Episode 120: 400-Unit Growth Secrets | How to Scale a Coffee Franchise with Scott Redler

Looking for the next big franchise opportunity? Scott Redler, co-founder of the legendary Freddy’s Frozen Custard & Steakburgers, reveals why he joined JRI Hospitality to scale Mokas Coffee and Eatery into a national powerhouse.

Key Takeaways
The Transition: After scaling Freddy's to 400 units, Scott Redler is now focusing on making Mocha’s a "franchise-ready" powerhouse.

Investment Reality: The startup cost for a Mokas location ranges from $943,000 to $2.5 million, with a heavy focus on ROI.

Culture First: The brand utilizes a "No Jerk Rule" to ensure that franchise partners align with the company's long-term values.

Operational Edge: Why having a coffee roastery in Arizona and a focused Midwest supply chain is critical for early success.

Owner Qualities: Beyond capital, Mokas looks for operational expertise and a passion for people.

Highlight Extract
"Restaurant people, we just don't have this switch that you flip and turn it off... I said, alright, I'll commit to a couple years of helping you make this franchisable." — Scott Redler

Resource Links

• Guest Site: JRI Hospitality
• Host Site: Franchise QB
• Brand Site: Mokas Coffee and Eatery

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Mike Halpern, CAFC
mike@franchiseqb.com

Transcript

0:42

Joining us on the huddle today is Scott Redler, president of Mocha's Coffee and Eatery. Welcome to the show, Scott. It's great to have you here. So you've been in the restaurant space for your entire career. You co-founded Freddy's Frozen Custard and Steak Burgers back in 2002 in Wichita, Kansas, where you currently live alongside brothers Bill and Randy Simon, whose father, Freddy, is the restaurant's namesake. We have a location here in Fairfax, Virginia, which your brother owns, coincidentally, I just learned that. Mm-hmm. family and I love it. In fact, my kids kind of grew up going there and there's a little park behind it that we like to frequent. And I'm a tennis nut and my tennis club is right down the street. So it's a good location. So you join J.R.A. J.R.I. Hospitality, a portfolio of franchisee brands, including Freddy's, Chompy's and the concept we're going to discuss today, which is mocha's coffee and eatery. Scott, can you share your recent history in the hospitality space with us? Yeah, so know, Freddy's was an amazing ride and so many wonderful people did great and built restaurants all over the country. We sold Freddy's five years ago, roughly with 400 locations and. you know I stayed on with Threadies for about 18 months and it was time to either start relaxing or figure something out and you know restaurant people we just don't have this switch that you flip and turn it off so Jason Eremance had called me up the owner of JRI and goes hey will you help me with bocas and he go tell me what you're trying to do and love the concept love the food the culture is amazing. So I said alright, I'll commit to a couple years of helping you make this franchiseable, which we've done That's really cool. mean, 400 units, what a milestone. I've been in the space 20 plus years, very few brands make it to that size and scope. So congratulations on all the success. And Jason made a good move because you can take a lot of the lessons that you've learned there and apply them to this new brand. So what initially attracted you to Mocha's Coffee and Eatery? mean, there's a lot of concepts out there that you can. You know what, especially for the franchisee mode, there's not a lot of franchise or is that are totally focused on the success of their franchisee. And that's an important statement. Jason has that attitude. was the attitude we brought to Freddy's that whether we're buying food or equipment or whatever, we were making decisions that were based on what is best for the operation, the mission and the system. And Jason has that all the way in his culture and Lisa his wife who helped run it And they make decisions that are what takes care of our guests. What takes care of our team members? what's best for our franchisee and what's best for the brand Yeah, it sounds like they got their fundamentals lined up and they put their the right priorities in order. So, you know, with all your experience at Freddy's, what philosophies guided you to success with Freddy's that you intend to mirror with mochas? I think the same attitude of, know, everybody has a choice where to put their capital. And when you're raising money, whether it's for restaurant or any business, and you know, it's all about if I'm investing $100,000, what's my return? And I think we focus on that first because you have to have that basic fundamental. Is this a good investment before you start? And then once you get to that point, it's are we set up to do it right, to build, to grow, to do it the right way? I'm going to call it the mocha's way, where culture really trumps a lot of things out there. And the team members have been there a long time. They're passionate about the brand. They're passionate about their guests. And that's what it's all about. Yeah, that's awesome. And we're going to talk about the franchising side of Mocha's here in a minute. But for those that aren't familiar with the brand, can you tell us a little bit about Mocha's Coffee and Eatery just on the surface, what it is and where it operates? Yeah, we're roughly, we just did a groundbreaking on our first franchisee about two hours ago, which was awesome. Thank you. was, and it was like a family reunion. And that's what it's all about. Mocha's is drive through and sit down and our guests experience made to order food. High quality food with coffee beans that we really spare no expense. We do it the right way. And our guests appreciate it. And our team members are passionate about the brand also. And the franchising mode just started. And we are thrilled. But when you walk into a MOCA as a guest, when you walk inside the building. You see wood tables and a very comfortable environment. It's the place you want to have a meeting. It's a place you want to meet someone to have a conversation over lunch or late afternoon latte or cappuccino with appropriate treats to go along with that. And it's just a great vibe when you walk in the door. Yeah, it sounds really cool. So when we talk about franchising, uh what elements of the Mocha's model, in your opinion, make it well positioned for franchise growth? You know, one of our reasons for success at Freddy's is that Bill Randy and I all had other businesses at the time. weren't relying on the income and we were able to put everything right back into the concept. And Jason has kind of taken that same approach. He's the largest Freddy's franchisee in the country with 135 or 140 Freddy's. And he's got Chompy's in Arizona. He owns Salina Country Club, which has a lot of neat features, including a really cool speakeasy, great place to have a cocktail. taking the attitude of he's in this to win it long term. The brand's been around 20 years. They never really had the time or energy to grow it. I was able to come and help them a little bit, make it a little more franchise friendly. And now we're off to the races. Yeah, that's great. I mean, it's really interesting to hear that even back then you guys had different streams of income so you can reinvest the profits back into the business. And what an important thing to do because as we all know, especially in the restaurant business, you have to like invest in your team. You have to invest in marketing. You have to invest in good food quality. If you don't have those things, the runway gets pretty short. So You know, when you became involved with Mocha's Coffee and Eatery, what were your first priorities? Like when you said, yes, Jason, this sounds great. Like what did you want to address when you joined? Well, you I want to learn, learn the brand. think you have to learn, listen, ask questions and ask questions and then just shut up and let someone tell you what's important, why it's important, why the brand is what it is, what makes it special. And then went through that period for a while and train, went through every position, cook, make coffees, the whole bit. And then said, okay, how can I make this a little more team member friendly with technology and cooking. And we basically rewrote the menu a little bit, maybe 20 % adjustment. And really, I think our team members were part of it. They were all giving great advice and we all worked together and made it franchiseable. And then put together all the documents and the team to be able to execute franchising. You can't just tell somebody, here's the keys, here's some plans, go build a building. You've got to show them why, how, what's important, what's critical with construction, what's critical with food, what's critical with beverage program. And most importantly, by far is what's important with how you're hiring your team and making them have the culture that represents a brand well. Yeah. And it's interesting because you come with all this experience. Jason comes with all this experience with the Freddy's concept, which is a lot more, you know, complicated as it relates to operating a food business. I don't know exactly how it relates to mochas. I'd be curious about that. But you, this is kind of an emerging brand, but it gets the benefit of all of the mistakes and challenges and learnings that you went through with Freddy's and get to apply it here. In your opinion, what are some of the systems that an emerging franchise brand has to have in place before it begins to scale? Well, I think you've got to have the labor models, the food models, the purchasing programs in place, the construction programs in place, the equipment supplier set up that you can trust. All these different components that make it easy to grow. mean, every decision in a restaurant is challenging. I remember with Freddy's, we would have hot fudge tastings. Everybody volunteered for that. think people tried to pay me cash to be in that hot fudge tasting. How do we pick our hot dogs? How do we do this? Everything is a decision. And you've got to get everyone to understand why and how you're making the decision and to be part of it so they believe in it. And when you're not going the right way to listen and adjust and go a different way. Yeah. Well, conversely, you know, what mistakes have you seen emerging franchise brands often make when they just grow too fast out of the gate? Well, I think your comment grow too fast. We're on a very steady growth path. We signed our first franchisee about six months ago or so. He's got his first location, wonderful individual, wonderful family. And you can feel that culture is right. We just are about to sign our second and we have a third one coming right after him. This kind of momentum is good, but we don't want to sign 22. We want... to get these groups started, let them do it the right way, the mocha's way, to understand the quality, the culture, and the teams, and really take it to that level. So, in case you're... the partners that have signed up so far, what qualities does Mocha's look for in an owner? I'm going to go back to the same qualities I used at Friday's, which was you have to have the money. You have to have a territory that you both agree on. You have to have the operational expertise or the ability to hire it. And if you're going to hire it, make that person a partner. And last and most important, like is the no jerk rule. can't you take somebody out to dinner and is this a person that you'd want to go out on a Tuesday night and have a beer with and if it's not it is. like you can't overlook that because you're going to be spending a lot of time with these people, whether it's a restaurant manager or a franchise owner or a key team member, like make sure that they fit right. We are protector of the brand first and foremost and the number of times, not very often, number of times that Randy or Bill and I would walk down the hall after meeting with a potential new group at Friday's and go, no way, they don't match. that's smart. I mean, that that's really going to protect the brand and make sure that you grow with the right people and good things happen when you make those disciplined decisions early on. ah So you were the past chair of the National Restaurant Association. What drives you to assist? I mean, you have a busy plate. Like, what is it that kind of keeps you ticking here in terms of I know I know you said you have food in your blood. It's hard to turn it off. true. mean, and you know, it's very humbling what we went through in Fridays. I get that it's what we went through with the growth we did. mean, in one day we opened seven restaurants in a day and, um, and you look at that, go, okay, why do you do it? What, what makes you do it? Well, we're very fortunate. It's humbling. We've made a lot of people very successful. We've taken care of a lot of people. And we're in the give back mode in a lot of ways. Our industry, I believe, has and will be the industry of opportunity for people that started with nothing. I'm one of those, by the way. We grew up in lower middle class. My dad was out of a job in high school. No, it wasn't fun. And went to work in restaurants and like day one, I thought I wanted to be a lawyer and accountant. Hard to believe that today. And I guess you're a little bit of everything when you're a restaurateur. But you. you get to go to work and make people happy and your team, you get to see people grow and see people accumulate wealth and get married and buy houses on the hill and all this kind of fun stuff. And it's all because you work together to make them all they could be. And I just think that's what it's all about. Yeah, that's awesome, Scott. I appreciate that. So if someone listening is interested in getting involved in mochas, let's talk capital. That was the first thing on your checklist. So what is the startup cost range in item seven? I know it's a big variance depending on the footprint and the type of building and all those things, but what are we looking at? our startup range for Mochas ranges from $943,000 to around $2.5 million, depending on a lot of things. The important thing is that it's all about return on investment for a franchisee, whether you're buying land and building, not buying land and building, size, location, are you doing the remodel? The other side is that in an FDD, you're regulated by what you can put in here to what you've already done. And when you look at our locations, we have not done that many and we're starting to get some economies that help us with some of these numbers. I got you. And that also kind of relates to item 19. So we kind of have a blank item 19 at this point. Yeah, we do. And we're going to leave it there for now. But what I recommend for anybody looking at any franchise location, any brand, any industry, is to talk to current franchisees. And they're able to share their data with you. That's where you want to get your information. Yeah, absolutely. Well, obviously, like your leadership team speaks for itself in terms of the experiences you've had in the industry. So this is great, Scott. I really appreciate all the information. Anything else you want to add to the mix before we wrap up today? No, think the people in our industry that have been successful and have all worked hard, a lot of people say that if you want to get lucky, work hard. And I believe in that. And do what your passion is. I love it. Even today, going to work. having fun, having conversations with our guests, with our team, understanding what people are going through, watching people that have worked in our system for five, six, seven, eight years grow up, become happy, successful, married, families, the whole bit. And there's nothing more rewarding than watching others succeed. That's awesome. So Scott, geographically, are you in Kansas? Where's the footprint? And have you expanded to the East Coast or West Coast yet? are we staying focused where you are before you spread out nationally? We're actually going to do Midwest first. Part of its supply chain, which is a critical component. And the other area that we're open to is Arizona. We actually have our coffee roastery in Arizona, and that's where our Chompy's are located. So we're able to make that work. So you have availability for new owners to open shops in kind of Phoenix, Tucson currently. Awesome. Very cool. Well, Scott, I really appreciate your time. And if anyone listening wants to connect with Scott and his team to learn more about becoming a franchise owner with mochas, contact me at franchise qb.com and I'll get you connected. Thank you, Scott so much for joining us in the huddle today. Thank you, greatly appreciate it. You got it.