How One NYC Café Plans to Turn Customers Into Owners

Australian café group Citizens is banking on pent-up demand. It’s also banking on pent-up entrepreneurial spirit.

The New York City hospitality brand, founded in 2016 by Justin Giuffrida and Andrew Geisel, thrived in recent years as America’s brunch scene erupted, with concepts like Bluestone Lane, Two Hands, and others writing national success stories. Citizens expanded to four locations in Chelsea, Gramercy, Greenwich Village, and Soho, and developed a cult-like base en route to a multi-million dollar, scalable future.

It faced challenges like all restaurants did in 2020, especially those in the ultra-restricted Big Apple. Amid quarantine life, Citizens launched “phone-to-table” service and began to plot life after COVID. And in that, it saw a different path than most.

This week, Citizens says it will become the first NYC hospitality brand to turn customers into owners. New Yorkers (and others) will have the chance to buy in, for as little as $100. The company is preparing to launch a crowdfunding investment campaign on platform Republic. Even before the campaign, it's raised $160,000 in funding.

CHECK OUT THE CAMPAIGN

The company said it picked this route to “reward their loyal customers,” as it embarks on a country-wide expansion journey. People who invest will also receive instant rewards, depending on level. Some will get free coffee, cocktails, and even “VIP Green Cards” that come with free brunch for life.

Giuffrida and Andrew Geisel chatted with QSR about Citizens unique approach, why it thinks it will work, and what’s still to come from the emerging brand.

What do you think about the timing, with COVID still such a pressing issue? Are people looking to take control of their business lives?

Over the past few years, well before the pandemic started, we had begun plans for our growth expansion through the help of equity crowdfunding. We were always going to launch this campaign in 2021, so the pandemic hasn’t affected our decision to do this. While the pandemic has immensely impacted the hospitality industry, at Citizens, we have been fortunate enough to withstand the challenges and become stronger as a company through this, and we believe that the industry will rebound, bigger and better than pre-pandemic.

What has it been like planning this through the pandemic?

Navigating the ever-changing landscape has been a monumental task for the entire Citizens team. Now more than ever, we endeavor to look into the future to identify how we can continue to pivot to reflect the landscape, and growth opportunities. We strongly believe the market will soon be stabilized and economically readjusted paving a path for businesses to grow and thrive once again.

Generally, what are your thoughts on how the industry will rebound, and when? And how will Citizens be positioned to take advantage.

With the challenges of COVID, the Citizens brand has evolved, grown and proven to be resilient in an environment where consumers are more health and quality conscious than ever before. In such a changing landscape, resilient operators are riding the wave and not fighting it, through innovating and adapting the business model to meet the consumer in the new world.

Through this period, we have launched our native Citizens app that handles guest ordering, payment and contactless pickup functionalities. This allowed the business to safely serve customers while protecting profits. We also expanded into all major 3rd party delivery channels including UberEats, GrubHub, Postmates, etc, which saw a 26% increase in revenue to the four wall economics. The business also grew to offer dinner day-part increasing revenues by 25%.

And of course, Citizens adapted our on-site offerings to comply with NYC codes and regulations. This included building weather-proof outdoor infrastructure to allow for outdoor dining, installed perspex dividers, etc. Each time the New York state implemented new and differing restrictions, we quickly adapted, too.

Historically, some incredibly successful concepts were launched and scaled amidst economic down-turns. Many economic factors are relatively readjusted in real estate, people and services which enables businesses to expand if equipped with growth capital. If Citizens can continue to be resilient and agile, we look forward to a bright future ahead.

In terms of the industry rebounding, it’s hard to give a definitive answer on when, but we think with the news of the widespread vaccination rollout, and as we head into the tail-end of winter, we will see the hospitality industry pick back up. New Yorkers have been rallying behind small businesses, particularly for restaurants and cafes, since they have been some of the hardest hit throughout the pandemic, and come spring and summer, the industry will hopefully be thriving back to pre-pandemic levels.

Citizens

It is widely known that Aussie cafes are extremely successful in New York City.

Tell us the backstory of Citizens

Originally from Australia, Citizens founders, Andrew Geisel and Justin Giuffrida both 29 years old, originally moved to New York to work in their respective professions, architecture and finance. Upon a chance meeting in a café back in 2015, the pair bonded over how much they missed the unique Australian café experience in the city. The fresh, healthy and progressive breakfast menus, beautifully crafted coffee and the warm feeling of walking into your local café where the staff knows you by name, face and order. This shared experience led to the ideation that America was ready for a better café experience, modernizing the outdated diner, creating a more craft and premium coffee beyond the monopolized Starbucks product.

It was their complementary career backgrounds that led Geisel and Giuffrida to become a dynamic duo, both bringing a different skill set to the table; Geisel is the mind behind the creative and design, and Giuffrida helms the financial and accounting side of the business. In 2016, the duo opened their first Citizens cafe in Chelsea—the Citizens name brings in their foreign backgrounds, and meets the pillar of the business which is serving the citizens of that cafe’s particular location. Just a year after its initial grand opening of ‘Citizens of Chelsea’ the duo went on to opening a Gramercy location, followed by a corner location on the iconic Bleeker Street in Greenwich Village, and their most recent location on the famed block in Soho on Lafayette Street next door to one of New York’s restaurant institutions, La Esquina. Each serving something unique to their respective locations, Citizens is overall a place for people to come together, enjoy fresh, healthy and creative menus, and soak up warm Australian hospitality. With the ongoing success of all their locations, the founders are ready to embark on an expansion journey and bring their innovative Aussie cafe concept to other neighborhoods in New York, but to different cities around the country.

Why did you decide to launch an investment campaign on Republic as opposed to raising private equity?

One of Citizens’ core pillars is community—we give back to the community and want to serve them in more ways than one. The success of the business has been from the communities that our cafes are in. From day one, it’s the Citizens locals that are the people who have supported the company and who have already been on this journey of growth and evolution together over the years. So, when we decided to embark on our larger expansion journey, we wanted to find a way to give back to those who have become a pivotal part of their business. That’s why we decided to launch an investment campaign that helps invite our community to be part of this process. Launching an equity crowdfunding campaign on Republic is a way for Citizens to offer our local customers the opportunity to invest in their favorite cafe.

Why is this a good investment proposition?

It is widely known that Aussie cafes are extremely successful in New York City and are leading the wave of consumers wanting a more premium coffee, healthy eats and better guest experience. The rise of specialty coffee is an incredibly fast-growing category as US consumers begin the shift away from Starbucks to a more premium product. The most recent data published in 2020 by the National Coffee Association (NCA) shows that specialty coffee has increased to 60% market share, up from only 9% in 1991. The demand for specialty coffee and healthy food will continue to grow strong, and soon Australian-style cafes will become the new norm of the market rather than the exception. This form of equity crowdfunding that Citizens is using through the platform Republic, is a brand-new and innovative concept to the hospitality industry. With contributions starting as little as $100, this is a great, attainable investment for everyday people who believe in the strength of the Citizens brand and burgeoning specialty coffee & wellness category.

Tell us about the expansion, what is your long-term goal with raising investment?

Republic crowdfunding forms part of a wider $5 million Series-A financing round modeled to fuel a 40-unit national expansion across nine major U.S markets, with a proven business model & formula bolstered with a unique real estate landscape presents unrivaled opportunities. In our lead up to launching on Republic and opening up investment to the public, we have already received an overwhelming show of support and early investments putting us well on track to filling the round. We have a strong pipeline of eight stores planned for the next 24 months bringing our store count to 12.

The company has modeled a three-phased expansion plan within existing markets and beginning its strategic growth plan in new markets, using a repeatable and predictable new market entry strategy that will ensure sustained success. Completion of the three-phased expansion shall see Citizens 10x its footprint and achieves an annual run rate of $80M. Upon completion of the Series-A expansion, the business will be in a strong position to merge with a strategic partner, accelerating a path to IPO.

How can consumers get involved?

We decided to launch an equity crowdfunding campaign on an innovative platform like Republic, as it is one of the easiest ways for everyday people to invest in the companies they love. As simple as signing up for free on Republic.co which takes less than 5 minutes, anyone can choose their own monetary investment in Citizens. People can choose from as little as $100 investment. We’ve created an awesome tiered-perk structure, to incentivize and reward our investors immediately, through free coffees and brunches, depending on how much you invest.

Tell us about the perks on getting involved? (this is important, as consumers can invest as little as $100 up to $10K and get free coffees, brunches for life, etc)

We wanted to reward whoever is investing in Citizens, almost immediately so we decided to create an amazing reward system for everyone who invests with our company. Everything from free coffees, cocktails, all the way up to free weekly brunches ‘for life’ based on a $10,000 investment. Here’s a peek at the rewards based on the different investments:

$100: 5 Free coffee or cocktails—Citizens with Benefits: Invest $100, and you’ll receive five free coffees or cocktails, loaded onto your Citizens Green Card.

$250: 10 Free coffee or cocktails—Citizens with Extra Benefits: Invest $250, and you’ll receive ten free coffees or cocktails, loaded onto your Citizens Green Card.

$500: 10 Free coffee or cocktails—Citizens with Extra Special Benefits: Invest $500, and you’ll receive five free brunches, worth $150 loaded onto your Citizens Green Card.

$1,000: Free coffee or cocktail for a year—Citizens Weekly: Invest $1,000, and you’ll receive a Citizens Investor Card, loaded up with a free coffee or cocktail every week—that’s 52 coffees or cocktails a year.

$2,500: Free brunch for a year—Citizens Weekly: Invest $2,500, and you’ll receive a Citizens Investor Card, loaded up with a free brunch every week - that’s fifty-two brunches a year.

$,5000: Free coffee or cocktail for life—VIP Citizen: Invest $5,000, and you’ll receive a Citizens VIP Investor Card, loaded up with a free coffee or cocktail every week for life.

$10,000: Free brunch for life—VIP Citizen: Invest $10,000, and you’ll receive a Citizens VIP Investor Card, loaded up with a brunch every week for life.