How Bow Truss Coffee Was Able to Scale Quickly & Organically
Bow Truss is one of Chicago’s fastest growing coffee shops. Over the last two and a half years, they have experienced a rapid pace of growth that’s rarely seen in the speciality coffee industry. Owner Phil Tadros got his start in coffee at 19, but put the business on hold as his design agency, Doejo, took off. A few years later, Phil was able to dive back into creating coffee the right way, and Bow Truss was born.
In this interview, we spoke with owner Phil Tadros about how Bow Truss was able to scale so quickly in such a short amount of time, how speciality coffee is changing the industry and why the financial landscape is better than ever for small businesses — even if banks aren’t lending.
How Bow Truss Coffee Scaled So Quickly
Phil got his start with coffee at 19, but put it on hold while launching Doejo, an award-winning digital agency that helps organizations innovate, design and build cutting edge products, services and experiences, based in Chicago’s Lakeview neighborhood. Once the agency became profitable, Phil was able to focus on his love for coffee. Along with an amazing team of coffee professionals, he launched Bow Truss in 2013.
While Bow Truss is still a small chain, with three retail locations currently open and three more on the way in the coming months, they’ve turned into a serious operation rather quickly. In just two years, they’ve exceeded the capacity of their first roasting space and are moving into a new 10,000 square foot warehouse. During that time, they landed wholesale accounts with the Virgin Hotel in Chicago, Whole Foods Market and the five major theaters associated with Broadway in Chicago. Bow Truss has even expanded to other cities, including Detroit, LA and New York. Those are major feats to accomplish, considering they do not have a sales team and have not taken any investment capital thus far.
“Having this kind of growth is unusual, so I have to just give credit to the product’s quality and the experience of the people who are helping facilitate this brand,” explains Phil.
Their retail presence has expanded from a single cafe in Lakeview to five new locations. Each location also brings an expansion to new neighborhoods, both due to landlords reaching out to him as well as keeping an eye on interesting retail locations as they become available. If you’re looking for expansion opportunities, it is important to keep your eyes open for new locations well before you may be ready to move. In Phil’s case, he was scouting for locations in popular neighborhoods for many months prior to signing a lease.
“The River North location I had my eyes on prior,” Phil explains. “I was waiting for that before Bow Truss even opened. The Lakeview location where we roast, that’s where Doejo’s offices were.”
The ceilings in the Lakeview location, and home to the Doejo offices, are bow truss ceilings; that’s where the name for the coffee brand originated. Phil found their Pilsen and Michigan Ave. locations as a result of landlords reaching out directly and offering up their space as a potential expansion opportunity.
“As you can see it’s pretty organic,” Phil continues. “We like Logan Square for a lot of reasons. My grandparents and parents moved there when they first came to this country and lived up the street from [the Bow Truss location], literally.”
Landlord outreach is a great indicator of organic growth and certainly helps the expansion process progress more quickly. Positive word of mouth also played a huge role in building a wholesale distribution network without the help of a sales team.
As Phil describes, “people are walking into our Lakeview location, seeing us roast in front of them, and loving our coffee. Word gets out that have you good coffee, it’s not hard for a chef or a restaurateur or a beverage director to say ‘Hey, I want to work with these guys.’”
Bow Truss’s revenue is close to an even split between the wholesale and retail sides of the business.
“Once the Virgin Hotel and some other key accounts are open, that could change. But on the flip side of it, once the three new retail locations open that could change. They’re always competing but right now they’re neck and neck,” says Phil.
To keep up with the pace of their wholesale orders, Bow Truss uses a local Chicago startup called ShipBob to handle the packaging and shipment of their wholesale and online orders.
“We used to work with UPS but now we work with ShipBob,” says Phil. “They’re a great solution and I’d advise other people to work with ShipBob.”
How Speciality Coffee is Changing the Game
“In general, we don’t really look at speciality coffee as competitors because there is such a fight in speciality coffee to grow,” explains Phil.
Competition among coffee shops is difficult to determine. In many ways, it simply comes down to taste. Much like comparing two restaurants or chefs, people choose to like one more than the other often based on taste alone. Much like the restaurant or craft beer industries, there are strong feelings of camaraderie and support among speciality coffee companies.
“We all want each other to grow because the specialty coffee movement is much bigger to me. It’s really about quality coffee and quality of life for the people that are working so hard to bring us good coffee,” he elaborates. “I don’t think we’re really as much in competition with each other as we are together competing against people who don’t respect the farmer, the process and the quality of coffee.”
Bow Truss, like other specialty coffee companies, carefully ensures that they source their beans from reputable brokers. They also are working on creating direct trade relations with coffee farmers in countries like Ecuador and Mexico. After finding the right farms, Bow Truss experiments with different beans to choose the most unique coffees to offer up to their customers.
“Dennis, our master roaster, will fly out and create a relationship with the farm directly. He just came back from Mexico, traveling and developing new relationships,” says Phil.
The Financial Landscape of Speciality Coffee
Crowdfunding has changed the game for businesses in all types of industries, and coffee is no exception. While Bow Truss bootstrapped their business, there are more opportunities than ever for up-and-coming businesses to gain access to capital — even without the help of banks.
“Banks are not giving people money,” states Phil. “They just don’t. Unless you have been in business for a long time [when] you’re already set up where you don’t really need [the money]. For a small startup, you really need to depend on your friends and families and crowdsourcing capital.”
As a small to medium sized business, it comes down to friends, family and fools to raise money. Investing is always a gamble, whether the investment is coming from your family, customers or venture capitalists. In the end, it comes down to making a gamble that you trust. Now, with so many new ways to fundraise, business owners can offer investment opportunities to people who already have shown trust in your business.
Bow Truss bootstrapped, which allowed them to make decisions on the fly and grow organically without having to give up equity or potentially undermine the quality of the product. For those in the early startup stage looking for growth capital, Phil recommends Kickstarter to mobilize your existing fan base.
“There are people out there who don’t know that they can give you money. But a lot of independent companies can make that public in a non-desperate way by working with companies like Bolstr or Kickstarter by saying ‘Hey, we want to grow. If you like us, help us, pitch in.’ Kickstarter is pretty amazing in that your fans get incentives and they’re not looking for anything else in return besides what you’re offering them as perks,” he explains.
In that past, companies couldn’t publicly announce that they were looking for funding to grow. But recent legislation, as part of the JOBS Act, has made it possible for businesses to mobilize investors in a new way.
“That’s what’s amazing about what’s going on with the crowdsource movement. It’s gathering that collective payment structure that everyone’s little bit means a lot together, and you can really help change and grow a company as fans. It’s a really good time for small business.”
This article originally appeared on The Vault on Bolstr.com.