This is 7 Brew’s world. We all just live in it

7 Brew in suburban St. Paul, with its shortest line of the day. | Photo by Jonathan Maze.

At just after 3 p.m. on Thursday, workers at a 7 Brew in a suburb north of St. Paul were given a bit of a break by the day’s onslaught of cars through the double drive-thru. 

That is to say there were only about 20 or so cars there at the time, rather than the line that had extended into the parking lot, down the road, around the corner and into a busy thoroughfare just out front for most of the day.

Such lines have been commonplace in the six weeks since the store opened and, if we are being honest, at such openings across the country. 

A location of the drive-thru beverage chain doesn’t open without these lines. They can generate waits as long as 45 minutes while local officials reconsider traffic flow around the locations and sparking vociferous complaintsin places like Springfield, Missouri, Florence, Kentucky or suburban St. Paul.  

Welcome to 7 Brew’s world. The drive-thru coffee shop chain may well be the biggest phenomenon the restaurant industry has ever seen. 

The Fayetteville, Arkansas, chain did not exist at the start of 2017. 

It is already the fourth largest coffee shop chain in the U.S., going from $3 million in sales in 2017 to $1.2 billion last year, according to the Technomic Top 500 Chain Restaurant Report, an absurd 111% annual growth rate. 

Only Crumbl hit the $1 billion mark faster, and 7 Brew is about to surge past the dessert chain on the Top 500 ranking, and it operates in a far more competitive market. 

7 Brew, Crumbl and Dave’s Hot Chicken, which was just sold to Roark Capital for $1 billion, were all founded in 2017. The average age for restaurant chains in the Top 100 is 50 years. Only six other chains in the Top 100 have even been founded this century.

The coffee chain opened its first stand in Rogers, Arkansas, in 2017. The brand quickly generated a following and grew to seven stands around Arkansas before it was sold in 2020, when John Davidson became the CEO. The brand received an investment from Jamie Coulter and Jimmy John Liautaud in 2021 and from the private-equity firm Blackstone in 2024. We were hearing early on, when the brand had just a few locations, that it was one of the more intriguing growth brands in the country.

7 Brew has now attracted some of the country’s best and most sophisticated franchisees, most notably Greg Flynn, who had largely avoided emerging chains since he got into franchising in the late 1990s. Last year, Flynn signed a 160-unit development agreement with 7 Brew.

The brand, along with the publicly traded Dutch Bros, has pushed the restaurant industry to rethink and broaden their beverages, as younger consumers flock to the shops for their colorful, customizable and social media-friendly beverages—most of which are served cold.

Demand for these beverages is such that these concepts are booming even though there are more than 32,000 coffee shop locations in the U.S. Indeed, as we noted earlier this week, coffee brands are generating organic growth despite the aggressive development.

But the real story in 7 Brew is in the shops. A typical 7 Brew costs between $940,500 and $2.3 million to build, according to the company’s franchise disclosure document. They operate in modular buildings that are 510 square feet and cost $310,000 to $600,000 before freight and installation. 

Those long lines of customers mean a typical location makes $2.7 million. Do the math, and that is $5,213 per square feet. By comparison, a standalone Chick-fil-A, which generates $9.2 million in sales per year, does $1,700 to $2,000 per square foot. That is an almost unfathomable sales level.

All of this has made 7 Brew a lucrative business. The company generated $113 million in revenues last year and $45 million in net income, according to the FDD. But affiliates that sell the modular buildings and other supplies to franchisees generated another $93 million in revenue, for $205 million. 

The company has a unique, tiered royalty requirement based on sales. Stores that do less than $20,000 in sales per week pay 4.5% of their revenues as royalties. They pay 5.5% if they make from $20,000 to $25,000 and 7% if more than $25,000. That both benefits the company when stores do well and provides relief for those that do not do well—and many of the stores perform exceptionally well.

7 Brew is showing no signs of slowing down. Buoyed by its well-capitalized and aggressively developing franchisees, the company is projecting another 437 locations this year, which will put the brand over 1,000 and make it easily a Top 50 chain. 

The company can do all this because it is a franchise, and one that generates strong sales and profits.

The franchisees are well-capitalized, operate in a hot sector and make a lot of money doing so. That prompts more and more growth and the franchisor doesn’t spend its own money in the process.

There is danger, of course. Fast growth can ultimately be its own worst enemy, as companies outpace their demand and fickle consumers turn to other options. The world has been full of them, notably Krispy Kreme and the entire frozen yogurt sector.

Yet 7 Brew has the economics, and certainly the long lines and the traffic problems, to justify all these new locations.