When Mark Janasik and his team envisioned the opening of Southern Grounds seven years ago, they were advised against entering an already crowded coffee shop sector.
But from their perspective, they had studied big-time coffee brands and noticed a standardized experience that didn’t follow through on the promise of building community, which is an integral part of the movement, Janasik says.
Southern Grounds wanted to rebuild that gathering place and disrupt the way customers experienced their morning beverage. The best way to do so? Combine sustainably sourced food with a coffee bar to carve out an elevated, differentiated category.
The concept recruited local chefs to create scratch-kitchen recipes, learned from coffee roasting company Intelligentsia on how to form equitable trading relationships with farmers, and teamed with local artists and architects to deliver designs that reflect the aesthetics, color, and artwork of the neighborhood.
Since, Southern Grounds expanded to four locations throughout Florida, including its first nontraditional unit in the Jacksonville International Airport in partnership with HMSHost. To kick off 2022, the brand announced the beginning of its franchise program, with the goal of reaching 125 stores in the next decade.
“We wanted social consciousness to persist in our brand over low prices, poor quality, and the standard mix of flavors you would get in traditional coffeehouses. So, increasing both food and coffee quality was important in this new paradigm for us,” Janasik says. “Those were the things we were chasing in this new model. New coffeehouse and community focus lead to new energy in the communities, gentrification of sorts, and we wanted food and coffee to be spoken equally in the same sentence when consumers came to experience us.”
The restaurant features a sizable food menu featuring breakfast and brunch, hot items, tartines (French open-faced sandwiches), cold sandwiches and wraps, salads and soups, and a kid’s menu. Some examples include Greek omelet, grilled goat cheese, salmon tacos, salmon toast, turkey club, and caprese salad.
Founders: Mark Janasik & Shiju Zacharia
Headquarters: Jacksonville, Florida
Year Started: 2016
Annual Sales: $6.3M company-owned shops; $2.1M AUV
Total Units: 4
Franchised Units: Licensing agreement with HMSHOST for two locations. One is currently open in the Jacksonville International Airport Terminal A, and a second location will open pre-security tentatively in Q4.
The beverage lineup comprises cold brew, drip coffee, cappuccino, cafe con leche, chai latte, French press, and more. The typical menu mix is 55 percent food and 45 percent beverage.
The sustainable and non-GMO menu feeds into a growing trend among restaurant consumers. Thirty-eight percent of adults said availability of locally sourced food would make them more likely to choose one restaurant over the other, according to The National Restaurant Association’s 2022 State of the Industry. The sentiment is even higher among Gen Z (40 percent) and millennials (48 percent).
At the biggest coffee chains in the U.S., off-premises has become king, especially since COVID swept through the country. In Starbucks’ first quarter, mobile order and pay, drive-thru, and delivery comprised more than 70 percent of sales, and drive-thru experienced its fourth consecutive period of double-digit comps growth. The same is true for the roughly 540-unit Dutch Bros, which saw digital mix more than 60 percent in the first quarter.
The same isn’t true for Southern Grounds, and Janasik doesn’t want it to be. The concept doesn’t have any relationship with third-party delivery providers; sometimes they sneak into the system, which he is still unhappy about. As for customers who may be on their way to work and opt for to-go, he estimated that to be about 10 percent and rising.
However, he doesn’t attribute the increase in takeout to a change in consumer preference. Instead, Janasik believes it’s a condition of space.
“I mean our Neptune beach cafe has 200 seats, Avondale has 60 and the other one 190, and we’re full all the time,” he says. “… One of our slogans or taglines is ‘gather together,’ and the whole purpose is to steer away from the quick, fast-food inability to sit down and enjoy.”
“We want to have a comfortable, very strong culture in our environment where people do feel comfortable gathering together, whether it be personal, professional business, whatever the scenario event is, we just want it to be a very comfortable third place,” he adds.
From the beginning, franchising was part of the overall vision, but Janasik and his self-described conservative leadership team wanted to ensure all resources and processes were in place to support potential operators.
Southern Grounds built a training program in which individuals spend a certain number of weeks working on each station, and those internal hires lead training programs for everyone else. The brand also simplified its menu and designed kitchen equipment processes to facilitate faster production times.
“Our stores are really high volume, obviously a proven system with great profitability, but we needed those processes written down, Janasik says. “That’s two, three years to understand what we do and why it works.”
The emerging fast casual is targeting 12 Southeastern states for growth—Florida, Georgia, North Carolina, South Carolina, Louisiana, Tennessee, Virginia, Texas, Alabama, Kentucky, Maryland, and Mississippi. In anticipation of this expansion, Southern Grounds established direct trade relationships with farmers throughout this region and arranged for their produce to be delivered through Sysco.
“Quality becomes the new frontier. We believe the coffee market is far from saturated, but is actually evolving into something different, something more focused, something better,” Janasik says. “And the consumer base is now demanding higher quality offerings, food or beverage, in our opinion. So for that whole reason, we think there’s no better time to launch our chef-driven coffeehouse to other aspiring restaurateurs or entrepreneurs that want to get into this space.”
In February, the coffeehouse announced the signing of its first franchise agreement with SOGRO St. Pete Hospitality Group. The company, run by Jordan Hooten, Zach Presti, and Nick Presti, plans to open nine stores in the next three years throughout Tampa Bay and St. Petersburg.
Southern Grounds also aims to continue its multi-unit relationship with HMSHost as opportunities arise at other airports. After opening one outlet in Jacksonville International Airport Terminal A, the brand subsequently signed on for a second unit that’s pre-TSA.
In addition to franchise and licensing deals, the brand will grow its corporate footprint in North Florida (Downtown Jacksonville, St. Augustine, Fernandina Beach/Amelia Island) and further south in Palm Beach.
The fast casual has four store designs ranging from 2,500 to 6,000 square feet, the latter including an outdoor landscaped patio. Janasik prefers walkable trade areas and dense neighborhoods. Among the three traditional stores, the Neptune Beach unit is located in a boutique shopping mall a few blocks away from the ocean, another is based in a strip in a historic part of Avondale, and the third location is a standalone in a historic part of San Marco.
As SOGRO St. Pete Hospitality Group grows, Southern Grounds will look to do more franchising concentrically from Jacksonville, such as Orlando and Naples in Florida, and then Atlanta and Nashville.
The company recognizes that some of its decisions aren’t typical to the coffee industry, says Lindsay Blakeslee, director of franchise sales. But it’s not as if the group is intentionally trying to go against the grain—it’s just transforming into a restaurant segment that doesn’t exist at scale.
“We are set apart from anything else that’s currently available by our menu, our locations, our involvement within the community, and just simply the impact and the experience that we want to have and allow it to be had by our guests,” Blakeslee says.