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Wednesday February 24, 2021
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Michael McFall

Coffee Rebound

Michael McFall thought he would spend 2020 celebrating Biggby Coffee's twenty-fifth anniversary.

by Micheline Maynard

From the January, 2021 issue

The coffee chain, then called Beaner's, launched with a single store on Grand River Avenue in East Lansing that was once an Arby's outlet. McFall joined in 1996 as a barista and became a partner in 1997.

In its first quarter-century, Biggby, which was rebranded in 2007, grew to 235 locations in eleven states. McFall, now its chief executive, hoped to add fifty more during its milestone year.

Instead, things ground to a halt for McFall, forty-eight, who lives in Ann Arbor and works out of an office at Liberty and Fourth Ave. (The company remains headquartered in East Lansing.)

There were days in March and April that he'd go out for downtown walks and run into no one.

"It was wild to be down here," he remembers.

During the early spring stay-at-home orders in the Midwest, thirty-six of Biggby's stores were closed, unable to sell even carryout coffees. Revenue plummeted by 40 percent.

But by Mother's Day, most of the company's franchises had reopened. While it lost eleven stores permanently, it opened nineteen new ones, winding up the year at 243. And despite the temporary halt at some locations, sales also rose. Through mid-December, Biggby's had recorded $145 million in year-to-date revenue, compared with $141 million for all of 2019.

"It's been a long twenty-five years," he says, "but things are really good."

McFall expects Biggby will open at least thirty more stores in the coming year and credits the rebound to two things. First, a Biggby is an inexpensive proposition as franchises go: the fee is $20,000, and franchisees can expect to spend another $250,000 building out their shops.

"The investment is relatively low, and the margin on a cup of coffee is very good," McFall says.

And despite the pandemic, customers kept showing up. "Coffee was something to give them a little slice of normal," McFall says. "They could drive home in their car with the latte sitting there as usual."

McFall, a Kalamazoo College grad who lives on

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the western edge of Ann Arbor with his wife Elizaveta and four children, was glad to see activity downtown pick up after the first wave of the pandemic passed.

Their favorite restaurants include Cafe Zola, where his wife worked as a teenager, and the Black Pearl on date nights. The kids, meanwhile, often cajole their parents into getting takeout from Slurping Turtle.

Despite his love for Ann Arbor, Biggby's four stores in the area face serious competition.

"Ann Arbor is tough for us. There's a lot of really, really good coffee in Ann Arbor," McFall says.

Biggby keeps the footprint of its stores deliberately small. Conventional ones have a counter where customers order drinks and pastries and a few seats, but some of its busiest locations are those with drive-thru service, which has become a major focus.

That drive-thru emphasis, and preference for smaller spaces, is why Biggby isn't interested in the empty Espresso Royale stores, McFall says. Back when Caribou Coffee closed twenty-two locations in metropolitan Detroit, Biggby's took only one, with size again an obstacle.

McFall says Biggby has developed a close relationship with its 180 owners. During March and April, it held daily online calls to share ideas for dealing with Covid. The plexiglass shields that Biggby installed in its stores were designed by a franchise owner in Owosso.

Last year, McFall outlined his management philosophy in a book, Grind: A No-Bullshit Approach to Take Your Business from Concept to Cash Flow. One aspect is looking after employees. Biggby has three full-time and two part-time "personal growth coaches" on staff, who meet with workers to learn their aspirations and advise them on ways to achieve them.

"We believe in individuals pursuing a life they love, not a life that someone else prescribes for them," McFall says. Even if that results in employees seeking other careers, he says, that's okay.

If people were satisfied with their time at the company, he says, "One, they remain loyal to Biggby. And two, they think of Biggby as an amazing company."     (end of article)

[Originally published in January, 2021.]

 


 
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