Human Bean Franchise : Really worth it? (2024)
The Human Bean Franchise is a drive-thru coffee shop chain that was founded in Ashland, Oregon, in 1998 with a mission to provide high-quality coffee and exceptional customer service. From the beginning, the company has been dedicated to not only providing delicious coffee but also supporting local communities and promoting sustainability.
Origins
The name was conceived by the mother of Dan Hawkins, co-founder and CEO, and represents the company’s approach to providing a guest experience and giving back to the community. The human element is considered an important aspect of the company’s operations, from the franchisees to the team members and guests.
The company began as a single drive-thru location in Ashland but quickly expanded to multiple locations in the surrounding area. From there, it continued to grow, expanding to other states and ultimately becoming a well-known and respected brand in the coffee industry. Today, The Human Bean has over 100 locations in multiple states across the United States and is known for its commitment to quality and sustainability.
The Human Bean has appointed Scott Andersen as its first Chief Operating Officer as part of a restructuring plan to support growth. Andersen comes to The Human Bean from The Learning Experience, a franchise academy of early education, and previously served as CEO of a fast-casual chain Fresh Alternatives, LLC and held leadership and executive roles with The Wendy’s Company and as a multi-state Wendy’s franchisee.
The Human Bean Menu
One of the things that sets The Human Bean apart from other coffee chains is its dedication to sourcing the highest quality ingredients. This includes sourcing beans from sustainable farms. And working closely with farmers to ensure that the beans are grown in a way that is good for both the environment and the farmers themselves. The company takes great care to ensure that the beans are grown in a sustainable manner, and are responsibly harvested and processed to retain the full flavor of the coffee.
In addition to coffee, The Human Bean also offers a variety of other drinks, including tea, hot chocolate, and specialty drinks. The company is known for its friendly and knowledgeable staff, who are always happy to help customers find the perfect drink to suit their tastes. The Human Bean is also committed to supporting local communities, through charitable donations, volunteer work, and fundraising events.
Overall, The Human Bean is a company that is passionate about providing high-quality coffee. While also supporting the communities in which it operates. With its commitment to sustainability, delicious drinks, and exceptional customer service, it’s no wonder that The Human Bean has become a favorite among coffee lovers.
How Is The Human Bean Franchise Positioned in the Food and Beverage Industry?
The Human Bean is positioned in the specialty coffee segment of the Food and Beverage industry. The specialty coffee segment is characterized by a focus on high-quality coffee beans, unique and complex flavors, and a variety of brewing methods. Specialty coffee shops like The Human Bean typically differentiate themselves from more mainstream coffee chains by offering a more curated selection of coffee beans and a greater variety of brewing methods.
The Human Bean, positioning itself as a drive-thru coffee shop chain, targets customers looking for convenience, speed, and consistently good coffee. The drive-thru format enables the chain to reach a wider customer base and meet the demands of a fast-paced lifestyle.
The Human Bean’s commitment to sustainability also sets it apart from other coffee chains. And can appeal to consumers who are looking for environmentally friendly options. The company’s focus on sourcing high-quality, sustainable beans. And supporting local communities can help to create a positive image and build loyalty among customers.
The Coffee Industry
In the current market, the coffee industry is highly competitive and the coffee shop market is saturated. With a big number of coffee shops increasing every year. According to a report by IBISWorld, the U.S. coffee shop industry is projected to generate revenue of $22 billion in 2021. With an expected growth of 1.9% annually in the next five years. The specialty coffee segment is projected to see significant growth .As consumers increasingly demand higher quality and more unique coffee options.
The Human Bean’s differentiated positioning and clear brand identity can help it to stand out. And attract customers looking for a high-quality, sustainable coffee experience. As a franchise, it tries to replicate the same business model and values to its franchisees. Promoting and encouraging sustainability and quality as well as a strong commitment to customer service. This can help ensure consistency and quality across all locations. Which is important for building a strong brand and maintaining customer loyalty.
How Much Is a The Human Bean Franchise?
The initial Human Bean Franchise Fee is $30,000. You have to pay this upfront fee when opening a Human Bean franchise.
The Human Bean Franchise Cost
The estimated total investment necessary to begin the operation of The Human Bean Franchise ranges from $385,850 to $908,770. The following costs are part of the upfront costs included in the initial investment for The Human Bean. Many of these are one-time fees that are needed to launch the franchise. Review the chart below to see how much it costs to buy The Human Bean franchise in 2022.
| Type of expediture | Amount | To Whom Payment Is to Be Made | |
|---|---|---|---|
| Low | High | ||
| Initial Franchise Fee | $30,000 (Includes $5,000 Site Analysis Fee) | $30,000 (Includes $5,000 Site Analysis Fee) | Us |
| Optional Are Development Fee | $10,000 | $10,000 | Us |
| Training Expenses | $8,700 | $20,250 | Us, providers of travel and lodging services and your employees |
| Real Property | $2,500 | $9,000 | Landlord |
| Equipment fixtures, other fixed assets, construction, remodeling, leasehold improvements, and decorating costs, whether purchased or leased | $290,000 | $773,000 | Us or approved supplier/builder |
| Inventory | $24,000 | $25,000 | Us or approved suppliers |
| POS Software | $350 | $450 | Approved suppliers |
| Security deposits, utility deposits, business licenses and other prepaid expenses | $4,300 | $9,000 | – |
| Working capital | $1,000 | $5,000 | Employees, till and cash reserves |
| Advertising and promotion | $5,000 | $10,000 | Advertising media vendors |
| Additional funds | $15,000 | $50,000 | – |
| Total initial investment | $385,850 | $908,770 | |
The Human Bean Franchise Requirements
- Franchise candidates must have a minimum net worth of $400,000.
- Franchise candidates must have a minimum of $200,000 in liquid assets.
Owning a Human Bean Franchise Requires Ongoing Fees
Royalty: None
Brand Fee: 1% of gross revenue excluding taxes, promotional discounts, and delivery fees (may increase up to 2%)
How Much Do The Human Bean Franchise Owners Make?
| 2021 Average | 2021 Median | |
|---|---|---|
| Franchisee Sales | $916,432 | $900,624 |
| 2021 Franchisee Adjusted | 2021 Affiliate Average | |
|---|---|---|
| Net Income | $120,712.19 | $147,938.47 |
| Total Cost of Good Differential as % of Average Sales | 2.97% | 0.0% |
| Coffee & Other Products/Supplies Differential | $24,037.69 | $0 |
| Shipping Differential | $3,188.59 | $0 |
| Total Cost of Goods Differential | $27,226.28 | $0 |
2021 The Human Bean Median Franchise Sales: $900,624
| Initial investment (midpoint) | %Profit margin of median franchise sales | Estimated Profits | Time to recoup investments |
|---|---|---|---|
| $647,310 | 10% | $90,062 | 8.5 years |
| 15% | $135,094 | 6.5 years | |
| 20% | $180,124 | 5 years |
Based on the median sales provided by The Human Bean’s franchise locations, at an average of a 15% profit margin it will take around 6.5 years to recoup your investment.
This is longer than other franchise opportunities. You may not get a 15% profit margin, which would elongate getting a return on your investment.
Many factors affect the sales, costs, and expenses of your Franchised Store, such as the Franchised Store’s size, geographic location, menu mix, and competition in the marketplace; the presence of other Food and Beverage stores; and the extent of market penetration and brand awareness that The Human Bean stores have attained in your market. Also, the quality of management and service at your Franchised Store are major factors.
Is The Human Bean Franchise Profit Worth the Franchise Cost?
To assign a valuation multiple for The Human Bean franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems where more transaction data is available.
Under $5 Million Net Sales
- Estimated Selling Price = Net Sales * 0.55
When you go to sell The Human Bean franchise based on the median multiple of .55 and net sales of $900,624, it would sell for $495,343. This is significantly lower than the midpoint investment of $647,310.
The more franchises you own, the more earning potential you have as private equity firms become interested in your business. Instead of individual owner-operators.
How Many Human Bean Units Have Opened and Closed?
| Outlet type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2019 | 67 | 85 | 18 |
| 2020 | 85 | 100 | 15 | |
| 2021 | 100 | 116 | 16 | |
| Company-Owned | 2019 | 13 | 13 | 0 |
| 2020 | 13 | 13 | 0 | |
| 2021 | 13 | 13 | 0 | |
| Total Outlets | 2019 | 80 | 98 | 18 |
| 2020 | 98 | 113 | 15 | |
| 2021 | 113 | 129 | 16 |
Over the last three years, the company has expanded massively. It went from 80 units at the start of 2019 to 129 at the end of 2021. This means that almost 17 units opened every year, or one every three weeks, on average.
Casey Hawkins, Inc. (Franchisor) Income Statement Key Insights
| 2020 | 2019 | |
|---|---|---|
| Equipment and buildings | 1,781,496 | 1,084,500 |
| Product sales | 684,831 | 560,622 |
| Bean and allied product rebates | 3,782,218 | 2,759,094 |
| Franchise fees | 500,000 | 234,500 |
| Area development fees | 180,000 | 15,000 |
| Equipment repairs and parts | 125,189 | 159,063 |
| Miscellaeous income | 2,618 | 3,306 |
| Total sales | 7,056,352 | 4,816,115 |
| COST OF GOODS SOLD | ||
| Purchases | 2,140,161 | 1,458,646 |
| Gross profit | 4,916,191 | 3,357,469 |
| GENERAL AND ADMINISTRATIVE EXPENSES | ||
| Payroll expense | 1,311,267 | 761,024 |
| Compensation of officers | 119,208 | 114,598 |
| Payroll tax expense | 94,216 | 82,227 |
| Employee benefits | 100,855 | 48,310 |
| Advertising | 554,849 | 331,333 |
| Bank charges | 9,302 | 5,001 |
| Depreciation and amortization | 58,251 | 20,458 |
| Dues | 6,273 | 5,839 |
| Insurance expense | 6,190 | 10,440 |
| Legal and professional fees | 98,266 | 50,367 |
| Meeting expense | 7,340 | 111,494 |
| Office supplies | 172,435 | 61,826 |
| Postage and delivery | 20,470 | 12,698 |
| Printing | 4,420 | 2,540 |
| Product testing | 320 | 990 |
| Rent | 189,507 | 76,247 |
| Repairs and maintenance | 55,253 | 44,013 |
| Software management | 37,545 | 28,984 |
| Supplies | 18,363 | 18,364 |
| Taxes and licenses | 9,105 | 9,112 |
| Telephone | 3,593 | 4,403 |
| Training | 10,862 | 20,707 |
| Travel and entertainment | 60,485 | 51,411 |
| Utilities | 23,827 | 17,085 |
| Vehicle expense | 9,261 | 13,796 |
| Total general and administrative expenses | 2,981,463 | 1,903,267 |
| NET INCOME FROM OPERATIONS | 1,934,728 | 1,454,202 |
| OTHER INCOME AND (EXPENSE) | ||
| Loss on sale of assets | (4,512) | |
| Donations | (35,227) | (8,750) |
| Other expense | (550) | |
| Total other income and (expense) | (35,227) | (13,812) |
| NET INCOME | 1,899,501 | 1,440,390 |
The Human Bean is a very profitable business for the franchisor with retained earnings of $1.9 million in 2020. Compared to $1.4 million in 2019, they saw an increase of around $0.5 million. This is a good indication of high growth as a company overall.
Conclusion
The Human Bean is a successful and well-respected drive-thru coffee shop chain. It is positioned in the specialty coffee segment of the Food and Beverage industry. The company differentiates itself from other coffee chains by its dedication to sourcing high-quality, sustainable beans. Providing delicious drinks and exceptional customer service, and supporting local communities.
The Human Bean’s drive-thru format and focus on sustainability can also appeal to customers looking for convenience. Also lookinf for environmentally friendly options. In an increasingly competitive and saturated coffee shop market, The Human Bean’s differentiated positioning and clear brand identity can help. And attract customers looking for a high-quality, sustainable coffee experience. The company as a franchise replicates the same values and business model to its franchisees. Promoting the same high standards in all the locations.
While this may be the business for you, make sure also to check out other companies offered on Vetted Biz and in the Food and Beverage industry.
