The Koerner Office - Business Ideas and Deep Dives with Chris Koerner - How to Start a Profitable Coffee/Restaurant Business. #051

Episode Date: August 12, 2024

I sat down with Mark Janasik, the founder of Southern Grounds, (https://www.southerngrounds.com/franchise) a chef-driven coffee house in Florida. Mark shares how he bootstrapped his business from the ground up, merging high-quality coffee with a sustainable food menu. Despite the challenges, he's built a multi-million dollar coffee-restaurant brand. We discuss starting without investors, maximizing space, and innovative ways to reduce waste in the industry. Timestamps below. Enjoy!---Watch this on YouTube instead here: tkopod.co/p-ytAsk me a question on or off the show here: http://tkopod.co/p-askLearn more about me: http://tkopod.co/p-cjkLearn about my company: http://tkopod.co/p-cofFollow me on Twitter here: http://tkopod.co/p-xFree weekly business ideas newsletter: http://tkopod.co/p-nlShare this podcast: http://tkopod.co/p-allScrape small business data: http://tkopod.co/p-os---01:37 Interview with Mark: Background and Vision02:23 Creating a Community-Focused Coffee Experience06:04 Challenges and Successes in the Coffee Business10:08 Sustainable Practices and Supply Chain Innovations11:59 Navigating the Economics of Opening a Coffee Shop16:44 Customer Acquisition and Hospitality Focus18:40 Random Acts of Kindness19:03 Restaurant Margins and Costs20:36 Hiring Talent and Lessons Learned21:12 Advice for Aspiring Entrepreneurs24:09 Opportunities in the Restaurant Space26:35 Sustainable Business Ideas32:58 Franchising and Expansion Plans36:20 Conclusion and Contact Information

Yeah, it could even be a startup that helps enable that, right? They sell you a keypad and cameras and you install them and you could use your coffee shop or restaurant as like a coworking space from four to ten. And you don't even really need to staff it because you got to get vetted to get a membership. Maybe it's just a monthly fee and you just swipe your card. They know you're in there. There's a camera watching you. They know you're not going to steal stuff or, you know, turnover tables.

And that would be almost pure profit. Okay, welcome to the Kerner office. Today I interviewed the owner of Southern Grounds, and that is a small chain of a restaurant slash coffee concept in Florida. And they're doing something really unique in that they're succeeding on the restaurant side of the business and they're succeeding on the coffee side of the business. Whereas usually the traditional wisdom says, pick one. You can only do one thing really well.

Is it coffee or is it food? And he's doing both really well. And I thought that was an interesting case study. Furthermore, we talked a lot about business ideas that he's seeing in the space around the restaurant and coffee industry. that's kind of near the end of the episode, half through second or third of the episode. I think you'll really like that part because he has some good ideas

from the perspective of a restaurant slash coffee owner, what you might be able to sell someone like him because if you think about it, there are more restaurants than any other type of small business in the United States. I could be wrong there. There's about 200,000 gas stations, and I think there's four or 500,000 restaurants. And so there's a zillion business opportunities

around selling to restaurant owners. Yes, even though they're not very profitable. Yes, even though they have a high failure rate, there's still a lot of businesses you can build there. So look forward to that part and let me know what you think. Well, Mark, how do you pronounce your last name? It's Janisik. Janisic.

What nationality is that? It's Czechoslovakian. My dad was from Prague. So it's a little bit of European lineage in that. It's funny because I lived in Budapest for two years. And some people call Prague, the Paris of Eastern Europe. Some people call Budapest, the Paris of Eastern Europe. It's such a beautiful city.

for sure. European cities have a lot of years on us, so it's been incredible. Yes. Okay. So tell me where you live and what you do. Let's just get started. I'm the founder of Southern Ground, chef-driven coffee house, coffee house that puts sustainable cooking at the forefront of its brand concept. I live in Jacksonville, Florida, and we started the concept about nine years ago. We believe that a great cup of coffee kind of connects people, starts conversation and creates community. and we wanted the coffee experience to be a little different than the national change that you are familiar with. And we didn't want it transactional. We wanted to be a gathering place.

And we created a concept around community and a relaxing environment with a seasonal food menu. When you first had this idea, or let me back up, what first kind of sprouted this idea in your head? I was born overseas, born in Singapore, lived my childhood in Athens, Greece. And I grew up in a home environment where food was tremendously important. And firsthand, I witnessed how hospitality created joy and memories. And I think that upbringing defined me, at least in my culinary career, I always thought what is greater than kind of being in a profession that brings joy to others and makes people happy. On top of that, I felt kind of the coffee experience was lacking something, at least from

what I saw in America, and it was mostly transactional drive-thrus and quick kind of Java experience, caffeine experience, and you didn't have a kind of welcoming environment. I wanted to create a business that would change how the morning coffee experience was delivered. I wanted a modern coffee house pairing a sustainable chef-driven menu and impeccably grown coffee, roasted coffee, sourced coffee, and I wanted a direct trade with the farmer, so the quality of the beans was better. In the beginning, we didn't know much about coffee, but we were educated by intelligentsia in Chicago, who's the pioneer of the direct trade movement and forever grateful for all the resource and intelligence that they gave us in our start.

I'm sure you've read all of Howard Schultz's books, and you're familiar with how Starbucks got their start. From what I understand, he kind of wanted there to be a, what did he call it, like a third home or a third place, like he saw in Italy, but they didn't have a. Do you think that's similar to your founding story, but he just took it in a different direction, like a more corporate direction, whereas you're keeping it actually more true to your original desires? I think Starbucks, we got to give a lot of credit to what they did. He went to Italy. He sourced the cafe environment and brought it stateside, and he created this home away from home. What makes southern grounds different from other coffee shops, not only do we have the sustainable food program, we have

a chef, but we have an array of products that conscious consumers can reach that go beyond the cup. So our brand thrives, I think, on providing healthy food offerings while building up community in a non-transactional environment. Starbucks at least started the conversation where the barista could talk about the coffee bean and the quality of the coffee as a chef would, his sustainable food program. So it allowed the consumer to touch something differently. I think we're in a different wave of coffee while the first wave was maybe Folgers out of a cup. second wave was more social conscious, third wave was a pursuit of better quality. Kind of the fourth wave of coffee is going beyond that.

It seems like one way you've gone beyond that is by expanding the seating area and really making it more of a restaurant. Have you had to struggle with that? Do we focus on the food? Do we focus on the coffee? How do we focus on both? What would be known for coffee or would we be known for food? Has it taken on a life of its own or has it gone along the plan that you envision

originally? I think originally when we studied coffee houses, we've traveled a lot. And what we were hearing was that the quality was missing in the coffee component. We noticed, I think, the consumer base of coffee was growing, but there was this kind of missing component of sustainability. And then consumers wanted organic, consumers wanted to know where their coffee came from. Consumers wanted to know if it was single origin. Consumers wanted to know the altitude it grew at and so forth. So I think that consumers were demanding a little more out of their coffee shop. Then what we heard is that you could have a great coffee shop, but no food program. So consumers wanted to have a place where they could have a healthy meal. We just took that from our chef's background. We took that

and created chef's driven kitchens. Here's kind of a random question, but let's say, in a hypothetical scenario, your landlord came to you at one of your locations and said, Mark, I've got someone that wants to come in right next door to your business. It's either Starbucks or it's either a high-quality new American restaurant. Which would you prefer? Which would you rather compete against, quote, compete against right next door to you? So I think we're in a unique spot. I think if a restaurateur, I consider both those in that category, are bringing a concept to the neighborhood that elevates the dining scene and the customer base, then we can all play in the same space. Typically better restaurants attract better restaurants and more consumers to that area.

So I think there's almost a regentrification of that neighborhood. So I would welcome them both to come next to us. We're different with what we offer. So I think we're just outside of competition against a coffee house. And then we're also out of competition of a full service restaurant. So when you first started your first location, did you get a lot of pushback from friends and family? Not that you really cared, but, you know, everyone thinks they're a genius because they know the restaurant failure rate. And I'm sure a zillion people tried to talk you out of that. How did you manage that or did you whatsoever?

Great question. And I think you've hit the nail on the head. we've had certainly some anxiety with our investors that said, hey, I don't believe this concept will work. And those investors actually pulled out of the concept. So we had a tough conversation among the family and said, hey, do we believe in the concept? Do you think you can marry a chef-driven kitchen with the barista bar as the focal point of a concept,

which hasn't been done successfully? And we believe that experience was missing in the restaurant landscape. Okay. So the original investors pulled out of your first location, right? Correct. How did you replace them? What was the backup plan? We actually didn't replace them. We took the gamble and took the risk ourselves. So it was a decision that we believed strongly that our concept had merit. Was there ever a conversation with them afterwards when it came time to open, you know, your second or third location? They call all the time. I don't know if you're anything like me, but I love that.

Like I have more supporters than haters, so to speak, but I'm grateful for the supporters, but I don't think of them, right? Like the haters I keep right here on my shoulder and they're always in my ear. And like those are the guys that I think to every day. Does that drive you at all? It might not be politically correct, but I mean, honestly. I think we're driven by our own ambitions to do something that we think is right and thing, something that's missing from the landscape, you know. Like I said, there's so many things

different from Southern Ground. So if you try to pick one point, I don't know if you can, but we disrupted traditional purchasing chain or the standard supply chain for coffee houses by reducing plastic consumption by 50%. A lot of people are doing it now. But way back when people weren't saying, hey, how can I spend more money on paper goods in the restaurant because it was so, socially important decision, but we wanted the whole brand to move in that direction. There was not too many people saying, how can I spend more money on organic proteins or sustainable proteins and not pass that on to the consumer? I would think it's hard to have your cake and eat it too, right?

Like a higher quality protein without passing the cost onto the consumer. How do you make that possible? Are you beating up the vendor a little more or skipping out middlemen? What does that look like? A little bit of both. As we grew and our purchasing power with our supplier or broadliner increased, we could negotiate stronger deals. But how I circumvented the whole kind of process, I used our broadliner Cisco as the distribution

mechanism for our food. And I created my own relationships with the farmer and negotiated the price. with them and then had the markup with Cisco. So we went backwards in terms of our contract negotiation. Typically, it doesn't work like that for a small restaurant tour. I had a background in the restaurant business running multi-units. So I understood how the game was played. Does that look like you basically putting in the legwork and sourcing your own salmon

and then going to Cisco and saying, Cisco, you don't carry the salmon, but I need you to carry it. Here it is. Can you distribute this for me? Correct. Absolutely right. So back to restaurant number one. What did the economics look like to open that? What did it cost to open versus what did you budget for it?

And what year was this? How did COVID play into it, if any? This was so nine years ago, 2015. Smaller store. I think the general questions on store economics, it depends on the square footage. I think the unique thing about us is, and it plays into how we were successful through COVID. But I think one of the unique things about the brand is we said, we are okay as restaurant operators,

operating in the state of Florida with 85, 90 percent patio space and small interior restaurant locations. So what it did for us is reduced capital costs, reduced running costs for the business, utility costs, so forth, furniture costs. Everything else was driven outside. So what were your costs to open? First store. We were just north of 350,000. What did you budget? 350,000.

That's all we had. Yeah. It's interesting when there's no plan B. You just have to make it work. You know, obviously March 2020 was a challenge. And government regulations changed the industry on how many people can sit inside and stuff. Indoor dining became a challenge. All our locations thereafter were designed with outs.

outdoor seating in mind. So we had not only this beginning pursuit of wellness for our community through our food program and great sustainable supply chain, but we had our mission to nourish, nurture and inspire healthy communities by this lifestyle brand was enhanced by having the patios. So we doubled down on this outdoor kind of component. So every one of our spots, as they grow and as they're continuing to expand has a major patio component to it. Yeah, I'm sure that was just perfect for COVID. I'm glad we went with this. And we did this to save money, but now we're doing this to save lives.

Now we think this is a viable model ongoing. And obviously, a restaurateur spends too much money up front on the capital asset. There's no way for them to, one, repay their capital or two, make a profit. You're putting too much demand. some sacrifice. So if your rent structure is too high, if your capital costs or you have bank loans, we were fortunate. We did not take a bank loan and have no debt as of now. So with the patio concept, I know I'm getting ahead of myself a little bit. I'm like building up all these questions for you as you talk, but you're getting starting into franchising. Let's say a potential franchisee wanted

to open a location in Minneapolis. How do you manage that with having 80% outdoor seating? But I think people enjoy sitting outside even in the wintertime. Have you had time to look back and reflect on that first location? Because I opened a retail business in college. And I had to sign a personal guarantee on a five-year lease on a space that had been vacant for years. I didn't know what I was doing. And looking back, I'm just like, wow, if I didn't have that landlord and that broker and this guy come together, that guy gave me 10 grand. Like if one of those seven things don't come together, we don't open.

Holy crap. I don't know how I made that work. Because I'm thinking about you. You had to bring this brand new concept to a developer in an ideal location. He probably has people beating down his door to put something there. And he decides to go with you. Can you talk a little bit more about that? Like, was he just a good guy?

Did you really have to sell him on the vision? Because a lot of developers, like, they don't care about your vision, right? They've got to perform it to me. In this particular case, the developer was looking for maybe something different. a luxury amenity and was not going for the national triple A plus prime tenant. And that was not a requirement. Now, you know, there is some developers that have bank loans and bank ratios to contend with this person did not.

And we are forever grateful that he understood what we were trying to create. And in our city, we were trying to create something different that we were inspired with from our travels. So we saw coffee houses of similar ilk throughout our travels to Europe, Central America, as well as the West Coast, which is the epicenter of coffee in America. And we said maybe we can do it differently. He liked the idea. It was a very small space in a multi-tenant building. So he appreciated, I think, the innovation and the young entrepreneur. How do you acquire customers outside of finding a really good location because in my experience, if your location is good enough, then you don't really need to

worry about that so much. Is that the case for you? Are you doing social media and all those other things pretty heavily? So we do have all those channels now. However, in the beginning, we didn't do anything and we still have not done any advertising per se. That is formal or paid for advertising. We still believe today that while word of mouth may be the slowest avenue to customer acquisition, it's the best and certainly the most robust in terms of keeping those customers. Now, your food has to be good. The delivery has to be good. The hospitality has to be good in the overall experience.

But we are a hospitality company first and then we offer a great product. Yeah, I love the phrase, that which is easily gained is easily lost. You could do direct mailers to the neighborhood and say free appetizer at Southern Grounds. And they're probably not going to ever come back. if they come at all. Whereas if you just put your location somewhere perfect, somewhere that just fits the clientele and the area and the climate, and that's not easy to do.

You can't put a location just anywhere, I assume, like Starbucks might be able to. But like that difficulty on the front end, I imagine will bring you more long-term loyal customers. So I think hospitality is how you make someone feel. Our entire training program and onboarding program is to teach our people that the, kindness that we extend to a guest is our trademark. I like that. The kindness we extend to our

guests is our trademark. I like that a lot. And it's hard to replicate like a trademark. It is hard to replicate, yes. It's easily lost if you don't focus on it every day, but that's what we focus on every single day. Random acts of kindness that we can now take to the community. I like that. My family and I, we do, we call it RAC, R-A-K. Every Christmas, we'll go do random acts of kindness. And it's a little awkward walking up to a stranger in a grocery store parking lot and giving them a candy cane. And they think you're trying to poison them, poison them. But it's, we're trying to teach our kids something. But we do the same thing. I think if you can be anything in the world, you should be kind. Yeah. I like that. When you look at your restaurant compared to a comparable

category, how do your margins look like? Are your food costs higher than average on a percentage basis, your labor costs? Or are you right in the average territory or what? I think that's a great question. So we don't have a category since we have this hybrid model of food and coffee in an environment. Now, if you look at some of the national change that are in the breakfast category, they don't have a robust barista bar, where they're making 40% of their revenue mixes as espresso-based drinks. We are 40% espresso-based drinks, coffee, and anything out of the Reast-to-par, 50 to 60% food program. Gross margins for us is revenue minus food cost, beverage costs, and direct labor cost. So we try to have a goal in all our stores of a GP of 40%,

which is incredibly high for the market. Net margin obviously varies based on factors that are specific to location, i.e. rent utility costs, insurance. My goal. there is 15 to 20%. How does your margin compare on your coffee versus food? So our food program, cost of goods on that, 30, 35 percent because we have the highest specialty coffee that we can buy that single origin direct trade. And we have a seasonal coffee house by intelligentsia, or anywhere between 12 and 15 percent on that. If you could go back and start that first restaurant over again, what do you think you would do differently about it based on what you know today? I think what drives the business is talent. So we would hire talent quicker than handling all the

burdens ourselves. But because we're bootstrapping this thing and we bootstrapped it to now over 10 million, we're in a different position. So probably the answer is nothing because those hard lessons has taught us how to be a better entrepreneur. And we understand the struggle and through the struggle, we have become super obsessed on our business. So this is two questions and one. Let's say a younger entrepreneur comes to you and says, I want to start a restaurant, not what you're doing, but a proper restaurant. How would your advice to him differ from someone that comes to you and says,

I want to start a coffee shop? Would you give him a hard dose of reality? Would you encourage them? How would that look between both of those two different questions? For me, the answer is the same. I would follow your dreams. My dad says, find something you love and you'll never work a day in your life. And I take that lesson to heart.

I truly love what we're doing. I truly love the hospitality we're giving, the opportunities we're giving, and the communities we're in. So I would just say follow your passion. What advice would you give them more tactically about how to open with regards to location or anything like that costs? So the entrepreneurs. left on their own. They have to find their own information. They have to be, have

initiation to discovery. They have to be open to failure. They have to learn how to handle stress. So all these intangible soft qualities. So there's tangential kind of businesses associated with being a general operator in a restaurant. You have to learn about, say, merchant services. You have to learn about contract negotiation. You have to learn about lease negotiation. I would hire experts in those fields immediately, at least is on a consulting basis to get educated so you don't make a huge mistake. You shared with me when your college days, you signed a personal guarantee, right? And those things are scary. So, and I don't know if young entrepreneurs know what that is. And I don't know if they know the liabilities how that

could affect them. So I would always surround yourself with good counsel in legal. in real estate as well as contract law. And I think in a lot of cases, if we just do a little brain exercise, we have people in our friends and family circle that have that expertise that are willing to help us for free even. For instance, in my example of a personal guarantee, I used a broker for this base. And I remember him telling me, like, you're going to have to sign a five-year lease.

That's just standard, right? And this place had been empty for years. And you're going to have to sign a personal guarantee. Like, everyone has half a dozen real estate friends. I could have just picked up the phone and said, hey, what do you think about this? And they're like, wait, what? It's been empty? No, no, no, no, no.

Six-month lease, option to extend. No personal guarantee. Like, I know you're new at this, but you know what I'm saying? Like, just a simple phone call to a friend or family member can make all the difference. Absolutely. Sometimes we need to ask for help, right? We don't know everything. And I think the more resources we can get to help us in our vision.

People want to help people in our opinion. I agree. I think the biggest deterrent to that is just our ego. and our pride, you know, thinking we can do it ourselves. Back to the young entrepreneur example. I did email you this beforehand, but are you seeing any opportunities in this space that you're too focused on to capitalize on? Maybe in coffee, maybe in restaurant, maybe in software around coffee or restaurants,

maybe in the supply chain. So tangential businesses to the core restaurant business, I think there are a few. I mean, we touched on a little bit. I think merchant services, I think that's a huge category. So these POS providers provide an all. one in all is kind of step. But I think, and that's how we do it, we currently purchase the merchant services through our POS provider. But if someone could create, I think, a less expensive alternative to take credit card fees and reduce the fees to a small business under, say, call $3 million in revenue, that would be incredible.

And I think ignite kind of entrepreneurial spirit. I think another difficult task surrounding just startup is supply chain negotiation. So I think if there could be almost a training center or maybe a tutorial program that would teach contract negotiation in food supply or contract negotiation in commodities, coffee being one of them, and understand the liabilities that you have if you try to be too risky in that approach. Could that help the young entrepreneur? I think that's where a lot of people get involved and open up their wrists because they don't know what they're doing. And then they're almost loaded with debt, at least to the vendor, they don't have good margins. Street accounts from normal broadliners are 15% while the national chain is 3.5%. What's a broadliner?

Like Cisco, one of these big distribution companies. U.S. foods. U.S. foods, PFG, all those kind of things. So we had once again well-wishers, and we believe the universe conspires to help you, but we had well-wishers that taught us all these things. And I had a history of being on procurement councils for my old multi-tenancy job, and I understood that portion of it. But I didn't understand real estate.

So I had a very kind developer that taught us that in the beginning and says, look out for these certain things. Why CPI is even important? Why is that even a clause in the contract? What does CPI increase me? mean, so forth. So that could be an opportunity. I think so the restaurant business has a lot of waste. I'll just talk in the coffee business. We go through about thousand pounds of coffee a week in all our kind of shops. And could someone repurpose the spent grounds in our coffee and not just

somebody try to pick up 50 pounds, but a coffee waste recycling company that could repurpose it for beauty products or gardening supplies or fertilizer. I'm just trying to think of some of the waste that we can, that we can make an enlightened circle or, you know, cycle of non-waste. Could you do, and depending, I mean, you'd have to get with municipalities here, but could you do that on plastic waste too? California and some of these other cities are great in recycled waste. You know, on the East Coast, we don't have good recycle programs. So what do we do with our plastic waste? we chose an organization to go with sustainable cups and sugar cane cups. So it's all disposable.

But other companies for cost reasons are going to plastic. And does plastic harm the environment? And what can we do with that in a thoughtful way? I like the coffee grounds idea. It's funny because just this morning I interviewed a guy that owns a lawn leveling business. And he's very unique. And his sales pitches that he will make your lawn look like a golf course. and he has to put infill, whether it's sand or mulch or whatever, and a lot of times this infill

has large sticks in it. And you can't have a golf course like grass with big sticks sticking out of it. So he told me he's inventing his own proprietary blend of a lawn leveling mixture that is mostly coffee grounds. I thought that was really, because these conversations are just a few hours apart. He's mixing it with manure and some other things. But if there was like an enterprising entrepreneur that called you and said, hey, I want to take your coffee grounds. How would you approach that? Would you say, okay, great, or what are you going to do with it?

Or what are you currently doing with your coffee grounds? Are they just going into the trash? They are. They're going into the trash. We have some people that pick it up for their home gardens and stuff, but it's not a concentrated effort or a structured approach to it. Here's another thing. Most coffee houses business is from 6 a.m. to 4 p.m. and the space is still available from 4 p.m. to 10, right? they're still paying lease, they're still paying electric, they're still paying insurance. So how do you maximize coffee houses in the evening? Could you have a business just completely surrounded as an event marketing business to promote space and events in coffee houses that aren't busy anyway?

Could it help the coffee house kind of purveyor build revenue in non-revenue generating traditional times. I think that's an incredible opportunity for a young startup and someone who wants to hustle and good with the public and wants to get out there and make a name for himself with very little startup costs. Yeah, it could even be a startup that helps enable that, right? Like, let's say a startup that sells you, and they could white label all this. They could just buy this from existing vendors. They sell you like a keypad and cameras and you install them and you could use your coffee shop or restaurant as like a co-working space from four to ten. And you don't even really need to staff it because you got to get vetted to get a membership.

Maybe it's just a monthly fee and you just swipe your card. They know you're in there. There's a camera watching you. They know you're not going to steal stuff or, you know, turnover tables. And that would be almost pure profit. Pure profit, absolutely. There's a lot of tangential business in our, you know, we struggled in the beginning, launching our own branded beverages.

We thought that was important for at least a marketing call for our own business to bring attention to what we were doing. So we created a nitro-cold boo coffee. But if you go to a third-party co-packer with your recipe, they want, I don't know, two, three, four pallets or 15 barrels of liquid. So the cost is exorbitant. We couldn't do it for six, seven years until we had the capital that we could. could do it. If there was a startup that says, I can do it for as little as as a hundred cans,

I think there would be a global industry on CPG business for that. The consumer package goods for our niche would be unbelievable. Yeah, and they can still charge more, right? Because it's more of a niche offering. I had a company that did something very similar. It was called SendEat. And we were a third-party logistics provider for CBG consumer package goods food brands. Because let's say you had this protein bar that you wanted to sell. Well, no one else wanted to deal with you. We weren't a copacker, but we would pick, pack and ship your orders. And we charged more than the big guys, but we were the only ones that would take them.

Right. So we were able to call you, let's say they had an idea for the coffee grounds. Maybe it was lawn leveling, maybe compost. Is that an easy sell for you? Quote, sell? It's just like, yeah, I'd rather not throw them away. Come get them. Or would they have to twist your arm in a little bit?

You know, someone helped us get where we are. And I am forever grateful for that assistant. So if I could help it any way, help another young entrepreneur or entrepreneur in this space get to where his dreams are would certainly do it. Yeah, there was a company called Eco Scraps that did this with grocery stores out of Utah. They would not get it for free. They would be paid to take all of their produce that was going bad that the grocery source had been throwing away. And then they would just turn it into compost. And then they sold that compost at 300% markup because it was so good.

And they ended up selling to some multinational company. I love that story. I love that story. Every dream of every entrepreneur, right? Yes. And I think there was someone else that did it with like juice bars. They would go get the pulp, all the leftover pulp for free and turn it into compost. And then Trex is like the decking company.

The decking, yeah. Yeah. He literally just took gross. grocery bags from Walmart, shredded him, mixed him with sawdust, and he invented this new material that never dies, which is normally bad. But if you have a deck, it's pretty dang good. I just love that business model. Here's another question for you. So as you're growing, like, what are your plans for expansion? I know you've looked at franchising. You've opened multiple corporate locations. If you go the franchising route, which I think you are, why that over opening more

corporate stores. So we have both avenues in our growth strategy. The first one is 50 stores on the corporate growth side in our regional market in cities that we've selected. So we have that for a year on the corporate side. And we think that's a good pace to keep quality consistent and not jeopardize the brand through irresponsible growth. On the franchise side, we want to pick, select multi-unit partners with a track record of success, understand the business, buy into our vision, and want to be able to create a wealth through franchising of a proven system with 10 years of history, right? So we think we can get to 250 stores regionally over the next 15 years through picking and being very discerning about the franchise partners we onboard.

So proven track record, understand what we do, understand the kitchen environment, understand hospitality and have hospitality in their portfolio. What do you think an ideal franchisee would look like for your brand? because I know it's different for every band. If you're starting a pressure washing franchise versus a restaurant, how picky are you and what does that person look like? So I think to protect our brand, we're going to be incredibly selective. So the person needs to have the capital wherewithal

to at least expand into a multi-unit scenario. The minimum amount of stores we would sell would be a package of three. Now, you could put three in a smaller market. If we're averaging AUVs of $2.3 million, you're talking somewhere to $7 million in revenue. As a small business, that is, I think that's pretty good for a small market. And you're doing something great for the community, introducing a coffee shop where you can make the central hub of your community. For larger markets, we would sell, so Tampa, for example, we just sold nine to approve an operator that, really loves our brand, speaks our language, and understands hospitality, went to school,

USF for College of Rosen in Orlando, studied hospitality and wants to do this as their entrepreneurial effort. So you could have a small operator who's very ambitious, you could have a multi-unit operator that wants to get into the business, or you can have someone that wants to where a hospitality company has resources and then hires professionals to run their business as a way to diversify holdings, income, and so forth. Okay. Well, that's awesome. I didn't realize you had sold those territories in Tampa.

That's exciting. We're very excited about it. The first one should open up in December. They got South Tampa and St. Pete. Okay. All right. Mark, well, thank you. Where can people find you if they want to learn more about you or Southern Grounds?

We're in Northeast Florida. Southerngrounds.com is our website, and we look forward to serving you. Okay. Thank you, Mark. I appreciate it very much. Thank you for your time, Chris. All right. I hope you enjoyed that interview with Mark. Let me know if you want more interviews like that, and we'll see you next time.