The Pitch: "Coffeehouses have always leaned to the left. We give conservatives a place to feel comfortable and rally around their values. We have got TVs tuned to Fox News. Our four blends are Liberal, Moderate, Conservative, and Radical Right. Conservative is our top seller, but Liberal, a decaf blend, is popular, too. We serve food and sell T-shirts with slogans like 'Peace Through Superior Firepower.' We are looking to raise capital to begin franchising and bring on an experienced partner. We have received more than 50 requests from prospective franchisees. We would like to start with four stores in 2009, then open 10 more in 2010."
OWNERS: David Beckham, Jill Beckham, and Bill McCall
LOCATION: Crown Point, Indiana
2008 REVENUE: $750,000
ITEMS ON MENU: About 60, including 15 coffee drinks
REVENUE BREAKDOWN: 21 percent from coffee, 41 percent from other food and drink, 27 percent from merchandise
AVERAGE SALE PER CUSTOMER: $9
RETAIL SPACE: 4,800 square feet
FUNDING SOUGHT: $1 million
RECENT BUZZ: Mentions in the Chicago Tribune and on Fox News and National Public Radio
The Experts Weigh In
BUILD ON THE CONCEPT
Conservative Café's theme could be carried out further.
All the menu items, not just the coffee, should have political names: Palin Pancakes, for instance. Maybe give customers a "tax break" coupon for their next visit. This isn't an easy time to raise money, and Beckham is looking to franchise prematurely. He should grow organically for now by opening a test location in an additional market to prove that the concept works. Once his concept is fleshed out, he could reach out to conservative groups such as the National Rifle Association or Veterans of Foreign Wars to find potential investors.
DON'T FOCUS ON COFFEE
The Democrats have control now, so Republicans will be making noise for the next four years. That gives Conservative Café a hook. But this strikes me more as a fast-casual restaurant than a competitor to Starbucks, given that less than a quarter of its sales come from coffee. Starbucks is closing stores, but the fast-casual market is growing. Beckham's current location doesn't represent a clear prototype. It's much bigger than most franchise locations, and it's in a small market with little foot traffic. Beckham should focus on building a prototype closer to what franchises will actually look like.
BE WARY OF COPYCATS
Conservative Café has a clear point of distinction against its competitors, and if executed properly, it can generate a loyal following. But there are no barriers to entry. The concept is easy to copy. One gaping hole in Beckham's pitch is the unit economic model. How much capital is required to open a Conservative Café? Without that information, there's no way to know whether the café can achieve a meaningful return that would attract franchisees. To show he is in it for the long haul, Beckham needs to start building the infrastructure to support franchisees.
Dorset Capital Management