale.

Speaker 2 (04:29):
I guess, yeah, for sure.

Speaker 1 (04:31):
How many? So how many units are you guys today?

Speaker 3 (04:34):
So we just opened up. We just got back from
the Tampa area. We're starting to break into the west
coast now largely we're you know, we have a Broward
County kind of enterprise because that's where we started the
first one. Now we're at thirteen stores, including that one,
and we are going to be We're in development with
ten to twelve more under construction for seven or eight.
We're gonna be at twenty stores by the end of

(04:55):
the year and then oh man by next year.

Speaker 1 (04:57):
Yeah, and that's a doubling of the brand. Yeah.

Speaker 3 (05:00):
Kind of what I was saying before was like, you know,
it was a slow role getting the first one, the
second one, it was like one a year, one a year,
two a year, four year. And now we're kind of
getting to where it's not as hard as it used
to be, right, and you have so many things going
that even though they're still taking a long time to
get each store open. You're kind of at a macro
level scope now a focus, and you're kind of the
two years doesn't feel like two years anymore, feels shorter

(05:21):
because you're so involved with your other stores and just
making sure they're operationally sound that the time goes quicker.

Speaker 2 (05:27):
If that makes what do you think?

Speaker 1 (05:28):
Okay? So doubling a brand, you look at the size. Obviously,
you guys have have stayed regional, which is good because
you can really control things. You understand the market's really easy.
You know, you can kind of share in the marketing
aspect of it from a sense of where the revenue
is being driven. You know, you look at certain stores

(05:50):
that are winners. You have certain markets that are winners.
Some of the big coffee chains have started to pull
out of certain markets.

Speaker 2 (05:58):
Yep.

Speaker 1 (06:00):
When you look at Fort Lauderdale, the Broward County area,
I know it well based here. What is it that?
First of all, what is it when you're looking to
build a store having that perfect location that you feel
is going to translate into revenue. Are there any key
things you're really looking for so that you can because

(06:20):
I think a lot of people start making mistakes on
real estate as they start to scale. How are you
guys dealing with that?

Speaker 3 (06:26):
Yeah, so that's a very interesting question. It's a great question,
and it's kind of like you don't know what you
don't know type of situation. I mean, our very first
location in Hollywood. If we looked at it now on paper,
it's just it's not a great site. It's that you know,
the road it's on is a side road, it's not
a main road. You don't have great visibility. You kind
of have to like hear about it or know about it.

(06:47):
And once once we get people to know about it,
then they know and they can come back. But organic
kind of like customer base it was. It was not ideal.
I call it like a sea level site. It happens
to be our second busiest store now because we've we've
developed that growth curve right and so but again it's
funny because looking at it now, if we saw it
now vacant, we'd probably just pass on it. So and

(07:07):
then we have other stores where we're like, oh, man,
this is going to be a home run. Man, it's
gonna be a eight plus site and ends up being
like a B minus you know, and so it's interesting.
We look at traffic counts, we look at you know,
households in the area, We look at ease of access,
your ingress points, your egress points, neighboring tenants.

Speaker 2 (07:24):
Isn't that big of a concern to us.

Speaker 3 (07:25):
We've never really relied on other ones, but it can
boost like if we were in like an end cap,
because we do freestanding, we also do like end caps with.

Speaker 2 (07:32):
The drive through has to be a driver.

Speaker 3 (07:34):
But if we have like a nail salon or a
hairplace like in the plaza with us, it's gonna help
because it goes man right, their customers are going to
go get their hair done, their nails done, grab a
coffee on the way in for their hair dress or
their styl is, their nail person whatever, and so you know,
you get some of that cohesion there too. But really
it's more of a households around traffic flows, traffic counts

(07:55):
and visibility is massive too.

Speaker 2 (07:56):
Yeah, you know, I'm.

Speaker 1 (07:57):
Looking at the Port Saint Lucy location here and okay,
so this looks like new construction, like maybe in a strip.
Is this an end cap and do you have a
obviously you have a drive through here. Yeah, I'm assuming
the drive through is like off this left hand side
in the picture if you guys are watching this. Okay,
So being in caps and you know, trying to get

(08:18):
to the end cap world, which is very competitive, you know,
especially in the sector of fast casual because we're seeing
so many fast casuals that are trying to introduce drive through.
But you guys have kind of almost won up the
game because that's what you're built for. What is the
real estate market light right now? Trying to find that

(08:39):
piece of property.

Speaker 2 (08:40):
Yep, it's it's very, very hard.

Speaker 3 (08:42):
They're kind of needles and haystacks, you know, unicorns almost
they pop up, but a lot of times, you know,
they have a Starbucks pre negotiated before you even get right,
so you don't even see it. You see the inline
spaces that are next to Starbucks. Starbucks becomes sort of
the anchor of that plaza, so to speak. But nobody
else gets even a crack at it, or another national player,

(09:02):
and so we've been lucky. We see the value in it.
There's a lot of capital expenses up front we can save.
Building a freestanding ground up building is always going to
be more expensive than an end cap, and we really
haven't seen a reason not to go end cap. Our
busiest store is an end cap. Some in our top five,
like three of them are end caps. So it's like, okay,

(09:22):
well there's really no sacrifice going on here, and we
can spend a lot less so your ROI is going
to be that much better. So we're willing to pay more.
We pay above market if we see an end cap.
We're very aggressive or quick to move because you know,
we don't have a real estate committee, Like I'm basically
the real estate committee.

Speaker 1 (09:38):
So I'll be the best time man.

Speaker 2 (09:41):
I'll call the broker, I'll call the landlord myself.

Speaker 3 (09:43):
I'll try and charm their pants off and just be like,
hey man, we're small ish, we're growing. Take a chance
on us. What's Starbucks paying? You know, we'll pay you
ten percent more. And Starbucks, honestly has has developed kind
of a reputation. Everybody wants them because you know, it's Starbucks,
but they're also kind of a pain to deal with
because in the world and then some.

Speaker 1 (10:00):
So yeah, they negotiate down a lot, you know, a
lot of real estate. I've had a lot of real
estate people that have said that very issue is a
lot of the national chains that have more than three
four hundred units are starting to get a little bit
hard to deal with, you know, from a real estate standpoint.
So that's interesting that you say that, you know, speaking
of that obviously taking on the titans of coffee, you

(10:23):
look at Starbucks Duncan, which has kind of controlled the
market for some time, but at the same time, we're
now starting to see this rebirth. In the early days
of coffee and fast casual, you know, you had places
like four Barrel, Blue Bottle, et cetera, mostly West Coast
brands and especially if you go up in Seattle area.

(10:43):
But now we're seeing some East Coast brands actually starting
to make a name for themselves. What do you attribute
that success to for Cali Coffee, of being able to
compete with that level of businesses.

Speaker 3 (10:56):
It's funny, I mean to me because I'm from Oregon.
I'm from the Pacific Northwest. So growing up where I
grew up, there were drive through coffee shops like us,
you know, from when I was a young age.

Speaker 2 (11:08):
So coming out here was almost like a time warp.

Speaker 3 (11:10):
But it was like we saw into the future almost
because they didn't have it out here, So that was
one of the reasons we came to Florida. We came
out and I'm like, Okay, Duncan Starbucks, Duncan, Starbucks, Starbucks, Duncan.

Speaker 2 (11:20):
But we didn't see much other than that.

Speaker 3 (11:22):
And I really don't consider like a blue bottle, like
a walk in style yeah, yeah, you know, like a
limited traditional coffee shop. That to me is not really competitor.
Our main competitors are going to be some of the
other players doing the same kind of drive through only
model or drive through centric model, and the fun flavored drinks,
the music a little too loud, the great customer service.

(11:42):
That's that's kind of our more head on competition. And
it's funny, man, because, like you're right, nobody did it
for so long, and then all of a sudden, everybody decided,
like two decades later, hey, let's let's jump into this market.
Let's dive in and do it kind of around the
same time we did, and I think we were lucky.
CALLI started in Florida as kind of one of the
first ones to kind of rapidly try and grow, and

(12:04):
so that's kind of me. We've always said, hey, we
don't care to go national, but I like to be
Florida famous, Like if we could just be awesome in
Florida where anywhere you go, Tallahassee, Gainesville, Southwork West Coast,
like you've heard a Cali to some level, it's like
a household name. That's that's great, that's our current growth.

Speaker 1 (12:19):
What do you think? Okay, so you're mentioning these big brands,
and then you know, obviously I'm down here in Florida.
The legendary coffee company here is Panther. There's a handful
of those like that in a lot of different places.
If you go down to Ashville, you go into Saint Louis,
you get in even in New York. You know, there's

(12:40):
certain little pockets where there are these really stalwart brands,
but they're they're smaller, you know, and they're very you know, cultish.
How do you compete against that kind of brand, especially
someone like a Panther, who is here in your backyard.

Speaker 3 (12:55):
I mean, Panther to me doesn't even like I have
to not no offense to them, but I just they're
not competitioned to us. They go for different markets too. Actually, yeah,
they go for foot traffic. They don't have a drive through. Right,
We honestly thrive on suburban markets and even rural markets.

Speaker 2 (13:10):
We'll go into we just open the store a new
part richie.

Speaker 3 (13:12):
It's like a population of twenty six thousand, right, But
to me, those markets are so good because Cali, I
think Florida lacks customer service in general. You go to
you know what I mean, like people, it's like you
go somewhere and you're doing them a favor. Is how
is the attitude you walk in? God, I should be
apologize person for trying to give them business. Whereas our
whole mentality is complete one eighty upside down on a head.

(13:36):
We're like, hey, the customer is the most important part
of the business. The crew is the core. But like
the customer is what it's all about. Without the customer,
we are nothing, we don't exist. So we will bend
over backwards for our customers. Every lid that goes out
at Cali Coffee has a handwritten message. It's call mid Love.
And so we do thousands and thousands a day of
lid love, and so everybody gets some kind of purple jove.

(13:58):
It's the best. It just every day it's so cool,
So panther, you know, they're never going to do that,
and it's fine, and they're going for more urban, walkable markets.
Well for like high traffic account pull in you know,
soccer moms, whatever it is, high school kids, whatever it is.
You know, make it convenient. I think that was one
of the biggest things for us. Like we'd have moms

(14:18):
of three kids, right and they want to get their latte,
but they can't.

Speaker 2 (14:22):
They can't drag it, you can't get out.

Speaker 1 (14:24):
Yeah, that's the drive through mentality. So what is the
mix right now for you guys in terms of the
sales numbers percentage wise of walk in and in you know,
in store traffic versus what you're getting in the drive through.

Speaker 3 (14:36):
Yeah, so it depends on the store a little bit,
but overall it's about eighty five drive through and fifteen.

Speaker 2 (14:41):
Yeah, on the weekends it.

Speaker 1 (14:43):
Will more than that's more than QSR is a Yeah. Yeah,
fast food doesn't hit that number. I mean they're usually
in the high seventies to mid seventies. And that's on
the really good ones. If you look at Chick fil A,
even Wendy's to a certain extent, they have not I
don't I have not seen many Wendys have recorded over
eighty five percent.

Speaker 2 (15:03):
Yeah.

Speaker 3 (15:03):
Now now we don't have we have no indoor area
for the for the customers anyway, there's no indoor access
to any of our stores.

Speaker 1 (15:11):
But they can still walk in though, right, they can.

Speaker 3 (15:13):
Walk up, so there's like a walk up window, but
there's still outside the building. And then of course we'll
have like a pergola and some kind of.

Speaker 1 (15:20):
Yeah exactly, yeah, but.

Speaker 3 (15:22):
It kind of to me that creates it allows us
to be nimble. We can keep our footprint really small.
Our prototypes about twelve hundred square feet right now, and
and it kind of creates this sort of a lure
and mystique because you can see like you can walk
up to the curtain, but you can't really cross over
into it. And I think a lot of customers kind
of dig that. It's it's cool, the whole vibe. We're
just like this caffeine bean slinging.

Speaker 1 (15:43):
Factory, you know, bean slingers.

Speaker 3 (15:45):
Yeah, when we have an h q'd be cool to
do like tours and stuff of like you know, bring
people in and like a Willy Wankt type of thing.

Speaker 1 (15:51):
There you go, that would be fun.

Speaker 2 (15:53):
I like it.

Speaker 1 (15:54):
Let's get into the menu a little bit. I'm looking
here on your website right now, so let's just go
right through there. Obviously, the caramel and vanilla, that's the Beverley,
you got, the snicker doodle. These are the Cali coffee.
So a lot of flavors there.

Speaker 2 (16:06):
Those keep the lights on right there, those two.

Speaker 1 (16:08):
Yeah, So yeah, go ahead hit it. Give me what's
the hot trend or seeing on the menu side of things,
and then let's get into some of your general beverages,
like your fruit fusion.

Speaker 3 (16:19):
Yes, sure, so Cali coffee. Obviously people think coffee. We
do have a lot more than that, but coffee is
about our specialty signature. Coffees comprise about sixty five percent
of what goes out the window. So it's a pretty
big uh, pretty big nutt you know, it's it's big.

Speaker 2 (16:34):
But then we created an energy drink.

Speaker 3 (16:36):
A lot of people want to get energized, but they
don't want coffee.

Speaker 2 (16:39):
They just don't like coffee.

Speaker 3 (16:41):
They had caramel, even if they had you know, milk
and all that, they they just don't like it. Right,
And we see a big there you go. So there's
an age demographic to this too. We see a lot
of the younger people, our younger customer based gravitating to
our Hero Energy Drinks, which is a company. It's a
sister company that we created back in like twenty twenty two,
and we do tea's, we do sodas, we're introducing lemonade

(17:03):
now too, and then you can customize it like infinitely. Right,
So that's called the Thunderbolt. It's blue ras and lime yep,
a red one over there that's rosewater, and those are
two of our most popular ones. So you can pick
a base of an energy drink which is called Hero,
a green tea, a black tea, a soda which is
just like fizzy water, or a lemonade, and then customize
for their strawberry, blue rass, watermelon, passion fit whatever.

Speaker 1 (17:24):
What's the mix right now on this especially on the
fruit usions, you've got what six nine different options here?

Speaker 2 (17:32):
Is that?

Speaker 1 (17:32):
Right?

Speaker 2 (17:33):
Nine? The week feature?

Speaker 3 (17:34):
You could you could literally go again completely off book
and make your own.

Speaker 2 (17:38):
We encourage it once people, you know.

Speaker 3 (17:41):
Get kind of involved in the brand, but we don't
want to overwhelm too. I think there's there's something called
menu paralysis. Right, you put two and people like, oh
my god, I don't know what to do.

Speaker 2 (17:51):
Just pick for me.

Speaker 3 (17:52):
So we found nine was the perfect number kind of
for to broadcast out in the open. And they've been
a regularly like, hey, all right, Paul, like you've had
the Beverly like sixty times in a row.

Speaker 2 (18:00):
Let's do at.

Speaker 3 (18:01):
Least like a Beverly and something else. Man, Yeah, exactly.

Speaker 1 (18:05):
But you've got to store out in West Pines. I
didn't realize you guys were out that far. Is that new?

Speaker 3 (18:09):
No, that was our third store, the third store okay, yeah,
so opened uh May of twenty twenty two.

Speaker 1 (18:16):
Okay, so yeah, I see the locations when you look
at Cooper City. I see now your strategy of going
not going for that. It's not necessarily that it's not
an A location, but you can see certain prime a's
and then certain a's that are kind of people don't
know about. You know that are a's. It seemed like

(18:36):
those are the ones you're going for. So we like
to just revealed your secret.

Speaker 2 (18:41):
Great, it's okay, Greig, no secret.

Speaker 3 (18:44):
If anybody knows what they're doing, they're probably following a
similar strategy. So it's all good. We can definitely talk
open book about it. And Cooper City is a funny one.
That's our busiest store. It Yeah, second store that opened,
and it happened right after COVID. We were building through COVID,
which was just insane, but you got through it. We
opened and it just came out guns blazing.

Speaker 2 (19:03):
It was.

Speaker 3 (19:03):
It was like overwhelmingly busy from day one. And yeah,
we were under staff. We had gone like double the
staff in like a week. We were like literally run round.
You want to tell morek here? Yeah, So and it's
still our busiest store again. End cap sort of an
obscure location really, like you look at it and you're
not like, oh, wow, that's good.

Speaker 1 (19:21):
Well, Cooper is not one of the known neighborhoods. It's
you have to be a South Floridian to know what
that is. Yeah, and that's interesting that you guys did
that there. That's cool.

Speaker 3 (19:31):
And so we actually that's our first city also where
we opened a second store in the same city. We
have another one on University and Sterling. That's our Cooper
City number two as well.

Speaker 1 (19:40):
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you there. So with that, in terms of the strategy,
now that you've kind of laid down strategy and a
little bit about menu, is there any food whatsoever? Is
it all beverage?

Speaker 2 (21:29):
Very limited?

Speaker 3 (21:29):
So we do grab and go type of things, but
we're a very high volume based business and we just
like to focus on what we're good at, and for us,
that's drinks, that's service, that's making your day. Food Like man,
I mean, Paul, you don't want me making breakfast for you?

Speaker 1 (21:42):
Man?

Speaker 2 (21:43):
I agree today.

Speaker 3 (21:44):
So I just figured, you know, let's keep it easy,
let's keep it simple, grab and go. We've got muffin
tops which are awesome, like the sides of the head.
We've got a few flavors of that cake pops the
kids go nuts, and then we recently added coffee cake
and lemon loaf. But it's grabbing go type of stuff.
It's not going to slow down the order. We want
people to be calm like because our lines get long, right,
So if you're number fifteen in line pulling in, we
want you to not have to worry if the guy

(22:05):
in front of he is getting three bagels that have
to run through the little gamage.

Speaker 1 (22:09):
All right, So let's talk about long lines. Uh, you know,
that's a that's a can be in most cases a
negative speed to get the coffee in there. What's your
what's your throughput speed? Right now? From point of order.

Speaker 3 (22:22):
From point of so basically, once you get your order in,
each car moves up at about forty five seconds a car, right,
so if you're car number ten, it should take you
maybe by the time you order, you're out, you have
your drinks, you're sipping your back on the road in
like seven minutes type of thing.

Speaker 1 (22:36):
Seven minutes from car ten. Yeah, you have a fairly
long queue before the delivery window.

Speaker 3 (22:42):
Yeah, but we take so we don't have a speaker
box or a squawk box as you might call it,
where you you know you're talking to this box.

Speaker 1 (22:48):
You're doing everything in line.

Speaker 3 (22:50):
Yeah, we have I think Chick fil A we call
it our relay system or linebuster system.

Speaker 2 (22:54):
So we'll deploy as many people as we need depending
on volume.

Speaker 3 (22:57):
So if we know it's going to be a Saturday,
busy morning, gang buster type of day, we can have
up to four people out there just taking orders. So
now we're taking orders four times of speed. We're cranking
it out super fast. If it's a slower day, you know,
we can do it.

Speaker 1 (23:08):
We did a I think I'm gonna try it too.
I'm gonna I'm gonna go over and film the Cooper
City because we're going over there this weekend. My daughter,
by the way, is a big fan of Kelly.

Speaker 2 (23:18):
Coffee, so I appreciate that she is dead.

Speaker 1 (23:22):
We're going to CALLI today, right, Yeah, yeah, she's she
of course is ninety. She's she's going after a lot
of the you know, the fruity drinks. Yes, and she
keeps asking when can I do coffee? When can I
do coffee? And I'm not yet, not yet.

Speaker 2 (23:39):
We have deecat fall, we got deecas, not yet. It
is Florida. You know, everybody drinks.

Speaker 1 (23:44):
That's true, that is true. So I'm gonna I'm gonna
time it. I'm gonna go over to Cooper City, on
one of your heavy days. Almost see what that looks like.
You drive through.

Speaker 2 (23:52):
If it's too slow, you shoot me a text and.

Speaker 1 (23:55):
Okay, well, hey, listen. The point is is that you
you mentioned it earlier, and that is in Florida, and
I think this is happening in other places around the country.
Is that the lack of service is started to permeate
into a lot of the areas. If Fast Casual had
its first dip. We recorded this on some of the
sentiment data had its first dip in hospitality sentiment for

(24:21):
the first time in a decade. Wow, in ten years,
we have not seen Fast Casual decline in service quality,
and this year was the first year we actually saw
it reverse. So that concerned me because it's kind of
been one of the categories that has led the market
for hospitality outside of fine dining, you know, and that's important.

(24:43):
Why do you think that is? Do you think it is?
Was it? You know, was it COVID and the pandemic
that kind of just reset the format of how service
is done. What do you think is causing this?

Speaker 3 (24:54):
I think it's more of you know, we're entering we've
been into digital age for a while, right, We're kind
of in that train transitional period, AI is becoming more
and more prevalent. They make it easy now to not
interact with people and that's okay now, right, And so
we're really kind of swimming up the current by staying
focused on the customer, staying engaged, like we want each

(25:15):
interaction to be like a magic moment.

Speaker 2 (25:16):
And so I think you can go one of two ways.

Speaker 3 (25:18):
I think a lot of our a lot of the
applicants we get now for jobs are like they just
they don't they can't communicate as well.

Speaker 2 (25:24):
As the kids. Yeah, and fifteen years.

Speaker 3 (25:26):
Ago kid, right, we find out with the guys honestly too,
the younger guys, they just they won't look you in
the eye, they don't shake your hand.

Speaker 2 (25:32):
It's it's not like it used to be.

Speaker 3 (25:33):
And it's very interesting, very like almost harrowing, right. And
so but then on the flip side of that, where
I think we shine again is like when there's the
decline in that if Cali can continue to just say no,
we don't care, We're going to continue to make your
day and be awesome for you, then we're just going
to be that light in the day that people that
people need, right, because I think there's going to be
more and more of a shortage of that.

Speaker 1 (25:54):
You guys have an opportunity, a very unique opportunity.

Speaker 2 (25:56):
You know.

Speaker 1 (25:56):
You first of all, you're dealing with young gen Z
and you know, younger on the end of millennials that
potentially are staff and management team, and you get a
chance to probably train this into a culture that has
never seen this. You know, they've never experienced it, which
is why they don't. You know, in many cases in

(26:19):
the industry, usually when you experience something as a being
in that industry, you start to copy it, and they've
never seen it, you know, So a gen Z versus
someone like a gen X like me or even an
older millennial, they've seen good service before. You know, they
know what it is and then they know when it's
not there. So, man, you guys have an opportunity if

(26:40):
you could create a cult like environment from a team
group yep, and start to separate this men, you are
going to graduate some rock stars into the market.

Speaker 3 (26:53):
Well that's one of the most rewarding things about owning
Kelly honestly. So now at this point with thirteen story,
we have over three hundred employees that are like active
and you know, our age ranges anywhere from basically sixteen
on the very very very low end to you know,
our managers are in their upper twenties to thirties. But
the core of our group of those three hundred are

(27:14):
like i'd say the average age is nineteen to twenty one,
and so they're at the point where it's like they're
kind of on that precipice. But man, I mean we
I have to give a major, major shout out. Our
crew is. I've always said this and this will always
be the case. The crew is the core. Everything resonates
from the crew. So you called it a cult, and
I used to be like, I used to feel like
that was a negative content, not and it was just

(27:35):
like it's.

Speaker 1 (27:36):
A good thing, a good cult.

Speaker 3 (27:37):
We are definitely a call Like people will drive dude.
We have this customer named Anita. She has been to
every single grand opening, doesn't matter where in the standuds,
she'll take work off. She just showed up the first
person there is wearing so our customers gravitated well of
regulars from six years ago still getting the same drink.
I'll be like, oh, you're still getting that medium hot
you know, Mogo with whip and they're like, oh my god,
how do you remember, Like we're habitual creatures when you

(27:59):
were remember those kinds of things, or remember their dog's name,
or remember their anniversary day like Patt and Kayleen June fourth,
they got married. I remember that and that we bonded
over that. It's like those kinds of things are just
so important. I think people just glaze over that now.
So our crew now, dude, it's unbelievable. There.

Speaker 1 (28:16):
It's going to become an art I think in the future. Yeah,
it's going to become an art that is going to
be sought after by consumers and when they find it,
because it's going to be one in a million where
you actually get to experience something like that, and then
that is going to be your go to brand, which
I think is the strategy you guys are building around coffee,
because hey, that's a daily event, you know, for everybody,

(28:38):
and how you make that daily event happen, which coffee
is such a passion point. It's the one thing that
I've said throughout the years, I'm like, this is why
Starbucks built to what the size it is. Is it
it really leveraged in on the passion port point, I
feel like they lost their way about, you know, a
decade ago in the sense of understanding what American consumers

(29:02):
really wanted. But you know, they're they're just growing now
and hanging on in the market because I feel like
they're just too big to fail.

Speaker 3 (29:12):
They don't even need to do it a great job
anymore because everybody knows the logo. They're going to go
there no matter what, and people are still going to
put them into every hotel, every shopping plaza.

Speaker 2 (29:20):
So they have market cap, yeah, beyond.

Speaker 1 (29:23):
That must have. It's kind of like Apple if you
look at them. However, I will say this, I'm a
big tech guy. All of those the tech scene heavily.
That was my background, and I'm watching the missteps that
Apple is taking around the industry, and I just wonder
when you look at titans like Apple, they've not gone
the AI route. They're struggling with interfaces. Everybody's kind of

(29:46):
coming up beside them. That's where I look at Starbucks
and even Dunkin to a certain extent, that they're leaving
these gaping holes in the market for companies like Cali
to fill. And at some point you wonder if there's
gonna be a tilt, you know, in especially when you
see the demographic, because you got to remember boomers, Gen X,

(30:08):
we grew up on Starbucks.

Speaker 2 (30:10):
Okay, the younger generation.

Speaker 1 (30:11):
The younger not so much so.

Speaker 2 (30:16):
The segment.

Speaker 3 (30:16):
We're already on the tilt right now. It's just a
matter of time and more locations. But we don't start.
If there's a Starbucks and we see a site across
from it, I'm like, oh, is that Starbucks busy? Great,
let's build right by Bill right next. Yeah, we already
know customers are willing to go there. It's obviously a
good location for them. And all we have to do
is be awesome and change the logo on their cup. Basically, right,

(30:37):
do that? We failed our job. That's that's up to.

Speaker 1 (30:39):
All right, So let's talk about the coffee for a minute,
because I like the coffee I've been and me for
you know, my basic element is is just plain black
with maybe a little bit of milk too. But you
look at at certain beans, the growing procedures, the process
of sustainability, there's a lot that goes into coffee production

(31:02):
and then getting really good coffee production to translate down
to the brand. Ye, how what's you guys's method because
the product is really good. It's it's far superior than
what I've seen, you know, come out of Starbucks for
a very long time. Duncan is a little bit too institutionalized,
you know, their taste profile. Yeah, but you guys have

(31:23):
done a really good job. I would consider it much
more like artisan you know coffee than others. What what's
the method for you?

Speaker 2 (31:32):
Yeah, it's very high grade coffee.

Speaker 3 (31:33):
It's actually called a specialty grade, which is basically the
top five percent of beans that go into production. That's
all we source. We have multiple countries we source from.
I am not like a coffee roasting coffee scientist by
any means.

Speaker 2 (31:46):
I am a people expert, and so.

Speaker 3 (31:48):
We really rely on our roaster, which is Palm Coffee
Roaster out of Hollywood.

Speaker 2 (31:52):
They've been really okay. Yeah, yeah, they're unbelievable.

Speaker 1 (31:55):
Those guys are fantastic.

Speaker 2 (31:57):
They're they're they're so good.

Speaker 3 (31:59):
I can't even like, can't even quantify how good they're
Vinnie and Cammy.

Speaker 2 (32:02):
But they handle a lot of our distribution.

Speaker 3 (32:05):
Now they've taken on multiple channels, but roasting is how
we got involved with them, and they are the coffee gurus.
They know macha, they know coffee, they know everything, all
the sciencey stuff, you know, that's that's their speciality. And
so we really leaned on them to be like, hey,
all right, here's our goal. This is basically the goal.
We want to do most of our drink milk based.
They're all going to be espresso based. We need to

(32:25):
get to something that's palatable for them, that's going to
really mix well with a milk based drink, but also
be good for someone, right, Craig, who's just going to
drink it black. So how do we find that magic
combo interesting? Yeah, it's a simple, it's a very set.
We only have one blend. It's the Cali Blend. We
call it the always Stoked Blend ye and it's a
three beam boked always.

Speaker 2 (32:43):
That's our motto right.

Speaker 1 (32:44):
Here, always stoked.

Speaker 2 (32:46):
I love it for a few years now.

Speaker 3 (32:47):
Yeah, and so it's it's it's great.

Speaker 2 (32:51):
We haven't really changed the recipe and haven't had to.

Speaker 1 (32:54):
Let's talk about the rewards program. I got to pulled
up here. We'll flip over to it earn while you sip.
We are a nice member of this. I like it.
It's very it's a very intuitive app. So you guys
have done a good job with it. How is this
working out for you? Is this building the base for you?
Is it slow running? What's the concept here?

Speaker 2 (33:15):
Now? It's pretty crazy.

Speaker 3 (33:16):
So right now we have a little over two hundred
and fifty thousand loyalty members that we've signed up.

Speaker 2 (33:23):
Yeah, and we're in about four to five hundred a day.

Speaker 3 (33:25):
Whenever we open a new store in a new market,
we give this big spike, right because the first month
you get all these new sign ups because everybody's new.

Speaker 2 (33:32):
And then at the established, more veteran kind.

Speaker 3 (33:34):
Of you know, yeah, foundational stores, you still get a
good amount and are.

Speaker 2 (33:40):
But what's crazy is our participation rate.

Speaker 3 (33:41):
Because the app is great, you can use the app
to pay ahead, you can order ahead.

Speaker 2 (33:45):
Now that's something we introduced the last six months.

Speaker 3 (33:47):
You can kind of you know, everybody has it now,
so we had to add that.

Speaker 2 (33:52):
But our participation rates insane.

Speaker 3 (33:54):
We're at ninety percent for loyalty, which there's no national
brand who can touch that.

Speaker 1 (34:00):
I think, how are you measuring that?

Speaker 3 (34:03):
It's all just data driven, so anytime they anytime somebody
logs in either by just giving the phone numbers, honestly,
what most people do. They pull up They'll be like, hey,
you know, here's my order, and then oh yeah, my
phone number is five Fox five whatever it is.

Speaker 2 (34:15):
Yep, they are now logged in, they get their points.

Speaker 3 (34:18):
It's very easy, right, you don't need to do the
app thing, you can you can do it either way.
And so then our system, our POS system, touch point
just knows that they logged in with that and they
made the order with that, and then we can see
on kind of a percentage level, how many orders and
what percentage of sales were made with loyalty customers and
what worked and like today I'm looking at today, We're

(34:38):
at ninety two today, but overall right around the ninety
percent as kind of an annual average.

Speaker 1 (34:44):
So with the I mean, you know, Starbucks ran into
a big problem when they revalued their points. You know,
when you would build Starbucks points, they ended up deflating them,
so you had you know, it would take more points
to get your rewards now I see, and you got
a huge pushback from that. It was probably one of
the reasons that the loyalty platform actually peaked and then

(35:07):
started to come down. One of the reasons why they
ended up getting you know, Brian Nickel coming over from
Chipotle to kind of lead the way. How important is
do you think loyalty now, especially with what we mentioned earlier,
which is kind of this always on mobile generation, How

(35:27):
important is this right now? Is this like you have
to really focus on it.

Speaker 3 (35:32):
I think it's big, you know, with with with the
coffee industry especially, I think people it's a very habitual
trade by nature.

Speaker 2 (35:39):
Like you wake up in the morning, at least I do.

Speaker 3 (35:41):
I wake up, and when I get out of bed
and I'm tired, I'm not thinking about breakfast. I'm thinking
about coffee is the first thing, and then it becomes
you know, the next level is like where they get
their coffee, who they get it from.

Speaker 2 (35:51):
It just becomes a part of their day. Right It's
like brushing your teeth almost.

Speaker 3 (35:55):
So if Cali can become that routine anytime available, I
think people are going to do it. If it's on
the way to work, if it's on the way home,
whatever it is, they're not going to stop.

Speaker 2 (36:04):
The start.

Speaker 3 (36:04):
We have people that go if they're Cali loyalists, they'll
drive by five Starbucks and four Duncans just to get
to Cali and We literally have people that do that,
you know.

Speaker 1 (36:13):
As one thing that I noticed in your you know,
in your app, this was an intriguing sign on. And
I've done a lot where I test these apps all over.
Yours had that process, if I remember where it would
text you back a code as the sign up process.
So you literally it was, you know, you download the app,

(36:34):
your phone number became I guess your account number in essence, right,
it texts you back the code. Boom. I mean the
sign up process was like lightning fast.

Speaker 2 (36:43):
Yeah.

Speaker 1 (36:44):
So is that the way you're able to capture so
many new new members?

Speaker 2 (36:49):
Yeah? And really nobody says no. I remember, man.

Speaker 3 (36:51):
I remember when I was a kid and I went
to a grocery store local in Oregon and they were like, hey,
do you want to sign up for like Safeway Rewards
whatever it was, And I was like sure, and they
handed me this big piece of paper to fill.

Speaker 1 (37:01):
Your email and then your address.

Speaker 3 (37:03):
And yeah, or like best Buy where if you want
to log in you have to do email with the
styl is here. It's like tell us your phone number,
it's ten digits and now you're part of the program.

Speaker 1 (37:11):
It takes you're in.

Speaker 3 (37:13):
We don't even it's not even a hard sell. We
just and we give a free reward with the first
side up. They get half off their next drink that
never have and they get points to that day. So
we're just like, hey, you know, what's your phone number?
We're gonna hook you up some points. And they're like,
oh sweet, let's go boom boom boom.

Speaker 1 (37:26):
Well, and I think the cool thing, you know, if
you guys haven't seen it, I'm going to show you
the the app right here on on screen. You know,
there's some interesting things here that I've noticed on this
is some apps don't necessarily have notice how the graphics
are really designed. I think in a really good way.
It's almost immersive, you know, And that to me is

(37:49):
something that is the magic behind really good apps is
if you can get the user lost in the app
for a little bit, you know, engagement time. Do you
guys have any data on that, like how long they
spend in the loyalty app?

Speaker 2 (38:03):
Yeah? Good question. Not off the top of my head.

Speaker 1 (38:06):
You should look at that because I think your design
has been done in a way that it really represents
I think a way. For one, you can learn a
lot about the brand and all the different menu items.
But it's intriguing to me to see how brands are
starting to create a science behind how these loyalty mechanisms
have done.

Speaker 3 (38:25):
Yeah, what we've learned with the app is like you
can basically they can create anything. Anything you want can
be done. It's just amount of time and money. And
you know what's the value behind that. You know, we
would invest five hundred can to the app to make
it more visually awesome.

Speaker 2 (38:38):
Is that going to move the need all?

Speaker 1 (38:40):
Is it going to do it?

Speaker 2 (38:41):
Yeah?

Speaker 3 (38:41):
You know right, It's very hard to know, but I
appreciate that we have noticed a big uptick in mobile ordering.
People are taking advantage of that way more than we
first launched. So that's kind of cool to see that.

Speaker 1 (38:51):
How does that work? I mean I haven't done that
when I've always gone in and ordered through the drive through.

Speaker 2 (38:56):
So we put limitations on it.

Speaker 3 (38:58):
Was I was always very skeptical, very apprehensive to even
launch this because my concern was, you know, unless it's
geofence based, which we don't have yet. It was a
promised pickup time. Like let's say you make your order
and you say, all right, well I'm ordering now I'm
going to be there in fifteen minutes.

Speaker 2 (39:12):
But then your kids, you know, something happens, something happens, right,
and now you don't show up.

Speaker 3 (39:17):
So we have it ready. It's sitting there. You got
your hot you know, you medium hot, beverly sitting there.

Speaker 1 (39:22):
Quality is going down, yes.

Speaker 2 (39:24):
And I'm not going to serve that.

Speaker 3 (39:25):
So now we have we have to dump down make
a new one because we're not going to serve a
subpar product.

Speaker 2 (39:29):
So that was the intrinsic problem.

Speaker 3 (39:31):
But what we figured out now the way we control
that is you place your order, but it doesn't actually
get initiated on the.

Speaker 2 (39:37):
KDS on the fly. Yeah yeah, until you pull up.

Speaker 3 (39:40):
So you pull up now and then we scan your
QR or you say, hey, I did a mobile order.

Speaker 2 (39:44):
My name is Paul, and then we sent it up
right then and there. So okay, it saves some time.

Speaker 3 (39:48):
You don't have to order, as you know, we can
still do like hey, what's up, like talk to you
a little bit, but you you skip the process of ordering.

Speaker 2 (39:54):
And it also gives customers.

Speaker 1 (39:56):
Look through for you, guys, has got to be faster.

Speaker 2 (39:58):
It's big, and it gives them flexibility.

Speaker 3 (40:00):
A lot of times if our line's big and they're
the first time they get overwhelmed. They don't want to
hold up the lines, so they're like, oh my god,
I'm just going to make a panic decision.

Speaker 1 (40:07):
What exactly?

Speaker 3 (40:07):
Yes, they can just take their time, they can pick
That's a really good point.

Speaker 1 (40:11):
That's a really good point because drive through, especially with
you guys, that Q time is going to become so
critical for throughput, you know, and being able to grow sales,
which is if you can get enough people. Really, I'm
gonna start doing that. I think I'm gonna start doing all.

Speaker 2 (40:25):
Yeah, yeah, give it a shot.

Speaker 1 (40:27):
I gotta try. Let's talk about franchising before we uh
get out of here. But how are what's the first
of all, what's the approach? Because this is this is
a business. I feel like that as a very personal business.
So how do you translate that down to a franchise
system that doesn't understand you and what you've tried to build?

Speaker 3 (40:47):
That million dollar question, Paul, probably multimillion dollar question.

Speaker 2 (40:51):
It's it's it's not easy. You know.

Speaker 3 (40:53):
You we are a people centric business. We're driven on
people by people, and so you get the wrong person
in the drive and it can really tarnish your brand,
especially if you're only thirteen stores. You know, thirteen stores
is not a lot if you have two of them
that are being run poorly, or you know, franchises are
trying to go against the grain type of thing. To me,

(41:13):
it's funny because if I was the sign of a franchise,
it's because I believe in the brand, I like the systems.
I'm not going to really try and be innovative now
me as a CEO and a founder of a company,
That's not my mentality. So I'd be a terrible franchise
ee to anybody else's brand because I'd be like, oh, yeah,
what if we did this, what if we did that?
But again, if I'm taking a leap of faith on
a brand that I want to sign up for as
a long term investment, I'm gonna be like, all right,

(41:35):
cool man, you wrote the book.

Speaker 2 (41:36):
I don't need to rewrite it. Let's go.

Speaker 3 (41:38):
I'm gonna I'm gonna, I'm gonna follow your lead. And
you know, for the most part, we do get that.
And I think being innovative and having because all of
our franchises are very smart people and they've been successful
in somewhere or another in some factor right, and sometimes
that translates over and they have good ideas, they have
bad ideas, and so as a franchise or we just
have to contain it. And you know, we hear every

(42:00):
idea one hundred percent. We have franchise e meeting every month.
We do a big zoom call and we let them
kind of voice any ideas, any concerns, whatever it is.
And if it's an idea we don't want to run with,
you know, we control them. We'll tell them why, and
if it's a good idea, we'll consider it. And some
of our you know, innovations have come from franchise the ideas.
So you do get more cooks in the kitchen, which

(42:20):
I think can be good and bad at the same time.
But overall our franchising systems it's good. We're really not
We don't seek out franchisees like, we don't look for them.
We get a lot of applications, but most of them
we just you know, kind of ignore because.

Speaker 1 (42:34):
Yeah, a good match, what is the unit economics for it?
You know, when you want to build one, how much
would you have to invest to get one going versus
average sales, et cetera.

Speaker 3 (42:45):
Yeah, and all that's in the FDD that we have,
But it really depends mainly on the bill out type.
Like your your F F and E package or equipment
package is going to be pretty much the same no
matter what. There are some options you can kind of
upgrade if you think you're going to have a super
busy store, like adding a third workstation over two, which
is the default, but all in all, it's going to
be kind of the same.

Speaker 2 (43:05):
The buildout cost is really the kind of variable. Factory.

Speaker 3 (43:08):
Yeah, so going back to kind of our previous right,
if you're going to do do.

Speaker 1 (43:11):
You have a set architecture group that you work with
that works on the same model. How's the process there?

Speaker 3 (43:18):
Yeah? We man, we just found god Send really this
this group out of Portland. They are just awesome. They've
been phenomenal, so interesting our first call now every time.

Speaker 1 (43:28):
Well, I think the key here as you grow, when
you once you lock down the brand, which it appears
that you guys have done, you know, in terms of
what you're trying to deliver, then you get into the
mechanism of how do I scale. Obviously real estate, interior
design all that kind of stuff plays into you know,
kind of the future where the brand is going. How
big do you think this thing can go? What's the

(43:49):
what's the aspiration here?

Speaker 3 (43:51):
It changes all the time, you know, I think five
years ago I said we'll never franchise and we're only
going to stay in Broward County. And then you say
the impact it has and and as you said, tomize it, it
becomes easier and easier to open a store and you're like, Okay,
we'll venture into the next county and then there you go,
and eventually it's going to be the next state. Right.

Speaker 2 (44:07):
But again, right now where we're.

Speaker 3 (44:09):
At, we're really focused on kind of dominating Florida. We
really believe in the hub and spoke model. I think
it just makes stores come out. Sure, right, you don't
want to open one in Nebraska all of a sudden,
because now you have to completely rebuild the brand equity.
Nobody in Nebraska knows about Cali. But if we open
in Tallahassee or Jacksonville, there may be some kind of
crossover where oh, yeah, my cousin lives in Broward County,

(44:30):
they go to the one in Cooper City all the time.
Let me go check it out, you know, and go, yeah,
it's funny, slow but steady and smart.

Speaker 1 (44:37):
I love it. Well, listen, Craig, it's good. I love
your energy. I think you know it represents the brand
in a great way. And the cool thing is is
we're starting to see this crop of coffee companies and
beverage companies in the fast casual space that are really
kind of setting the tone for this becoming a huge
sector when you look at the big powerhouses, whether it's

(44:58):
freshmanc bakery, cafe, even to a certain extent, ethnic but
I think beverage now is as of twenty twenty five,
is becoming one of the cornerstones of the industry. So
good luck to what you're doing over there at Cali Coffee.
It's been great having you on the podcast.

Speaker 2 (45:13):
Thanks for having me, Paul, I appreciate the time you.

Speaker 1 (45:16):
Bet all right, you guys, If you have not checked
out Savor FM over on YouTube, you guys can catch
all of this and more just by going over to
the YouTube channel. We'll put a screenshot up where you
can get into a lot more podcasts just like this one.
And of course if you're listening on Spotify, on podcast Guru,

(45:36):
or on iTunes and Apple podcasts, all you have to
do is leave us a comment. Oh and by the way,
we're getting ready to open up on YouTube music as
well for this podcast. Let me know in the comments
if you guys are using YouTube music anyway. We'll catch
you next time right here on Fast Casual Nations