Industry News | May 12, 2011

Saxbys Coffee Emerges From Bankruptcy

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In hindsight, Saxbys Coffee’s declaration of Chapter 11 bankruptcy is the best thing that could have happened. Of course, Joe Grasso and his partner, Kevin Meakim, had no way of knowing it at the time, but the more than 20-month process from which they’ve just emerged has afforded them the chance to finally mold the coffee-shop franchise into exactly the kind of powerhouse they always imagined it would become.

“The first thing that attracted us to purchasing Saxbys in 2007 is that the company is a franchise model, whereas Starbuck’s is corporately owned,” Meakim, principal of Saxbys Coffee Worldwide, says. “And now that we’ve reorganized and gotten past all the hurdles of the bankruptcy proceedings, we’ve been able to craft it to fit the vision we always had. 

“We’ve always believed in the neighborhood, owner-operator style, where the stores are connected the community, to the little league teams and the artists that play live or hang their art on the walls," Meakim says. "No connection is more important than the one between the customers and the person who’s brewing their coffee every day.”          

And it goes even further than that. Each franchise works with local food and ingredient purveyors to stock the best fresh ingredients that that particular area has to offer. At the same time, owner-operators also benefit from Saxbys corporate buying power when it comes to dry goods.          

Much of Grasso and Meakim’s success in implementing their vision—they opened up eight additional Saxbys locations during the bankruptcy proceedings, bringing the total to 32 units in eight states and the District of Columbia right now—has been as a result of relationships they’ve forged with Bancorp., whose SBA loans have been so critical to the company’s growth.

“Bancorp. has been instrumental in Saxbys emergence from bankruptcy,” Grasso says. “And now that we’re out of Chapter 11, their lending arm, which focuses exclusively on franchise lending through the SBA, is going to play an even bigger role in our future. They have half a billion dollars in capital to be invested in franchises, and we’ve just structured a deal to afford us access to all that they have to offer.”         

The timing couldn’t be better, as Saxbys is clearly a company on the rise. For despite the publicity and headaches that naturally come along with any Chapter 11 proceedings—Saxbys’ bankruptcy was a result of litigation costs around the time of Grasso’s purchase, Meakim points out that 25 franchise locations have seen consistent same-store year-over-year rises in sales. This would be a remarkable achievement for a company that hadn’t gone through what Saxbys has, and it is a strong indication of the overall health and promise of the brand.       

“We believe that Saxbys has tremendous potential,” Grasso says. “Our ultimate goal is to grow responsibly. In the next two or three years we’d like to have over 100-units, which we believe is where companies become noticed in the franchising industry. It’s going to take a lot of hard work, but I really think we’re at the stage right now where we’re ready to do that, especially considering our financing backing from Bancorp."

 

Comments

What an awful franchise this was to have owned. The CEO didn't even tell us they were filing bankruptcy while sitting in front of him in the philadelphia office after signing our franchise agreement. No corporate support, no concern for a new franchisee.

DO NOT I repeat DO NOT Trust Nick Bayer!! He would stab his own mother in the back to get out of paying someone! I know from personal experience that all three of them are crooks! Even with their other company Coffee Shops International, which wasn't in bankruptcy, they don't pay vendors, they can never afford to buy coffee beans which they make the shop owners buy. SO, how do they plan to keep these shops profitable? THEY DON'T CARE!!! The will get your 90k in franchise fees, then they will never help you again! They make their franchisees buy from certain vendor because those vendors pay them 10's of thousands a month! Which just cost their owners more and more money! If you want to buy a franchise do your self a favor, and don't buy this one!

WOW! I was just getting ready to make the call to invest in a few stores in Naples, Florida. Thanks for all the info and I am so thankful for the internet. I wonder why someone would open 2 stores in the Raleigh, North Carolina market. Maybe they did not do their research.

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