Darren Spicer, Co-Founder & CEO of Clutch Coffee Bar

Guest: Darren Spicer, Co-Founder & CEO, Clutch Coffee Bar

Host: Chris Hatch

Listen on Spotify

Summary

Chris Hatch talks with Darren Spicer, co-founder and CEO of Clutch Coffee Bar, a 14-store drive-thru coffee brand in the Carolinas. Darren spent nearly a decade at Dutch Bros before a change in its franchise program pushed him to start his own brand, beginning with two converted Human Bean stands in Mooresville, North Carolina. He walks through why he picked the Carolinas, how Clutch moved from converting existing buildings to ground-up development with a preferred developer, what he looks for in a site, why Clutch has stayed company-owned instead of franchising, and how a private-label energy drink cut cost of goods in half.

Key Takeaways

• Clutch picked the Carolinas for younger, growing cities, car-dependent commuters, lower real estate costs and lower wages, plus room to grow without the West Coast's saturation and red tape.

• Early growth was driven by "what's available and affordable." The shift to "where do we want to be" came around store six, when a preferred developer helped Clutch move from conversions to ground-up builds.

• Co-tenancy matters for a younger brand: put stores where people already have to go (grocery, oil changes, haircuts) instead of counting on being a destination.

• "Captive traffic" beats raw traffic counts. Signalized intersections and slower-moving roads make it easy for customers to turn in.

• The current prototype is about 850 square feet, laid out so team members never cross paths, on 20-year leases (or 10 years with options on a build-to-suit) for long-term control.

• Clutch chose not to franchise to protect brand control and culture. Darren's view: if you franchise, you can't do it halfway.

• Going into business with friends? Ask the hard questions about risk appetite and growth up front. It's much harder to align midstream.

Transcript

[01:45] Chris Hatch: Darren Spicer, co-founder and CEO of Clutch Coffee Bar is joining us on the Dirt Dog Pod. Welcome to the pod, Darren.

[01:58] Darren Spicer: Appreciate it, man. Thanks for having me on, Chris.

[02:01] Chris Hatch: Yeah. So tell us about Clutch. What is Clutch and how many stores are you, where are you located? What's the Clutch story?

[02:10] Darren Spicer: Yeah, so Clutch Coffee Bar was born in 2018. We have 14 drive-through locations in the Carolinas specifically. So we started in 2018 in Mooresville, North Carolina. And I, in my much younger years, started in drive-through coffee and just had a passion for people in the business. And I saw an opportunity. I actually originally was working to franchise with another brand that you may or may not be familiar with. I was working toward their franchise plan, nine months into the 12-month pre-qualifications, when they changed it one final time and there was no more franchising available. And so that's what really pushed and inspired me to start Clutch.

[02:56] Chris Hatch: So first off, is it a secret what that brand was? Is that OK? Can we discuss that?

[02:58] Darren Spicer: Yeah. No, no, it's not a secret. I give an incredible amount of credit for building a great foundation in who I am and how I go about things. So I spent almost a decade at Dutch Bros, in Oregon and California. Initially as a barista through high school and college, and it was a kick a** great job when you were 18, 19, 20. And then I left and got a real job, an adult job. And something just kept pulling me back in terms of the people and the opportunity. And so I was helping to open new locations in Northern California and then really double down to commit to franchise.

And so at one point in time, I was working 30 hours a week managing a Dutch Bros location and an additional 40 hours a week doing medical device sales. I did that for almost a year straight, pulling 70 hour weeks.

[03:48] Chris Hatch: That'll definitely shave some lifespan off of you, right? Pretty quick. All right, for a young guy too. Okay, so at the time when you were trying to go down the franchise track, do you have to kind of elect to Dutch like, this is what I would like to do. And then they put you in some kind of training program or how was that working at the time?

[03:53] Darren Spicer: Some great and some grays, man, I'm telling you. There were several iterations that kind of changed almost on an annual basis. But the last version that I was in, right, was there were certain pre-qualifications, right? You had to work at the company for at least three years, I believe consecutively. You had to manage for at least one year. And those were some of the things that then allowed you to be eligible, so to speak, to be a franchisee. And it wasn't a guarantee, right? Then you still had to submit. You had to go through a process, I think some pretty intense interviewing to make sure that they vetted you out to make sure you were going to be a great representation of the brand.

So doing all of those things. And I had some friends that had already completed the franchise journey. And so they were helping to provide some advice along the way. Hey, here's some things to keep an eye on for. And I was very hungry and wanted to do it even to the point where I was finding maybe this is applicable for the Dirt Dog aspect here, but like finding sites that could be converted and submitting them and saying, here's the economics, here's what it looks like, here's the traffic count, like did my homework, probably more than most people that were in their mid to late twenties might've been doing.

So yeah, I was really eager on that. And then they changed the model, which, where I'm at now, I understand makes sense. And they moved to the operator model. And at that point in time I was probably a little bit of an outlier because I also had an additional successful career outside of Dutch Bros. And so the operator offer, number one, I had a challenge by not having any equity in it. I really wanted to have skin in the game, but also it would have represented a 60% pay cut from what I was making in medical device. So those things didn't quite align and that kind of encouraged me to go start my own.

[05:59] Chris Hatch: So when you work for Dutch, you were in NorCal, right? Okay, so sites you're scouting out, hunting out, I would assume they're right there in the area.

[06:09] Darren Spicer: Yeah, At the time I was living in Walnut Creek. I found an awesome site in Concord, a block away from Costco, 37K traffic. I did all the research; it was a very affordable converted building. So I was looking at that, and at the time I was the first manager of a store in Oakley near Brentwood so I would actually pay a $5 bridge toll to go to work each day to go manage that store.

[06:38] Chris Hatch: Yeah. Fun times, right? Okay. And you're still in NorCal.

[06:45] Darren Spicer: Yeah, I split time when we started the business, when we started Clutch, I was out in North Carolina 22 days a month for a year and a half straight. And it was like 11 days out and then four back to make sure my wife didn't divorce me. And I did that for about a year and a half to really set the foundation of the culture that was paramount to my two business partners and I. And so as we've grown over time, I've been able to kind of delegate some of that leadership responsibility and so I still go out every two and a half to three weeks, based in Northern California. So a lot of red-eye flights.

[07:20] Chris Hatch: Yeah, no kidding. Okay, so you said you do 22 days on, come home for four days? Is that what said?

[07:26] Darren Spicer: I was doing 11 out there for a year and a half. Was doing 11 out and then four back. So in aggregate I was out there about 22 days a month.

[07:35] Chris Hatch: Yeah. This is pretty, yeah, obviously, yeah, I'm sure that helped a lot. But why the Carolinas? Right? I i mean, that's not close to where you were.

[07:36] Darren Spicer: Yeah. So it was kind of an interesting melding of two worlds. I had spent a good amount of time in a lot of different cities across the U.S. with the medical device sales. I was actually the national director of sales for a device company out of the Bay area. So I had spent time everywhere from Charlotte to Nashville, Miami, Houston, Phoenix all across and pretty quickly identified that if we were going to start something somewhere, cause I'm originally from Oregon and the Northwest is super saturated on drive-through coffee every other corner. So if we were going to go somewhere where that didn't exist in spades, we really liked Charlotte and Nashville to start.

And this was my brain in 2015, 2016. So, almost 10 years ago, we liked that they were younger growing cities, younger growing demographic, no public transportation. So everybody was driving from bedroom communities to work. The cost of real estate was more affordable. Minimum wage was lower. Just a lot of things aligned that made it more approachable that if we were going to take this risk really to start a brand, if we could mitigate the risk a bit versus starting on the West Coast, which had a lot more red tape and a lot more costs. We targeted those two cities to start. And the break we got was our broker found two Human Bean locations.

The guy wanted to retire. And we basically bought those two, we checked them out first, but bought those two and then rebranded it and opened 90 days later as Clutch. So I signed the deal to make Clutch official and take over these two while I was on my honeymoon in Australia. So there's a picture somewhere that'll go in the book one day of that.

[09:34] Chris Hatch: Amazing. Were either of your partners from Carolinas?

[09:38] Darren Spicer: No, one was from Oregon as well and spent a lot of time working at Dutch Bros. So he was kind of the operational guru. And then the other one we met through mutual friends who had a finance background. His day job is actually as a derivatives trader for Morgan Stanley in New York. Amazing guy, originally from Dallas. And so the three of us kind of had what we thought was complementary skill sets. We had the finance guy, the operations guy, and then I was more cultural sales, marketing, community integration. And that was kind of the all-star team to start.

[10:11] Chris Hatch: Okay, so you pick up the two Human Bean locations and about how far apart are they close together or?

[10:18] Darren Spicer: 3.2 miles, same town.

[10:20] Chris Hatch: Oh, perfect. Great. So that's the home base and you get it rolling. What's it like to step in and create a new brand? You're not just creating a new brand, you're creating a new culture. You've got entirely new team members you're hiring, right? Walk us through that a little bit.

[10:37] Darren Spicer: Yep. I think there's several emotions and several adjectives that can be described. It's exciting because you're creating something new that we had this outside perception going in. Charlotte considers itself the South of like Southern hospitality, right? And we prided ourselves on the level of hospitality that we grew up and learned on, frankly, at Dutch Bros. And so it was exciting to be able to share the analogy I tell people is like, when you got your first smartphone, you didn't know you needed it until you saw it, and you're like, my gosh, how have I lived without this? Same thing with when we went into that market, all they had really was Starbucks and Dunkin.

And so they didn't know what they didn't know in terms of an amazing experience, a faster experience, better product, all of those things. So that part was really exciting. And I have a gene that I really like in terms of creating and innovating. At the same time it's nerve wracking, right? You're putting what, at the time, was a respectable percentage of what you've saved as a young professional into it. But the thing I always told myself was I don't want to look back 20 years from that point in time and say, gosh, I knew the coffee industry was going to take off. I had that idea, but I just didn't execute.

I didn't act on it. I just was on the sideline. And so what I told myself and my wife was, hey, if we're going to do this, let's be very strategic. But like, if we're going to fail, let's fail fast. And we'll rebound and do something else, but don't have any regrets of just saying that could have been me. Like, let's go for it. So to answer your question, it's exciting, nerve wracking, all of those things at once, but you just got to put one foot in front of the other. And I think action is the big thing. And I would give credit to Travis Boersma, the one living Dutch brother, right?

He always talked about how if you want to do something substantial, like you have to take massive action. And so this was our massive action.

[12:40] Chris Hatch: Did you ever consider just keeping them branded Human Bean and growing that like as a franchise operation?

[12:47] Darren Spicer: No, number one, the branding was awful, if I'm going to be really honest. And no, we didn't have a desire to be handcuffed by some of the franchise things there, at least for that specific brand, right? And we wanted to be able to do things a certain way I had been to Human Bean before in other states, so I had a general idea of what that vibe was like, and it wasn't us. It wasn't Clutch, if you will. So that was something that we felt pretty strongly about was creating our own brand. I'm a big sports fan, and so when a player steps up and they deliver in crunch time and they're clutch, I want us to be that for our customers every day. So that's how the name was born.

[13:32] Chris Hatch: Who came up with the name? Yeah, I love it. Just epiphany just had it in your brain or where'd you come up with it?

[13:34] Darren Spicer: I played sports in college and when you're in kind of that world of vernacular, right? Of like, that's clutch, right? Or, wow, they gave me a free drink on my birthday, that's clutch. And so that was, I wanted to use something relative to the other major brands that are out there that actually I think is used in everyday vocabulary versus like, how do you weave in the word Starbucks into something? I'm not really sure. So yeah, there's a whole different story on securing and landing the name, because that was a whole adventure as well, but we landed it and got it done, and I'm very, very happy with the name we chose.

[14:22] Chris Hatch: My wife had this hilarious Uncle Pete, and for whatever reason he mixed up the meaning of the word clutch. So if you missed a golf putt, he'd be like, "You really clutched it," and you'd be like, "No, I actually think it's the other way around." So in our family it has a hilarious meaning. Okay, so you get the stands going. How many employees do you typically have per location?

[14:38] Darren Spicer: That's awesome. When we started, I think we hired 25 to start. And we didn't, you have no idea where you're going to start at volume wise. I mean, you're hoping for the best, but you're mentally prepared for like, all right, nobody knows who you are. You think you know a lot about marketing. Looking back now, you didn't, but you still put a lot of effort in. And so we started with, we started with 25, and that also included one of the partners and me. We taught everybody how to open, how to close, right? We were in the stores 19 to 20 hours a day for a while because we cared and we wanted it to be built the right way. So yeah, started with about 25.

[15:33] Chris Hatch: Yeah. And so you onboard these new 50 team members and you step in there day one. And I guess that's what it takes, right? Is you, we've basically got to divide and conquer. You go to here, I'll go there. Is that what it is?

[15:47] Darren Spicer: Yeah, we opened the, yeah, the first one was March 3rd of 2018. And then we opened the second one exactly four weeks later on March 31st. So it was get the first one up and rolling and then immediately divide and conquer to your point and start hiring and training for the second store. And so we caught a little bit of a momentum wave where people saw the first one or experienced it and they said, my gosh, I've got to recommend a friend, right? That would be great for the other location. So that kind of helped build a little momentum, but it was very much like everybody focused on number one, get it open and then divide and conquer.

We were still in great communication. We lived together too. We rented a house together. So it was like the real world. But it was divide and conquer once we got the first one.

[16:33] Chris Hatch: Yeah. So I've seen you from a social media perspective, but I've not had a chance yet to come to one of your stores. How did you decide what to put on the menu?

[16:46] Darren Spicer: Great question. Probably a blend of a couple of things. One, we had a general idea of things that performed well from our experience in the coffee world. And I worked, in addition to working for Dutch Bros for as many years as I did, I worked at a couple of other coffee places prior to Dutch Bros in high school and then another one in college. I had enough reference points to know what we thought would do well. We also wanted to innovate and create some things that hadn't been done before. So like the muscle mocha was one of them. And that was inspired by my wife, who was like, Hey, I'm tired of having to drink a coffee and a protein shake in the morning, find a way to fuse it together.

Okay, we can do that. So high protein, low sugar. And that's how the muscle mocha was born, like day one when we started. So yeah, it was a blend of those things. And then also, we wanted to expand a bit beyond what we had seen previously and incorporate some things that someone says, hey, I'm not a big coffee drinker. Cool. No worries at all. We have six or seven other things that you're bound to like something that's on there, right? So expanding the smoothies and using 100% juice smoothies, which I think is cool because there's a lot of added sugar in most of the smoothies out there.

And then we actually added three different custom juice blends that are 100% juice, no sugar added. So like trying to provide other things that someone might say, gosh, I'm not a big coffee person, but we've got some other things as well.

[18:15] Chris Hatch: And then as you started to add things, subtract things from the menu, is it you just kind of feel your way through the process, see what the customers are ordering? How long has your menu been set right now?

[18:31] Darren Spicer: Yeah. Well, now we have a good cadence of being able to actually take data. I mean, we've been able to look at data since day one, but we have a much more refined process now to look at all that. So, I would say day one to now, there's probably still 80% of the day one things that are there. Some things here or there that have adjusted of something that maybe wasn't a super big seller that we moved away from. We've done some pilot testing of things, but for the most part, a lot of our signature drinks that we came out with on day one are still on there.

[19:10] Chris Hatch: What's currently a best seller?

[19:13] Darren Spicer: Caramel Macchiato is the number one drink seller, which is interesting because, I mean, of course it tastes great, but I think the aesthetic of that, you eat with your eyes first. And I think the aesthetic of that, that Starbucks helped to make popular really provided a comfort level. It's approachable. People say, well, I know what I'm going to get with this. So that's our, yeah, number one.

[19:38] Chris Hatch: Interesting. So you got the first two open, you get those set, and then how did you go to store three?

[19:47] Darren Spicer: So we waited, well, we had differing internal views of growth velocity, which was interesting because we found success with the first two. I think I was probably looking back more on the like, hey, we've got something here. We should look to grow and see what's out there. One of the other partners was more conservative. So it was kind of a push-pull, which is probably a good thing, a healthy thing to have. But we all had made an agreement that if we weren't all aligned on something, we would not move forward until we were all aligned. So from the time store one and two opened until the time store three opened, which was September 5th of 2020, you're talking a little over two and a half years.

So it was a little bit of a process. And then you also had COVID kind of woven in there as well. But looking back now, the approach we took early on, and you'll appreciate this as a developer, I think our approach early on wasn't the best in terms of it was like, well, what's available and is it affordable? Right? Not how we think about it now, which is where do we want to be and we need to get in there. So that's how number three came into our hands in Winston-Salem: a very affordable rent, but you kind of, you look back and say, well, why is it so affordable?

Probably not ultimately the right perfect demographic. However, the store does very well. It was just a long growth period for that one. So yeah, that's how we got to number three.

[21:21] Chris Hatch: I had a 150 store franchisee for a national burger group that I used to work with. For like 40 years, the real estate strategy was go to the A plus corner and then find the closest pad that they could buy and self develop. And as a result, everything I ever worked through for this client, we had C and D volume restaurants because we were always like 13 pads down from the corner. It's kind of interesting. It is an interesting moment when you make that switch. When did that happen for you? Was that store four or a little further into the process?

[21:55] Darren Spicer: I think it was store six. We started working with a preferred developer who really helped to professionalize us a bit more on the real estate side and think about the approach we could take. And it allowed us to kind of have an unlock. Stores one through five were all renovations of existing buildings, right? So one and two were coffee. Number three in Winston was a former Jamba Juice. Number four in Greensboro was a converted Wells Fargo bank. And number five in Clemmons, which is also in the Triad was a converted like Southern and soul food place. So all of those were existing buildings: convert it, upfit it.

Six and beyond, we were able to actually start doing some ground up developments and actually find locations for a standalone building, not something that was second or third generation. So, yeah, it was around store six, which was Rock Hill, South Carolina. Which allowed us to kind of spread our wings and elevate a bit.

[22:56] Chris Hatch: So you identify a dirt site on six, and then how did you get to the footprint of what you're operating out of? Did you sit there and just site plan it? Did you kind of go through and decide where the equipment was going to sit? And what did you end up with? How big's that stand?

[23:13] Darren Spicer: Yeah, six is a little smaller than all of our new prototypes because it's a very tight pad. We're talking 0.33 acres. Very, yeah, that one was tough. That one's 650 square feet. All of our new ones are 850. Something that we're very passionate about is the layout to make sure that things flow well, because if we have team members who are wasting time or energy, and you see this a lot at coffee places that don't have all that figured out where they're crossing over. That wasn't something we wanted to have happen to us. So very intentional with the layout, how things are set and 850 square feet.

Now that we work with a broad line distributor and get once a week deliveries, it allows us enough space to store things where we're pretty self-sufficient. The first two we did those Human Bean stores were 450 and 550 square feet. They can't hold enough products for the volume we do. So we had to put sheds outside, which are not my favorite thing, but do what you got to do to handle the product.

[24:17] Chris Hatch: Yeah. Yeah, no kidding. So, it's interesting when you talk to various operators that have not operated in something under a thousand feet doing the kind of volume that you do and others do in your space. So much thought has got to be put into: does this human run into this human, right? As they're doing this function, right? And what a fascinating thing to go through. So.

[24:46] Darren Spicer: Yeah, I think there's two brands that really, just to give credit, that really pushed the envelope, I think, on that, and that's Chick-fil-A and Dutch Bros, to be totally honest.

[24:54] Chris Hatch: Yeah. And Chick's doing it out of four or 5,000 feet, but their volume's just so high, they've got the exact same thing. It's just which human stand where, right? Yeah. Yeah. I honestly don't think there's a better operational masterclass than just sitting there during lunchtime or dinnertime at a really busy Chick-fil-A. Fascinating to watch what's going on, what's happening.

[25:02] Darren Spicer: Own your lanes. I've done some consulting for smaller... It's funny. I say smaller now, like we're not that big at 14 stores, but for some smaller coffee brands or friends that I know that have one or two locations or three locations, and they didn't come from the Dutch Bros tree, if you will. And so they don't know what they don't know. But what's interesting is I'm like, man, if I was in that spot. I would just go study the best in class like you talked about. I would go sit outside and study that and take notes. Some of the answers to the tests are right there.

You just have to be willing to go look at it to make your own operation better and more efficient. There's nothing that kills me more than when you go to a place and you see that happen, and you're like, oh gosh, I want to coach so badly, but not my spot to do it.

[26:10] Chris Hatch: We just did a ground lease to In-N-Out here in Utah. And for the first month of them being open, there have been moments where they've had as many as 90 or 100 team members working at the same time. And it has been one of the most fascinating things just watching all of these humans because there are so many employees behind the counter. That there literally is physically not space for them to move around and navigate into their normal spots, right? Because they're two or three or four deep, and it's because they're training and kind of blitzing this store, which has been entertaining.

[26:45] Darren Spicer: Yeah, that's a wild number to have on shift at one time, which tells you that if there's that many on shift, they've got several hundred total.

[26:53] Chris Hatch: Yes, yeah. And I think for them, they send in a lot of, they call them all-stars, to kind of get a store open and running, which is kind of a fun concept. Okay, so you were at store six, you start to get a little bit more formal. What did you mean by that as you engaged with the preferred developer? How did that help Clutch and you and your partners kind of treat it more like a business or whatever? What did you mean by that?

[27:02] Darren Spicer: I think it did a couple things. Number one, it allowed our site selection process to be a much deeper dive. We had a good idea of some of the high level indicators that we were looking for in terms of traffic demographics, things that were surface level, I would say, but the developer helped us to do a deeper dive to understand traffic patterns, where are people going from or coming from and going to. Trade areas, those things that allowed us to kind have a better idea and hopefully to study our own data to say, okay, you've got six stores, five, six stores open. What are the commonalities we see there?

What do those sites look like? Knowing that they're not freestanding buildings, but like, what do they look like? And then how does that demographic overlay with areas we're targeting? It just, it challenged us to go deeper on thought, to have a few more senior professional voices. And creating a real estate committee, because real estate committee prior to that was 3 guys in the kitchen talking about it. So it allowed us to elevate our game there be more thoughtful with our site selection. I would still say we've missed on a couple where I'm like, wouldn't sign that one again, but for the most part, it's elevated us and we're starting to see it with newer stores that are opening at higher volumes that might have taken us 18 months to get to previously, which is really encouraging.

[28:55] Chris Hatch: That's fantastic. So now let's talk about what's the prototype moved to. So what have the last couple of stores looked like and what's your current engine? What are you trying to develop when you go look at a new site?

[29:09] Darren Spicer: Yeah, in terms of like what are some of the things we're thinking about?

[29:12] Chris Hatch: Yeah, what do you want to build? What's the ideal corner? What are you after? What are you trying to grow? What's your growth look like?

[29:19] Darren Spicer: Yeah, so we talked about the footprint there. I think co-tenancy matters a lot, right? I don't think our brand, while we're seven years old, we don't have a 20, 30, 40 year track record to be able to just open up in an area and say, here we are. You know, here's In-N-Out in Salt Lake, right? And everybody knows and is like, great, I'm going to be there. So I don't think we have that long of a track record to be able to do that. So I really do think we have to be mindful about where people are already traveling. Where do they have to physically go?

Right? What can you not mail in, so to speak? You can't mail in an oil change, right? Can't mail in getting your haircut, things of that nature that, say, okay, we know people are going to be traversing this area, going to the grocery store. Although I guess you can have that delivered, but typically still going there. We look at a lot of that. I think one big one for us that we've tried to really grow on is captive traffic. You can have great traffic counts, but there is such a thing as traffic going by too fast and they miss it or it's hard to slow down and turn in, making it very approachable.

People don't like hard things, right? The easier it is, the more likely they are to do it. So. Finding signalized intersections, or being close to them, allows some of that captive traffic to flow in and out. We saw that a lot actually with our second Winston location that we opened this past fall. It's on a hard corner, small lot, but hard corner with two busy streets, but no one's going by the site faster than 15 to 20 miles an hour, which is great. So yeah, those are some of the key high level things I would say.

[31:10] Chris Hatch: Interesting. Lease structure-wise, do you do 15 years, 20s? What are you doing right now?

[31:17] Darren Spicer: 20. We kind of have a template lease built, at least if we're doing it with our preferred developer; it's kind of a rinse and repeat on that. So 20 there. With that Winston one, for example, the landlord was not willing to sell, but was willing to do a build to suit for us. So we're always aiming to get 20. I think that one is 10 with two or three five-year options, but that's, yeah, typically trying to have long-term control.

[31:46] Chris Hatch: So seven years in, 14 stores is really great growth, right? And creating your own brand and carving the stone out of the hill. A lot of brands, it seems like they choose to grow via franchise growth because it is more of an accelerant for them on the growth pattern. Why did you cognizantly choose to not go that route?

[32:10] Darren Spicer: That's a fantastic million dollar question. I have an email folder that's probably 150 names long of people who have expressed interest in franchising clutch. When we initially started, our resistance to it was making sure we didn't lose control of the brand. When we bought those first two Human Bean locations, the gentleman who was the franchisee was pretty revealing with us that he didn't listen to anything that corporate told him to do or ask him to do. He kind of just did his own thing. And so we were like, okay, noted.

[32:51] Chris Hatch: Did you point out, like, man, that might've been part of your problem.

[32:56] Darren Spicer: Right. That might've been why you were doing $800 a day in sales. I don't know. So yeah, so we were initially resistant on that just for control of the brand. And then the discussion came up as we got a little bit bigger. And the biggest thing I told the team, whether this is right or wrong was if we're going to consider franchising, we cannot half-a** it. I think it is a substantial lift to prepare and create FDDs to have that, and then the franchise support. I had some mentors in my life who have owned or have franchised their own concepts and talked about experiences they went through during COVID, right?

Of like finger pointing and all I didn't get this support, I need this, my volume's down. And so there was just enough cautionary things that we just said, hey, let's just keep this tight. Let's own control now and see where it goes. I have a friend that is franchising a coffee concept in another state and I think they own four company-owned ones and they franchise like eight or nine. But it's just interesting to kind of like, I'm kind of piggybacking along for the ride to like, how's that going? What challenges are you seeing? And I think both are very plausible if you have the right team.

I think people is everything. You see 7 Brew growing the franchise route and doing it at a very aggressive velocity. So yeah, but for us it was trying to protect the brand and to make sure that we had people who were bought into what we believed in and how we want to serve people.

[34:36] Chris Hatch: Interesting. Okay, so you're in both North and South Carolina at this point. And I would assume at 14 stores between those two states, you got room for a handful more units right there in the Carolinas. And then are you starting to look at other states further expansion? What's on the docket for you?

[34:54] Darren Spicer: Yeah, we get a lot of stuff sent for Virginia, Georgia, Florida. I think for us, there's an opportunity to densify in the Carolinas. I think we've learned a little bit that if you're going to go to a totally new market, again, not having a super long brand history, kind of starting at square one, maybe square two on your brand recognition and building that awareness out of the gate. So the ramp is longer. So I do think there's a lot of infill opportunity for us around the areas we're in. So in the Triad, in Charlotte and Columbia, and Charleston, which we're really excited about. Those are the areas that I think we want to densify some more.

So never say never in terms of other areas. I mean, it could naturally easily spill over into Georgia or Virginia, but we're at least trying to be intentional about some of the white spaces still in the Carolinas.

[35:57] Chris Hatch: Do you guys have an app? And how long ago did you integrate that in?

[35:59] Darren Spicer: That was the fall of '22. So I think we're two and a half years, two and a half years into that. A few iterations as we've continued to grow. It's funny that the point of sale provider we used at the time when we wanted to develop it said, no, that's not the way of the future. People are going to use PWAs, progressive web apps, like where you would order on a URL, versus the app and I'm like, that sounds miserable. So we stayed the course with wanting to develop an app and ended up switching point of sale providers. We use Toast now and it plugs in very seamlessly.

But I think for any brand, right? Like driving people to the centralized place you want them to be because that's where you can share anything under the sun, right? They can track their points. They can see new things that are coming out every month. The banners that are on there rotate with like what we have going on right now, right? Right now we just did a collaboration with Cheerwine Soda, which is a hundred year old soda brand in the Carolinas. So showing those things and just allowing that to be the centralized place that they get their information from and allowing us to send push notifications on things that are coming is key from a marketing perspective.

[37:22] Chris Hatch: So you love it for the communication. What do you pick up analytics-wise that you look at from the app?

[37:31] Darren Spicer: Just a couple of different things. It's really interesting to see demographic wise, like we learn about what is the average age of our customers at each store, right? And what is the split of men to women, right? I find that to be interesting. And then how do we overlay that with our following on social media? How much correlation is there or not correlation in terms of, you know, 77% of your followers on Instagram or likes on Facebook are female. But your actual customer base is more like a 60-40. So just interesting to see some of that and also to learn what percent of people come by on a very consistent basis.

I very much dive in the weeds on great, we get someone that downloads the app and signed up, we give them a free drink. What are they doing in the next 30 days? How sticky are we to get them to come back or not sticky? What, like, and how can we improve? Our offering, our experience, the whole thing. So I learned a lot of that out of the app, which is helpful. And then the other big one is just constantly looking at the percentage of people who unclick the box that says allow marketing communications to see what percent of people are going to allow you to be in their back pocket versus not getting notifications.

[38:49] Chris Hatch: Yeah, that's pretty interesting. Has it taught you anything as far as where customers are coming from looking at like customer pin drops?

[38:58] Darren Spicer: Yeah, it has, but I think there's a lot more meat on the bone there, to be honest, in terms of learning more about not just that, but also where are they spending time, like in other retail spaces, right? Are these customers that go to Target a lot? Are they customers that go to Walmart? Where else do they spend time so that we can look at new areas we go into and say, okay, we know there's a correlation here. We know that customers that go here are very likely to also come to Clutch. I don't think that's a destination. I think that's a journey of continuing to learn about where people are at and what their behaviors are. It's a fascinating arm of everything to kind of study.

[39:40] Chris Hatch: So you didn't go the traditional route of going to an Ivy League business school or Stanford or something like that and go get an MBA. And you've gotten your MBA in the shop, right? In the kitchen. How's that been?

[39:57] Darren Spicer: Love that you said that because I've joked with my wife over the years. Like, you could pay a lot of money to get an MBA and get a great education. I went to the University of Oregon, so I'm a duck. But the real life experience you get, not just in terms of how things work, but like you got to go out and like you got to go make mistakes and you got to learn from those. And then you got to rebound from them. And then how is your mettle tested when crazy things happen, like how stable can you be? How can you continue to lead?

I very much think this chapter of my life, starting Clutch and growing it, will serve as a great foundation for things I take on in the future. And a lot of things that I've actually been able to already do to help others, right? In terms of not just consulting, but like I have a friend that has a chain of gyms and he has five locations and he's talking about growing, but he's like they want me to sign a personal guarantee. I'm like, let me talk to you about some strategies of how to avoid a personal guarantee. Let's put up some more security deposit and avoid these things.

So those are just really fun things that I think will allow me to help others. And that just feeds right back into what I'm passionate about in the first place, which is people. And that's part of why we started Clutch.

[41:20] Chris Hatch: In a typical location, do you have a couple of GMs per location? Two, three?

[41:27] Darren Spicer: Each location has a store manager and an assistant manager. If they get to a certain volume, we might have two assistants, but every store has a store manager and an assistant. And then the ratio that we try to stick pretty religiously to is five stores under a regional manager. We still want them to be on a first-name basis with employees and have an idea of your actual crews at those stores. So that's kind of the structure we have right now.

[41:55] Chris Hatch: What does turnover look like for you?

[41:58] Darren Spicer: It's a hot topic. I think because of the demographic, like we're typically pretty young, right? This is starting at or close to minimum wage, depending on experience. So where we've found success, I think is finding people who are going to be in school for a couple more years, whether it's in high school, whether it's in college and able to stay with you for a few years and then grow. And we've seen cool stories where they graduate college and they're like, I thought I wanted to go do this, but I'm having so much fun here. Are there opportunities for me to grow? And those have happened, which is exciting.

So those are the success stories. You also by nature of having to be minimum wage or close to that, you're going to have inherent turnover. One of our board members owns 25 Five Guys and we were comparing turnover and their turnover was astronomically higher than ours. But it's still a real thing. I mean, you're constantly hiring. So.

[43:01] Chris Hatch: Yeah. You know, it's so funny, as an entrepreneur, how many different things that folks like you have to handle, right? I i mean, you just went through marketing, but you didn't just go through marketing. It was tech, developing an app, figuring out how to integrate with customers, figuring out how to offer to customers, what the data means and then you skip right into the next subject and it's turnover and operations. How often and how much training probably goes in your world, right? I mean, it's just wild, all the different things.

[43:28] Darren Spicer: You touch everything. And I think it makes you more well-rounded. I would even tell you that a weakness of mine when we started, I wasn't the operations guy; one of our other partners was the main operations guy, that may not have been my strength to begin with, but it sure as hell is now in terms of this is the game plan, here's how we're going to follow this, and here's our expectations. And we need great execution. And so, and finding ways to share that with the team, not just to enforce, but how do you motivate and inspire and get people to buy in and say, I'm on the same page and I want to go do this versus, you see a lot with some business leaders who don't understand the cultural aspect and just kind of talk at people or talk down to them versus having a relationship.

I've experienced more different buckets than I would ever have imagined. Getting sued by a landlord? That's cool. Okay. What does that look like? How do we, how do we navigate this? So you learn a lot about a lot of different disciplines.

[44:42] Chris Hatch: Now that you're a little bit bigger store grouping, I would imagine you're starting to find some better buying efficiencies?

[44:50] Darren Spicer: Yes, for sure on that and not just from our own volume, but then like we vertically integrated and created our own energy drink, which cut our cost of goods in half, which was great. But now we have other smaller brands, not just in coffee, but also outside of coffee that are looking for an alternative to Red Bull as an example. And we have a product that we think is actually superior in flavor to that, especially when you think about adding in fruit flavors to that and infusing it, which is how we serve it. So now we have people that are buying the energy drinks additionally, which helps increase our buying power beyond that, and creates a new revenue stream for us, which is kind of cool.

So yeah, we're starting to get a little bit of scale. We know we're low on the totem pole, right? We have some of the same vendors in the coffee space as other brands that have 200 stores or 1000 stores. So we have good self-awareness, but we're starting to see a little bit of opportunity on the scaling aspect.

[45:55] Chris Hatch: What is it like to brand your own energy drink?

[45:59] Darren Spicer: I had a blast doing that to be honest with you. Again, I nerd out more on the marketing side than most might, but it's called BDE, Big Drink Energy.

[46:10] Chris Hatch: We're going to need to send a case of those over here. We got to check that out.

[46:16] Darren Spicer: I got you. Got you. So yeah, and like our demographic is relatively young and we have a fractional chief marketing officer who, ironically, spent a decade at Red Bull and Coke before she started her own agency. And I just told her, I'm like, hey, look, let's create, let's have some fun with this. And there's no pressure on the brand because the number one goal we're achieving is cutting our own costs internally and creating a product that people enjoy and like, which they do because it's 20% of our product mix now. And if a brand happens to take off, awesome, but that's gravy. There's no pressure on it at all.

So yeah, we had some fun with that and yeah, I'll get you some to try, but I had a good time with that and we'll see where that goes. I think the sky's the limit on that as well.

[47:07] Chris Hatch: Amazing. So I have this vision of like you and your partners wearing lab coats in a kitchen, trying out various energy drinks. So what is this like? Lay it out for us. What does it look like? Do you go to a kitchen?

[47:20] Darren Spicer: So what's funny about this, since you're based in Salt Lake, is I actually went to a flavor lab in Salt Lake to do this. So we went to, got connected to a flavor lab there and basically said, hey, here's what we're using now. We would like to create a better for you product. We would like it to taste a certain way, but also be balanced and allow for a flavor to be infused, right? So it has to be able to be RTD, ready to drink.

[47:26] Chris Hatch: Well, there you go.

[47:49] Darren Spicer: But it can also have a complementary flavor. And so I think that's where it becomes more scientific than my knowledge base. And so it was a lot of iterations. Like the biggest roadkill on that was a batch we thought we had landed the recipe on, they ran it and it wasn't. And it's like, cool. So what are we going to do with this? So we wholesaled it out and I think it's in, there's a grocery chain called Menards. I think you can find it at Menards right now. So that was a batch that just didn't meet our, it still tastes great, but it didn't meet our expectations for what we were going to do for our customers.

So, you learn a little bit there, but then we got to a spot where it's like, all right, now we think we have an iteration that's pretty much nailed. So you just kind of have to go through the process.

[48:43] Chris Hatch: So the product was good on its own, it's just when you infused it wasn't what you were looking for.

[48:48] Darren Spicer: It had an aftertaste that I would not sign off on. The one that didn't cut it had an aftertaste that had more of that like, not even vitamin, but it's just kind of that it just, some energy drinks have it, some don't. And I'm like, we need people to adopt this in masses for us. Can't like, we got to do this right. So yeah, that was a 50,000 can lesson, but it helped get us to where we're at now.

[49:15] Chris Hatch: We have a lot of younger listeners that like to listen in on the pod. A lot of these folks are newer to retailing or commercial real estate in general. If you were talking to the 20 year old version of yourself, what would you tell 20 year old Darren?

[49:31] Darren Spicer: 20 years old, so I'd be a sophomore, junior in college. I think I would tell my 20 year old self to not just get by on talent alone. Talent is one thing, but work ethic and hard work many times and often times will trump any talent. And if somehow you can combine the two of those to have talent and have an incredible work ethic and discipline and follow through, the sky's the limit. Don't get by just on talent, but actually apply yourself and put everything you have into whatever you're doing.

[50:10] Chris Hatch: Tell us about a big mistake you've made and then more importantly what you learned from it, right? I think often when people do these podcasts, they talk about everything that's great and everything that's wonderful. Tell us something that's terrible.

[50:27] Darren Spicer: Yeah, I would say making the assumption that friends will automatically make great business partners. Sometimes that works, but I think it's a failed assumption to say, well, we get along great here. So it must work here. Right. You find out what people are made of and what they're composed of when you face tougher times or when you don't see eye to eye. And for us, my two co-founders are incredible people, right? We all had these complementary skill sets and that will never change. Clutch wouldn't be here without the three of us combining forces. But then as things grow and mature, if you're not on the same wavelength in terms of growth mindset, in terms of what's your risk profile, right?

And those types of things, it can change. If you don't keep those things in mind in terms of risk profile and your appetite for growth, if you're not aligned on those things out of the gate, it can make things a lot tougher. So if you're going into business with a friend or someone close, don't be afraid to ask the tough questions and the scenarios upfront so that you have an idea where things might go. Because if you're not aligned, it's a lot harder to figure that out midstream than it is to say, okay, we're on the same page with where we want to go, how much we want to grow all of those things. So, that was a pretty big lesson for me.

[52:17] Chris Hatch: Yeah. Thank you for sharing that. Well, seven years in, 14 stores, room for more growth in the state you're operating in. You got your own branded energy drink BDE. Love that. Yeah. Love that. You got big things ahead. I you've got to be doing something right. You've gotten to 14 stores and you're still running and you've kept your marriage together. Good for you. That's good. That's key. That's amazing.

[52:32] Darren Spicer: Thank you. She's the MVP of that. Yeah, no, I think I appreciate the kind words. I think it really comes down to people and creating the right culture that people want to be there, are bought into the growth. If we hadn't laid the foundation the right way, that's where I think a lot of businesses maybe falter a little bit out of the gate, right? The idea or the concept is great, but if you have poor execution or poor people on there, it's just going to be tough to pull it together. So all the credit in the world goes to the team. We have some senior leaders that have been with us for five years plus, which is amazing.

And then, yeah, if she ever listens to this, I got to give credit to my wife because she was the breadwinner holding down the fort when I told her that I wanted to start a coffee company and take an 80% pay cut.

[53:37] Chris Hatch: Yeah. As we wrap up here, for the listeners that are listening that haven't been to a Clutch, obviously they need to try the Caramel Macchiato. Anything else you'd recommend for them to try? for any first-time customers out there?

[53:54] Darren Spicer: Yeah, if you're into health, if you're health conscious, the Muscle Mocha is just pretty unique. And if I didn't tell you that it that a medium had 19 grams of protein and three grams of sugar, you would honestly think it tastes just like an iced mocha. The flavor profile is that great. So that's one for sure that I think is a can't miss. And then I'm clearly biased on the energy. We've got one called the Electric Stardust, which is pretty awesome, which is a strawberry peach and white chocolate energy. Sounds weird with white chocolate and energy, but it works. And I think those are a couple of our top sellers.

[54:32] Chris Hatch: There you go. If you haven't been to a Clutch, go check it out. Darren Spicer, thanks for joining us on the Dirt Dog Pod.