Issue #24: PopUp Bagels Launches Franchises

Grip, rip, and dip. The slogan that has captured the attention and appetite of many hungry bagel eaters. For those that haven’t gotten the chance to try its product, this slogan belongs to PopUp Bagels, a startup bagel retail shop that prides itself on serving you hot bagels, no sandwiches, that are to be ripped apart and dipped in a schmear (cream cheese). I have written about them many times (at least 6 of the 24 issues mention PopUp Bagels), as I strongly believe they are one of the companies at the forefront of retail and this model can be replicated across other types of retail, like Crumbl and Wingstop.

To take a step back, right now PopUp Bagels has 9 shops, 6 under construction, and just raised a $8M Series A last year. What is so exciting about what they did this week? Two things: hiring a new CEO and announcing the plan to start franchising locations.

First, let’s start with the new CEO. The founder, Adam Goldberg, had been serving as CEO until stepping into the Chief Brand Officer role. The new CEO, Tory Barlett, comes from the brand and franchise world, most recently at Moe’s Southwest Grill as Chief Brand Officer. Here is a snapshot of his Linkedin:

I went ahead and annotated Tory’s linkedin. The yellow stars are when he worked at franchise concepts and the blue stars are working on the brand team. As you can see a lot of yellow and blue, which is exactly in line with the future strategy for PopUp. The core part of PoUp Bagels is its brand - there is a reason the founder is now the Chief Brand Officer. It is essential to how they see the strategy. Couple that brand ethos with the desire to start franchising and this CEO pick makes a ton of sense. Excited to see how he continues to grow PopUp.

On the store footprint/franchising front, the plan is to grow up and down the East Coast, with a focus on Miami and NYC. In the focus markets, PopUp plans to have company-owned units and fill in the gaps along the East Coast with franchise stores. Since the stores are very streamlined and have limited items, it is not that difficult to get started in a new location. This franchising strategy reminds me a lot of Crumbl Cookies, the cookie store that changes its menu weekly, just like how PopUp changes schmears weekly. Crumbl also utilizes social media and virality to promote its products and get new users. Due to franchising, Crumbl has grown from 1 store in 2017 to 1,040 locations in 2024. However, the rapid growth did cause some growing pains due to issues with operations scaling. It will be interesting to see how the PopUp team works to scale the operations and how fast they decide to grow the number of locations.

Luckin Coffee Planning US Launch

Luckin Coffee is a coffee chain in mostly China that focuses on pick-up, mobile orders, and quick service. It has a fascinating history, and here is the breakdown:

• April 2020 🔴 - Luckin reveals that 2019 sales revenue was inflated by $310 million (over half of their revenue that year), the stock price crashed, and executives were fired.

• June 2020 🔴 - NASDAQ suspends trading and delists the stock

• February 2021 🔴 - Luckin files for bankruptcy

• Spring 2021 🟡 - Centurium Captial, a Chinese PE firm, invests $240 million into the company

• December 2021 🟡 - Class action lawsuits are settled and debt is restructured

• March 2022 🟡 - Luckin emerges from bankruptcy with new executives

• June 2022 🟢 - Monthly active customer numbers reach 500 million people

• March 2023 🟢 - Luckin now manages 9,351 stores (6,310 self-operated stores and 3,041 partnership stores)

• July 2024 🟢 - Luckin now has 20,000 stores

This story has to be one of the biggest comebacks of all time. From getting delisted due to rampant fraud to coming back stronger and rebuilding from the ashes, it is fascinating to see the comeback. What Luckin has been doing is focusing on what it does best, value and convenience. Ironically, Luckin’s approach to coffee is the exact opposite of the original Starbucks and the vision of a revitalized Starbucks that the new CEO wants to build. The small format stores are custom-designed to focus on mobile orders and automate as much as possible. Now, they plan on bringing the value and operating model to the United States. However, I do not believe this is a major threat to Starbucks but rather more of a threat to the Dutch Bros and Dunkins of the world. Starbucks is focusing on community and making the coffee experience better. If they can nail the community, it is a totally different value prop than Luckin offers. While Starbucks may lose some customers, I still think it won’t be too much of a threat. What are your thoughts?

Amazon Just Walk Out

This week, I was doing some travel through LaGuardia airport in NYC. As I was waiting for my flight, it was early in the morning, and wanted to grab a canned coffee for the flight, so I decided to head over to the convenience store and get one. To my surprise, it was not your typical convenience store. Here is what it looked like:

The convenience store operator was using Amazon’s Just Walk Out Technology. It was my first time experiencing this technology. Overall, I thought it was fine but was not blown away. The way it works is you tap your card, enter through the gate, grab your items, and then exit through the gate. Not having to check out probably saved a little time overall, but getting in did take a while and the prices were not better. Additionally, there were still people working in the store, so I am not sure why the store decided to implement that expensive technology. It will be interesting to see if this technology gets rolled out more, but I am not really a fan due to the fact it isn’t the most pleasant shopping experience. I also think this technology will be negative for retail because having that experience is why you go to retail stores to purchase items.

Fishwife Announces Results of NYC PopUp

In Issue #20, I covered Fishwife, the tinned fish CPG brand, and its marketing activation in NYC with a physical pop-up on 9/27, 9/28, 9/29, 10/4, 10/5, and 10/6. These weekends were filled with partnerships with other emerging CPG brands, NYC retail institutions, emerging NYC retailers, and food influencers. It was a masterclass in launching a temporary retail location via partnership and utilize a diversity of marketing strategies to drive people in. This week, Fishwife announced some of the results and it was a success. Here are some of the metrics:

• Drew over 5,000 attendees and brought in $91,000 in revenue - doubling expectations

• Generated 4.3 million impressions, over 200 pieces of User Generated Content (UGC), and 10,000 new followers for Fishwife

Plus, this activation was done in partnership with eCommerce software provider Klayvio. From their POV, it was such a success that Fishwife was featured in Klayvio’s first Black Friday and Cyber Monday Campaign. Another angle to the partnership that helped boost attention and revenue. For others attempting to do a pop-up, another great idea is to partner with a software provider you use. Finally, another exciting follow up from the success, the CEO of Fishwife, Becca Millstein is planning to open a permanent Fishwife location in the next five years.

Survey Says: Customers Want to Eat More at Home

Kroger, the large supermarket chain, has a retail data science, insights, and media arm, 84.51. Given the broad reach of Kroger, they are able to produce some fascinating reports on consumer behavior trends. This week, they released a report illustrating that customers want to eat 76% of their meals at home. In reality, only two-thirds of meals end up being eaten at home, but it is interesting to see the desire to eat at home more. Some reasons are given, but I would love to learn more about why customers are opting to eat at home more. Inflation, more options, and lack of time to cook are a couple of reasons that are given as to why customers want to eat more at home. From a retail perspective, one of the things that drive foot traffic to an area is restaurants, so a decline in eating out could hurt many retail areas. This stat will be an important leading trend to follow going forward whether consumer desire to eat in the house increases or decreases.

Bonus: Emerging CPG in Restaurants

I came across an interesting post this week highlighting the emerging CPG brand, Graza, which produces olive oil in a squeeze bottle, and its quest to be featured in more restaurants. For any emerging CPG brand, I think food service is a super viable channel and I am excited to see more follow in Graza’s lead. First, especially in the case of Graza, you are getting marketing being on the table at the restaurant. Even if the product is not able to be on the table, a lot of emerging CPG brands will get a call out on the menu. Second, it allows consumers to try before they buy. Many of these brands are expensive, but can be worth it. Consumers aren’t necessarily going to want to invest in a $20 bottle of olive oil without trying it first. A restaurant partnership allows a trial before purchase. Finally, the margin profile is better than D2C or retail as you don’t have to pay for online marking, trade fees, merchandisers, etc. I strongly believe more brands should use this approach to winning their local market - winning is more than just retail, food service is super important too!

• Summary: Trynow is a Shopify app that allows eCommerce sites to run try-before-you-buy programs - customers can add items to their order for no upfront cost and only pay if they want to keep it

• My take: I strongly believe in try before you buy and I think tools like this are really interesting. My concern is the cost of reverse logistics and returns. it would be great if there was a way to incorporate your retail footprint into this process

• Founder(s): Benjamin Davis

• Amount raised & investors: $12M from Craft Ventures, Shine Capital, Third Kind Venture Capital, Perkins Cove Partner, and SciFi VC

• Notable Clients: Misen, Snif, Peter Manning, Soludos, and more

• Pricing: 2.99% of net sales after returns and $0.99 per order

• Interested? Book a demo here

Additional Links:

1. Chunk Foods, the plant based steak company, announces the launch of 4 SKUs in retail in NYC and LA (read more here)

2. McDonalds can now repair its own Ice Cream machine after the United States Copyright Office granted a copyright exemption that allows restaurants to repair broken machines instead of them only being fixed by the manufacturer (read more here)

3. A deep dive into Ven Space, an in-person only clothing boutique in NYC (read more here)

4. Celsius, the energy drink, acquired one of its manufacturers to help improve supply chain and be quicker to market with innovation SKUs (read more here)

5. Soda is making a come back and total volume is up 1.3% YoY (read more here)

   • My take: I am not surprised and I think you are already seeing the effects with the rise of soda focused retailers too, like Swig

6. Bowery Farming, a leading indoor farming company, announces it is shutting down (read more here)

7. Ryan Reynold and Rob McElhenny, owners of Wrexham FC, have acquired Wrexham Lager (read more here)

8. Jake Karls, the founder of chocolate bar Mid-Day Squares, details why they decided to put their bars in the refrigerated section (read more here)

9. ShipHero CEO, Aaron Rubin, who makes the ShipHero Warehouse Management Software (WMS) showcases how they pack their orders (read more here)

10. Wingstop continues to have strong quarters with surging same-store sales and digital sales (read more here)

    • My take: A little bigger than a Crumbl or PopUp Bagels, but another example of a franchise concept utilizing marketing and digital to grow sales

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