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Sunday, June 23, 2024

Coming through in the Clutch

Darren Spicer

Clutch Coffee CEO Darren Spicer is betting that coffee drinkers will prefer a drive-thru experience that lasts no more than a minute to pull them away from a Starbucks or Dunkin’ Donuts.

The Mooresville-based company, founded in 2018, has seven locations in North Carolina and South Carolina. But it’s seeking investors in Series A funding that will drive growth and lead to 20 stores and $20 million in revenue by the end of 2024. Spicer also hopes the company will swing to a positive EBITDA before the end of next year.

Spicer says the company will expand in Charlotte and Winston-Salem, while he’s also looking for locations in Columbia and Greenville in South Carolina. He’d like to eventually add three to five locations in the Raleigh-Durham market.

“Drive-thru coffee in the Northwest is literally on every other corner,” says Spicer, who grew up in Oregon. “It’s not as prevalent on the East Coast.”

About two-thirds of Americans drink at least one coffee a day, according to the National Coffee Association. In North Carolina, the most popular coffee drink is an Americano, according to Coffee Affection. There are 422 Starbucks and 210 Dunkin locations in the state.

While many of those locations also have drive-thru windows, Spicer says Clutch Coffee is betting on faster customer service and building relationships. At most drive-thru locations, the customer orders at a speaker box and video board and then waits in line until they get to the window. But Clutch Coffee locations hire runners who work the line, taking orders. And the person at the window works on developing a relationship with the customer, hoping that they remember the service and return. “We want to have an authentic relationship,” says Spicer. “That’s the model for us.”

Clutch Coffee’s time between orders being delivered is 1 minute and 4 seconds. Spicer would like to trim that number to a minute or less.

Ken Bernhardt, a retired marketing professor at Georgia State University and retail consultant, likes the strategy. “Coffee is a high-margin business. Success of course will depend on being able to execute the people first strategy,” he says. “The people strategy is hard to execute, but when done right is an important differentiator.”

Coffee addiction hit Spicer early. He was a barista when he was 17 and later managed a Dutch Bros. Coffee location in California. “What I loved about it, and still love to this day, is the relationship aspect of it,” says Spicer. “We have a small window of time to have a positive impact on the customer.”

He gave up a medical sales position to start Clutch Coffee, picking North Carolina over Nashville and opening in two renovated Human Bean locations in 2018. His favorite drink at Clutch is an iced muscle mocha, a combination espresso and protein shake over ice. The locations also serve smoothies, energy drinks, juices, teas and shakes.

All locations are company-owned and generate an average of $1.1 million to $1.2 million in annual revenue, with the top location recording more than $1.5 million in revenue. Acquiring the land and building a location costs between $1.2 million and $1.4 million.

“If we can have stores that are paying for themselves in less than two years, that’s our general approach,” says Spicer. “If they can pay off in less, that’s great.”

Spicer owns about a third of the company. A family office investor bought out a former co-founder last year and has committed to investing $2.5 million in the Series A funding, which Spicer said could raise as much as $10 million. “We’re definitely having a lot of conversations now.”.

Chris Roush
Chris Roush
Chris Roush is executive editor of Business North Carolina. He can be reached at croush@businessnc.com.

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