After a year of restructuring prompted by the closure of some of her locations, Urban Farmhouse Market & Café owner Kathleen Richardson is preparing to take her business down a path she said she was never initially interested in traveling.
The locally based coffee shop and café chain is entertaining offers to franchise the concept, with interest lining up in Richmond and Northern Virginia.
“I was taking the Starbucks approach to my business,” said Richardson, who started Urban Farmhouse in 2010 after stints on the corporate side of McDonalds, Panera and Starbucks. “I wanted to own all of my locations, but I’m realizing now that may not be the best approach for our growth.”
Richardson said the decision to franchise came after outside inquiries about expanding her concept and limited on-hand capital to pursue the ventures herself.
“We have had a lot of requests over the years from around the country and throughout Virginia,” Richardson said. “I’m realizing that our concept is popular, and people want us, but having us place all of our revenue back into the business makes it challenging for us to grow.”
The change of heart comes as Urban Farmhouse continues to regroup after growing quickly to six stores, only to close three in close succession about two years ago. Richardson closed her locations in Manchester, Church Hill and near VCU in 2016.
The brand, which is profitable, still operates shops at Linden Row Inn on East Franklin Street downtown, Scott’s Addition, Midlothian, Rocketts Landing and its original location in Shockoe Slip. And Richardson says she still has legacy costs to pay down on the three shuttered outposts.
“It’s a healthy number for us to maintain,” she said. “We are still repaying debt we incurred from the closure of our other locations about a year-and-a-half-ago, and look to have it repaid by the end of the year.”
Richardson said upfront franchise fees for an Urban Farmhouse location are less than $50,000, and the company would take a 5 percent royalty on sales initially. She said average volume of her existing stores is approaching $1 million in annual sales.
Build-out costs per-store can range up to $250,000, depending on the costs some landlords might cover on their end.
“There is a satisfying demand for our concept, and some landlords and developers and are willing to invest a good portion of the upfront costs,” Richardson said. “Generally, kitchen hoods are not needed, which keeps major costs down. Most equipment is smaller and portable and lots of materials are re-purposed. The floors are sometimes unfinished and ceilings do not need to be built.”
Franchisees will also be able to tap into her Farmhouse Functions catering brand, which launched last year after opening at Linden Row Inn. She said that tangent of the business has catered several weddings and business functions since its launch, including functions at Altria and Envera Health in Richmond.
“It has really been a learning process, but we’re finding that it’s a lucrative part of our business,” Richardson said of the catering side. “We plan to build this into the franchise concept.”
While arriving at the decision to franchise has been difficult for Richardson, she said she’s ready to take the leap.
“There is real growth in the market for this type of concept, and what we have built here is something that can be applied anywhere,” Richardson said. “With my background in working and supporting franchisees with over 15 years with McDonald’s and Panera, we’re already prepared.”