Today from BlackRock Coffee Bar, Mark Davis, CEO, and Rod Booth, CFO. For those of you who don't know BlackRock, it's a very quickly growing coffee-centered chain out of the Pacific Northwest originally, but now based out of Phoenix, growing at around a 20% clip and putting up consistently positive same-store sales in a rapidly growing category. We think there's a lot of room to grow this concept, even in their existing states, and likely portability into other regions. And we are going to have, oh, I keep forgetting to say this, there's a complete list of research disclosures and potential conflicts of interest at William Blair.com. Mark's going to set the stage with some slides, and then we're going to have a chat.
Thank you. Perfect. Thank you, Sharon. Nothing like following the disclosure. I want to say thank you to everybody for being here very much. I get the privilege of talking about our company. Our company started in 2008. There is a picture for everyone that has never been to one. Seven states. Again, we are going to be predominantly west of Denver and Dallas. And you'll see it in California. You'll see it in Oregon. You'll see it in Washington, Idaho, and Arizona. And so as you look at it and you think about the points of different, especially against the peer group, What you'll notice is that we have not only the drive-thrus, but we have the lobbies. And again, when you think about the lobbies, we have the garage doors that open up. We have the furniture, the lighting, the music, and the ambiance. And what sets us apart is going to be the baristas. Guest satisfaction of about a 93% to a 96%. So really, really strong. And again, that is built off these baristas that drive the experience. Again, the push on the mission is going to be connection, caffeine, and community. And as I spoke to you earlier, we really try to drive that experience. We believe that's going to be a point of difference. I think any of you, when you think about going to a beverage shop, there is the drive-through capability. Every one of them have one. We also have the order ahead, and we have the third party. But again, we push real hard on that connection that we get through the lobby. The caffeine, everything that we roast is small batch. And so when you think about it, when you have a beverage with us that has coffee, you are typically going to have that anywhere between 10 and 14 days from the time that it was roasted. So again, really fresh. I would add that when you look at the top 10 pea mix, Americano is going to be one of them. I made this joke the other day that anybody in finance is typically cold brew or Americano. But when you think about the Americano being in there, it speaks to the quality of the coffee. And then the last thing is community. We are roughly coming up on 200 units. You'll see that pretty quick. Again, Rod and myself and the team have guided that we'll end up right around 220 at the end of this year. The long-term algorithm is that we will grow the system-wide sales at at least 20%. you'll see the EBITDA grow more than 20%, and then the units grow at least 20%. And when you look at our first three quarters as a public company, we have done that all three. So we feel real proud about that. I'm going to move this through pretty quickly here to show you just a couple of things. This is what we are most proud of. And again, for those of you that have kids, For those of you in the back of the room that have just evolved out of being kids, what I would say to you is, again, as you look at this, we try to teach our teams acumen right out of the gate. And so when you think about that, for those of you that have kids and you think about what you want for them, we literally sit down and go, hey, you have an external budget. We'd love to teach you how to have an internal budget. You're going to build your own sales levers. you're going to think about how to retain the team. You're going to think about how to drive that guest satisfaction and ultimately leverage into profitability. And so there is a great push on Acumen, but then you go a step further. We being a smaller company that's growing, they're on the bottom floor and there's a giant career path. I think you take it a step further, there is profit sharing. And when you think about the profit sharing, if you're a young store lead, you get the ability to not only set a budget, go beat the budget, but then you share in the profits. As the profits grow, you get a percentage of it. Next thing, and one of the most important, if you think about the culture in the world today, while everyone loves the acumen, and I would say they love the career path, again, a store lead for us is going to make right around 65 to 75. A multi-store lead, which is going to run three to four, is going to make 75 to 85. And our AMs make upwards of $100,000. These are people that are going to be anywhere between 18 and 23 years of age. And so really, really impressive on that end. When you look at the performance culture, we stack rank. How'd you do on your sales growth? How did you do on your retention? How did you do on your satisfaction with your guests? How'd you do growing your transactions? And then ultimately, how did you leverage in your profitability? And what it does is it allows us to provide a winner for monthly, quarterly, and yearly. And what I would say to you is as much as our teams love the acumen, as much as our teams love the career path and the profit sharing, what they really love is to give each other a bad time about where they are on the rankings. And then when you go to the top, what we push is we're each year going to take you to a great hotel called a JW Marriott. There'll be a lazy river. There'll be a casino night where you get to gamble with your friends, win prizes. The next day you get to learn about your company. From there, you get to dress up and you win trips and awards and all the above. And all these things row together and what eventually occurs is you see this great compounding growth rate both on sales and on the EBITDA, which is really, really good. And again, if I took you back to your kids or the people on our team, it is really what gives us that point of difference and drives the company. I'm going to turn it over to Rod. Again, we had promised Sharon we'd be quick and we could ask some questions and have some responses and rod can talk to you a little bit about the
model and the profitability yeah thanks mark and for the group i see several of you taking notes i would just add everything up here is on the ir website it's our investor deck so you can see that here i really just set the table in terms of size company where we're going you know we ended last year at 181 units. And you'll see target for us in 2026 is 36 units. From a revenue standpoint, we're looking at $255 to $257 million in revenue. From a comp standpoint, mid-single digits, we think that's something we can sustain long-term. And then from a consolidated EBITDA standpoint, company-level EBITDA, $33.5 to $34.5 million. And then on the capital standpoint, we're looking at 40 to 41 million of net capital investment. That supports not only the 36 stores that we're looking at in 2026, but also the early 2027 class. What's not up here, you know, Mark spoke a lot about team and performance. One of the things we're really, really proud of is our team members really operate and run their stores like to their very own. You look at the first quarter of 2026, we ran a 29.6 store level margin. We couldn't do that without the phenomenal teams that we have, and so they do a really good job of managing their stores, connecting with the guests, managing the turn time and the speed of service, and it's really a big part of what we do. And then long-term, from a modeling standpoint, really what we're going after is 20% unit We think that's something we could do year over year for quite some time. We're targeting essentially 1,000 units by 2035. You know, from a comp standpoint, we think mid-single digits is really a good place for us to be. You think about all the markets we're growing, all the things we're doing around digital and the loyalty and the things we're doing to engage our guests that are new, have a lot of legs and some runway. Of course, 20-plus percent revenue growth long-term is what we're looking at. And then on a company-level profitability standpoint, we're looking for store-level or company-level EBITDA that outpaces our revenue growth as we continue to leverage the G&A. And so I kind of wanted to set the stage with that from a finance standpoint. But as you guys, again, you can download this deck, this presentation from our investor website. And Sharon, I think I'll open up to you for questions.
Yeah. So I think, you know, the coffee landscape is very competitive. And probably the biggest question that we got from investors during the IPO and subsequently has been trying to figure out how does BlackRock fit into that competitive landscape? you know, what do the customers see about you that's different from what they might get from
one of the larger peers that we all know? Yeah. So I think when you think about us, and I'd use anybody in the room, I think when you look at the peer group, that is typically going to be drive-through only. We have that. We can do that. But generally, we believe there will be moments, human connection that you're going to want to go in. You're going to want to sit with somebody, the lobby experience and all of that makes a giant difference. I'd take a step further. Started in the Pacific Northwest in 2008. There are every one of the brands that we compete with and have always competed with. On the earnings call, I spoke to it and I gave examples in each state. Recently, we had a store we took over in Neaters as a conversion. And right next to the Neaters is that Dutch Brothers location. We opened up that location as a conversion. That location opened up at 28 a week. It's now doing roughly 35 a week. And I think what you end up seeing is there is a different customer base with us being 55% coffee. What you typically find is the demographic 18 to 45. We're going to have a little bit more mature of a customer base, a little bit more disposable income, and I think going to skew more towards coffee.
Can you talk about as well the portability of the brand? You alluded to it a bit in some of the regions you are, but how you've seen the performance throughout the states that you're in and how you think about the longer-term opportunity, how you approach that, and why 20% is the right growth rate. So when we were going public, we tried to
speak to what the potential could be. And the way that we came up with that is at 20% compounded growth each year, we would hit a thousand units by 2035. With our pipeline of people, we're about a year ahead on people. We have the ability to grow and have had no issues with that. When you look at existing markets, I'll use Phoenix as an example. Phoenix is among our very most competitive market. Every brand that we've spoken to is there, and it is among our highest AUV, going to be north of 1.6 and growing, and is also going to be among our most profitable. We have three locations in California. Those locations are the most profitable and do the most sales. We've opened two this year already that are right in line with those stores. So again, Portability, you see it there. When you go to Colorado, Colorado, when I started four years ago, we had four stores. We now have 20. Those stores are all averaging in that one five range. We've moved into Colorado Springs. And again, when you look at same store sales, same store transactions, by the way, McDonald's ran their test there. All of that, Colorado is our most successful same-store sales market and is growing at a rapid rate. Like I said, we'll have 20 by the end of this year. We opened 18 last week. We'll open 19 Sunday, and you'll see 20 within the month here. And so, again, I think as you look at it across the board, every state that we have, the seven that we're in, we have stores that rival any of the volumes of any of our peer group.
Yeah, I think California especially is interesting because you could argue you could probably have as many locations in California as your entire company right now.
Absolutely.
So when you're thinking about new markets, and I'm going to generically say states are new markets, which isn't the truth, right, because California is obviously a big state. Do you see the need to push outside of the states you're in in the foreseeable future, or is it more working where you already are and making some of those states like California and Texas, which are really big states, more penetrated with BlackRock?
So specifically to the 1,000 units, we could open all 1,000 in the seven states, and we would have no issue doing it. I think when you look at it, what we have said is we are going to develop where we are the most successful the majority of the time. So when you think about that in the moment, that is going to be Austin. That's going to be California. That's going to be Colorado. That's going to be Arizona. And again, those are great development states for us. from a pipeline, 2027 is complete. So that's already built out. And again, the majority of the growth is going to be in those states. And I think you will see the opportunity to add a new state in 2028. I would say it won't be necessary, but there is the idea that as we grow, we again want to show that portability and show that we're able to do it. And Rod, can you go over what the unit economics are that you target?
Yeah, I mean, I think when you look across each class of stores, different states, different markets, we're essentially modeling each store at 18 months, it's going to comp slightly below our current average AUV of 1.3 across the system, slightly lower than that 29.6 store level margin, they're typically comping in the low 20s. But then of course, they're ramping from there. And I think when you look at all across all of our markets, really the more or the less mature markets they're going to take call it three years to ramp and then in our more mature markets it's usually about two-ish years to ramp to you know company level profitability and then ultimately what we're going after in year one is that 35 percent cash on cash return and I think when you think about the AUVs and the profitability and one of the things we spend a lot of time on is making sure given our size that we're incredibly capital efficient If you think about the 2025 class, the average net investment per store was about $650,000. You know, that will, of course, incrementally go up as we continue to move forward. But we're trying to be very flexible in the deal types that we do. Mark mentioned the lobby as a differentiator to us. But ultimately, we lead with the drive-through. We want to meet the guests where they are, be it the lobby, the app, the third party. And that ultimately, whether it's a build-to-suit deal all the way up to a ground lease, we do fewer of those because they're quite expensive. but conversions and end caps and things like that that we're really trying to balance you know both our ability to be flexible in the deal types that we do but also balancing the capital for each
class and each cohort. I think one other thing that's come up more recently as you've been growing really quickly has been cannibalization so that was certainly a well-worn topic on the last earnings call so can you talk about how the cannibalization has emerged whether it's surprised you in the order of magnitude and kind of how do you expect that sales transfer which is the nicer way of saying cannibalization to kind of play out for the remainder of this year it seems to me like cannibalization is just part of the beverage market like you see that time and time again but this felt a little bit newer at least from the outside I guess maybe I speak to
how we got there and then you can speak to the math something like that if that works okay So I think when we were making the decisions around Phoenix, we were coming up on a comp. When you look at the comparative number, we were about 9.2. We finished the quarter at 5.2. So on a two-year stack, we were at 14, which is a really strong number. Naively, I probably made the comment on the earnings call that I said, hey, we were at 5.2, and we could have been bigger had we not made the decision to drop three in Phoenix that are right next to really big, call it $2.5 million stores. One, it relieves a little bit of the pressure of those big stores and makes them run better. But two, instead of having one $2.5 million store, you and I would now have two stores that are eventually going to be four to four and a half million and make lots of money for the company. I think looking back on it and the advice that we've been given and we've talked about is that if you're going to grow as a public company, ideally you would spend that capital in a place where you're not going to see sales transfer. I think our genuine comment back would be, had we not taken that site, there is someone else that would have. And so it was good for the company. But what I had said throughout the calls and continue to talk about, we have six stores coming in Phoenix that will have no sales transfer. We've worked through it. These sales transfer stores that we're talking about, the three will lap in September. And when you look at next year, there will be four to five in Phoenix that are going to be non-sales transfer. But generally speaking, we are going to continue to focus, as you spoke to earlier, Sharon, on the new markets, California specifically, Colorado, Austin, in places where we get the return without the risk of the sales transfer.
I think the counter to it is exactly what you said, though. If you don't open there, I might, and I might get the customer. So there is that fine line between pleasing Wall Street and doing what's best for the business. So at that $2.5 million AUV, is there anything there that isn't great for the customer where it does make sense to cannibalize? And should that just be part of the strategy to have some implicit cannibalization?
I think when you look at it, and, you know, Mark, you mentioned, by the way, that was the headline of the whole first quarter is, oh, the negative 0.6 in transactions. But when you think about it, Sharon, to your comment, you know, the stores that we have, stores that are doing that, high twos approaching 3 million in AUV, the team is still focused on staffing the store well, what's the throughput, making sure the guest has a great experience. That's less of the concern, more of as we're continuing to grow a market like Phoenix where we have the most density, where we are growing quickly, we look at all sites. And I think that was a decision for us where you go, hey, it's a great site, great visibility we know that store can do well we haven't experienced much if any sales transfer in the past and ultimately we felt it was the right thing to do for the business because it also ultimately both stores are still going to do great volume they're still going to be incredibly profitable the returns are going to be great everyone focuses on the negative 0.6 i think the one thing that got lost in that conversation you know we made comments to it but if you think back to, you know, I spoke to new loyalty program, new app. We launched that in June of 24. And really in that first six months, closing out 2024, we saw a lot of great growth in the loyalty program, really second in the industry participation at 66%. So a lot of transaction or a lot of traction with our guests, it was resonating with them. But we also were lapping a lot of outsized transaction growth as a new, as a new loyalty member, you've got a free drink. We started the year in 2025 with a hey start the year off some good value promotions and then again what we also noticed in the first six months of the program is we had a lot of guests who were accruing points accruing free drinks but they weren't using them and what we really want is guests to come in to build their points have a free drink use that free drink there's value there so they're coming back and doing it again and our team can continue to engage and so when you think about that yes transfer of some of those phoenix stores was a portion of it but we also are lapping outsized transactions, accelerated transaction growth from the early growth of the loyalty program. And then I think to answer your other question, I think you'll continue to see that through some of the year, primarily in the second quarter. But, you know, eventually we're going to lap those stores and again, profitability and how we're thinking about growth, where we're growing. This isn't every store we open in Phoenix. Oh man, we've got a sales transfer issue or a concern. It was really more strategically. We had some good sites that we liked very much that happened to be closer to some of our higher volume stores. I think the other thing, I mean, you may have
noticed that people are very worried about high gas prices. And so having the slightly negative transactions in the quarter where gas prices spiked just leads to the obvious question, which is, are you seeing any change in your consumer behavior related to higher gas?
Yeah, and the way that we have answered that is, and I think for everybody in the room, when Rod says we asked everyone to use their free drinks, we were going to give them six months to do it, January 1st to June 30th, we basically said you need to use them. We had transaction growth of somewhere between 9% and 12.5%, big numbers. And so when we look at our transactions and how they're performing, and we look at it on a two-year stack, we see that and go, at the moment, we don't appear to be feeling any type of sensitivity. I would say that everybody in the room realizes if the gas price is triple, that is going to have some effect. But generally speaking, we haven't felt it, at least in the moment.
I will knock on the fake wood that we don't see gas prices triple. In terms of growth, which is, you know, obviously new unit expansion is really the story here and not the comps in the March quarter. but as you think about you have a new chief development officer who joined i mean is it three weeks ago it was pretty recently so i'm sure they have everything planned out at this point but i mean what are the the chief priorities that you have for the new chief development officer what are the things that you would like to maybe see changed or optimized from what you were doing
before so again if you go back to the first three quarters of being a public company we we again hit our sales growth numbers, we hit our profitability growth numbers, and we hit our unit growth. Opportunity, when you look at the units, they were backloaded into the quarter. And so when we've talked to John, who I've worked with several times and know really well, what we've said is we want to be more predictable, more consistent. One of the things for those of you that are on social media and you track it, we are now giving three months in advance the stores that are coming. And so when you look in April and May, what you'll see is we had committed to 10 for the quarter. We've already opened five. And when you look at June, it lists the five that are going to open. When you go to July, it lists the five that are going to open. When you go to August, it lists the five that are going to open. And so one of the things that John has already done is been able to move them forward in the quarter, which obviously means not only are we going to get the units, but we're going to get the additional store weeks. And again, we'll help with revenue and again,
the consensus and all of the above. The other topic that's kind of really impressive about your business is the labor. I mean, your labor runs at levels that nobody really sees as a percent of sales. Can you talk about what drives that labor and how sustainable of an advantage
you view that as so again going back to the culture and taking care of the teams we have store leads that are obviously hourly they earn tips we then have multi-store leads and when you think about a company most companies when you go from store lead to call it the area manager position. You go from one to 10. Our multi-store leads work in the stores. They run three to four on their additional day of the work week. They have an admin day. They not only get promoted from store lead, but when they get promoted, they pick their successor and then they run that market and in turn shoulder to shoulder. And you get that great guest satisfaction that I spoke earlier. They're heavily invested in the ownership of it. And what that drives, again, going back to what I spoke to at the beginning, industry's running somewhere between 120 and 140 on team member turnover. We run 50. And so we are considerably better. The average tenure of that group is going to be about three years. And if you thought about it intuitively, what that means is longer tenure, better retention, better experience, better sales growth, which we've seen. And in turn, we can leverage that into profitability. And so I think while the model is slightly different, what really works for the model is that retention. And when you have that great retention, you have lower labor,
and that's how we get there. I think we have time for one more question. So I wanted to ask about loyalty. You're relatively early in your loyalty journey, but it's already about two-thirds of your transactions if I have the number right. Can you talk about kind of what inning you're in and how you're using that data to influence frequency or spend? And kind of which cohort are you seeing the biggest lift from? It's usually the less frequent users. If you can get them to come in more, that's like the holy grail. Are you starting to see that? Or what really motivates that
customer? So to your point, loyalty is going to be 66% of our transactions. And when you look at that, again, to Rod's point, started in June of 2024. When we had started, Starbucks was number two at 55. Dutch was number one, I think right then about 63. I believe Christine said they're around 72 right now. We're at 66. And so when you say that in roughly a year and a half to get to that level is really exciting. Our top group on the quartiles of loyalty members are coming anywhere between 10 and 15 times in a month. So really, really strong. When you look at the second group, they're going to be five to 10. And again, that is accelerating. And to your point, we continue to work with the third and fourth group, which are right around five times a month. and that's where the opportunity is and I think being a new brand we took our marketing budget from one percent up to two percent of sales and the whole idea there is to have paid media that brings new people in but use the segmentation to try to help influence those groups to come more
off great that went fast so we are going to have the breakout in the Richardson
thank you everybody for having us very much