It’s never occurred to Brandon Knudsen to leave Ziggi’s Coffee.
He and his wife Camrin founded the business in 2004 and have kept ownership for the past 20 years. Part of the history involves signing a lot of single-unit franchise agreements—people who heard about Ziggi’s story, met Knudsen and his family, and invested with their life savings. He values that belief in the brand. It’s what keeps him going.
“It would feel like a massive abandonment,” says Knudsen, who serves as CEO. “They’re just getting open, and then, ‘All right guys, we’ll see you later. Good luck with VC, whoever or whatever.’ It’s just not how we roll. We love this. And I’m hoping to help all these franchisees who signed hopefully have the same success that my wife and I have had.”
Knudsen has seen several changes in the quick-service segment in the past two decades, most notably the transition from hot coffee to cold coffee. He’s also careful to use the term “beverage” instead of “coffee industry” because offerings have become more about energy drinks, smoothies, chai, and matcha. When he and his wife opened the first store, essentially all the drinks were a vanilla latte, caramel macchiato, or drip coffee. Every once in a while he’d flip around to make a smoothie. In the latest prototype, a frozen station and ice station take precedence over the hot bar.
The executive attributes the shift to coffee shops exploring ways to fill underperforming dayparts.
“We got commuters in the morning, we got mom and dad dropping the kids off. They’re getting their coffee and the latte and then at 10:30 it would just fall off a cliff back in the day,” Knudsen says. “Well, how do we fill these spots? How do we get them to come back in the afternoon at lunch and those sort of things? Then I think you just spiral from there and now you’re realizing that, ‘Hey, these kids love caffeine, they just don’t like coffee.'”
This year is particularly special as the 85-unit brand should reach 100 shops by summertime, permit and construction timelines willing. A majority of that growth will come from franchising, which began in 2016. The program was initiated after years of people asking Knudsen for advice on how to enter the restaurant industry. Recognizing that giving away free wisdom couldn’t go on for much longer, the CEO dipped his toe into outside partnerships via two methods—allowing managers to run stores themselves and forging licensing deals. Knudsen preferred to take a measured approach to external operators because of horror stories he heard regarding other brands. “I watched the Quiznos situation back in the day and some other things where it’s like, that’s the last thing I want is those people mad at me.”
Licensing proved challenging, so Ziggi’s pulled back and spent a couple of years fine-tuning its systems. Even when the first franchise site arrived, Knudsen was at the store every day during construction and showed up for opening day. He admittedly wasn’t in a position where he felt comfortable enough handing the keys without supervision.
“We just slow-played it. I think we approach every part of this business this way,” Knudsen says. “Then it just was a rocket ship after that.”
Ziggi’s offers operators three prototypes—double-sided drive-thru, cafe and drive-thru, and single-sided drive-thru. Knudsen says the portfolio of store designs is a reflection of the franchisees it wants to team up with. For instance, having the ability to fit into a drive-thru at the end of a strip center lowers the financial entry point and allows mom-and-pop couples in their late 20s or early 30s to open a business without having to borrow $2 million.
In other cases, operators have dreams of owning a cafe, and the brand can satisfy that with its prominent food menu. This version also makes it easier for franchisees to connect with the community since customers often come in to dine with friends and family.
“Without food in cafes, it’s kind of death. You have to have those things when people are hanging out,” Knudsen says. “And as we expand to our first drive-thru, we just moved the food over to that location. Let’s say there’s a Dutch Bros. and a 7 Brew across the street. What’s going to separate us? I’m super biased, obviously, but we have great breakfast burritos that are made here in Colorado with green chili and it’s very unique to Colorado. And then the breakfast sandwiches and my son has celiac [disease]. And so we have a lot of gluten-free options.”
Ziggi’s 85 shops are spread across nearly 20 states. The company’s strategy is to follow well-equipped operators into a market and build density instead of focusing on a particular region. Having a distribution company that can ship materials to Oregon, Maine, and everything in between certainly helps.
“We’re like, all right, let’s just find awesome people and let’s plant seeds wherever that is, whether it’s in Maine or Florida,” Knudsen says. “We’re not worried about that because we have a great distribution partner. And then with that what we’re finding as soon as we open that store, then naturally people start to realize, I want one of those. And so, it’s expensive for us to ship things there, then hopefully we can expand, get five or six or eight stores, then we can have a little hub there to distribute. But again, this business is all about who’s running it. If you can find good people, I really don’t care where they are. As far as geography now, we’re looking at small communities, but again, with good operators, this business works anywhere.”
As the coffee has matured in its franchising program, so has the type of deals it’s signed. Late last year, Ziggi’s announced the development of 50 new shops in the Greater Atlanta area—its largest agreement to date.
However, Knudsen and his team don’t want to lose sight of the small operators on which it was built.
“I love getting a text message from a couple that opens and they have lines around the street for their grand opening,” Knudsen says. “I just think that’s a ton of fun.”
