Southern Grounds wants to disrupt the coffee sector

When Mark Janasik and his team considered opening Southern Grounds seven years ago, they were advised against entering an already crowded cafe district.

But from their perspective, they had studied the big coffee brands and noticed a standardized experience that didn’t deliver on the promise of building community, which is an integral part of the movement, Janasik says.

Southern Grounds wanted to rebuild this gathering place and disrupt the way customers experienced their morning drink. The best way to do it? Combine sustainably sourced food with a coffee bar to carve out a high and differentiated category for yourself.

The concept recruited local chefs to create scratch cooking recipes, learned from coffee roasting company Intelligentsia on how to build fair trade relationships with farmers, and partnered with local artists and architects to come up with designs that reflect neighborhood aesthetics, color and artwork. .

Since then, Southern Grounds has expanded to four locations across Florida, including its first non-traditional unit at Jacksonville International Airport in partnership with HMSHost. To kick off 2022, the brand announced the start of its franchise program, with the goal of reaching 125 stores within the next decade.

“We wanted social awareness to persist in our brand about low prices, poor quality and the standard mix of flavors you would get in traditional coffee shops. So improving the quality of food and coffee was important to us in this new paradigm,” says Janasik. “Those were the things we were looking for in this new model. The new cafe and the focus on community led to a new energy in the communities, a kind of gentrification, and we wanted the food and the coffee are pronounced equally in the same sentence when consumers come to meet us.

The restaurant offers an extensive menu including breakfast and brunch, hot dishes, tartines (French open sandwiches), cold sandwiches and wraps, salads and soups, and a children’s menu. Some examples include Greek omelet, grilled goat cheese, salmon tacos, salmon toast, turkey club, and caprese salad.

Founders: Mark Janasik and Shiju Zacharia

Headquarter: Jacksonville, Florida

Start year: 2016

Annual sales: $6.3 million from company-owned stores; AUV of $2.1M

Total units: 4

Franchised units: License agreement with HMSHOST for two locations. One is currently open in Terminal A at Jacksonville International Airport, and a second location will tentatively open pre-security in the fourth quarter.

The beverage range includes cold brew, drip coffee, cappuccino, cafe con leche, chai latte, french press, and more. The typical menu mix is ​​55% food and 45% drink.

The sustainable and non-GMO menu is part of a growing trend among restaurant consumers. Thirty-eight percent of adults said the availability of locally sourced food would make them more likely to choose one restaurant over another, according to the National Restaurant Association’s State of the Industry 2022. Sentiment is even higher among Gen Z (40%) and Millennials (48%).

At the largest coffee chains in the United States, off-premises has become king, especially since COVID swept the country. In Starbucks’ first quarter, mobile ordering and payment, drive-thru and delivery accounted for more than 70% of sales, and drive-thru saw its fourth straight period of double-digit comp growth. The same goes for the Dutch Bros, which has about 540 units, which recorded a digital mix of more than 60% in the first quarter.

The same is not true for Southern Grounds, and Janasik doesn’t want that to be the case. The concept has no relationship with third-party delivery providers; sometimes they sneak into the system, which he is always unhappy about. As for customers who might be on their way to work and opting for takeout, he estimated that was around 10% and growing.

However, he does not attribute the increase in takeout to a change in consumer preferences. Instead, Janasik thinks it’s a space condition.

“I mean our beach cafe Neptune has 200 seats, Avondale has 60 and the other 190, and we’re full all the time,” he says. “…One of our slogans or slogans is ‘get together,’ and the goal is to get away from fast food fast food’s fast-paced inability to sit down and enjoy.”

“We want to have a comfortable, very strong culture in our environment where people feel comfortable coming together, whether it’s personal business, business, whatever scenario event, we want just let it be a very comfortable third place,” he said. adds.

From the start, the franchise was part of the overall vision, but Janasik and his self-proclaimed conservative management team wanted to ensure that all resources and processes were in place to support potential operators.

Southern Grounds has a training program in place where individuals spend a certain number of weeks working at each station, and these internal hires run training programs for everyone else. The brand also simplified its menu and designed kitchen equipment processes to facilitate faster production times.

“Our stores have a very high volume, obviously a proven system with high profitability, but we needed those written processes,” says Janasik. “It’s been two, three years to figure out what we’re doing and why it works.”

The emerging fast casual is targeting 12 Southeast states for growth: Florida, Georgia, North Carolina, South Carolina, Louisiana, Tennessee, Virginia, Texas, Alabama, Kentucky, Maryland and Mississippi. In anticipation of this expansion, Southern Grounds established direct business relationships with farmers in this region and arranged for the delivery of their products through Sysco.

“Quality is becoming the new frontier. We think the coffee market is far from saturated, but it’s actually moving towards something different, something more focused, something better,” says Janasik. “And the consumer base is now demanding higher quality offerings, food or beverages, in our view. So for all of this reason, we believe there is no better time to launch our cafe led by a chef to other aspiring restaurateurs or entrepreneurs who want to enter this space.

In February, the cafe announced the signing of its first franchise agreement with SOGRO St. Pete Hospitality Group. The company, led by Jordan Hooten, Zach Presti and Nick Presti, plans to open nine stores over the next three years in Tampa Bay and St. Petersburg.

Southern Grounds also aims to continue its multi-unit relationship with HMSHost as opportunities arise at other airports. After opening an outlet in Terminal A at Jacksonville International Airport, the brand then signed on for a second pre-TSA unit.

In addition to franchise and licensing agreements, the brand will expand its commercial footprint in North Florida (Downtown Jacksonville, St. Augustine, Fernandina Beach/Amelia Island) and further south in Palm Beach.

The fast casual offers four store designs ranging from 2,500 to 6,000 square feet, the latter including an outdoor landscaped patio. Janasik prefers walkable commercial areas and dense neighborhoods. Of the three traditional stores, the Neptune Beach unit is located in a boutique mall a few blocks from the ocean, another is based in a strip in a historic part of Avondale, and the third is freestanding in a historic part of San Marco.

As SOGRO St. Pete Hospitality Group grows, Southern Grounds will look to do more concentric franchises out of Jacksonville, like Orlando and Naples Florida, then Atlanta and Nashville.

The company recognizes that some of its decisions are not typical of the coffee industry, says Lindsay Blakeslee, director of franchise sales. But it’s not like the group is intentionally trying to go against the grain – it’s just turning into a restaurant segment that doesn’t exist on a large scale.

“We differentiate ourselves from anything currently available through our menu, our locations, our community involvement, and simply the impact and experience we want to have and enable our customers to have.” , says Blakeslee. .

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