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Don and Linda Eckles founded Scooter’s, a drive-through coffee chain, in a suburb of Omaha, Nebraska, three decades ago. The company has since grown into one of the fastest-growing coffee brands in the country, but it still has no locations in the Northeast or on the West Coast.
More than a decade into running his Omaha-based coffeeshop chain, Scooter’s founder Don Eckles wrote to Warren Buffett to ask whether Berkshire Hathaway might be interested in buying the business. Buffett responded requesting additional information, and the two “went back and forth a couple of times.”
Buffett ultimately concluded Scooter’s was too small “to move the needle for Berkshire,” but suggested another Nebraska investor, M-One Capital. That introduction helped lead to a 2018 deal that allowed Eckles to “go all-in on expansion.”
Scooter’s, founded in 1998 by Eckles and his wife Linda, now has 912 locations, excluding 19 company-owned stores; all other locations are franchises. Many franchises are concentrated in the Midwest. Systemwide, the franchises generated $859 million in sales last year, which translates into an estimated $80 million in revenues for Eckles’s holding company.
Because most costs are borne by franchisees, Forbes estimates Eckles booked profits of about $50 on that $80 million, implying a 62.5% net margin.
Scooter’s has become an acquisition target, though Eckles says he prefers to keep the business private. Reports last year suggested an offer to buy the company for $1 billion. Eckles said: “For sure, for now, we love being a privately held company.”
The Eckles family remains majority owners, with an estimated 60% stake in the business, valued at approximately $1 billion (about $600 million). Investors including Omaha-based M-One Capital, Minneapolis-based GMB Capital, and Dallas-based Morrison Seger own the remaining 40%.
Scooter’s is the 78th largest restaurant chain in America and has locations in 32 states. Its strongest customer base is in Nebraska, Iowa, Kansas, South Dakota, and Missouri. The chain reaches as far west as Idaho and Las Vegas, but does not have a location on the West Coast or in the Northeast.
Scooter’s is growing quickly in Florida and also has locations in Georgia, South Carolina, and North Carolina.
Analyst Andy Barish of Jeffries described Scooter’s as “under the radar,” noting it has been on the scene for a long time while investors watch what could happen as competitors expand. The company’s core territory in the Great Plains has seen relatively limited competition, but Arkansas-based 7 Brew is “nipping at Scooter’s heels,” and the question remains what happens if Dutch Bros and 7 Brew move further into states such as Nebraska, Oklahoma, Kansas, and Iowa.
Even without adding more locations, there is room for sales growth. The average Scooter’s kiosk-format store has just under $1 million in annual sales, compared with $2.1 million per location for Dutch Bros and $1.9 million for 7 Brew.
The top quarter of Scooter’s franchisees have net income margins topping 20%, while the average location’s net income margin is closer to 15%. Eckles said store profitability remains the top priority.
“900 is just a number on the way to another, larger, number,” Eckles said.
After Don and Linda married in 1975, they met while Don was a radio broadcaster covering a high school basketball tournament in western Nebraska where Linda was cheerleading. By 1979, the couple was living with their young daughter in Anchorage, Alaska, and Don became interested in dogsledding after seeing mushers on his commute. He later moved back to Nebraska and, after relocating to Folsom, California, opened a sit-down coffee shop. The couple then decided to bring drive-through coffee to Omaha.
In 1998, they remodeled their first location—a 650-square-foot former Chinese restaurant—using $40,000 in savings (more than $80,000 in today’s terms). Eckles recalled that he expected no bank would lend money for a small drive-through building in someone else’s parking lot while selling “$3 cups of coffee.”
To manage cash flow, the couple worked every shift for the first four months, with Linda stamping a smiley face sticker on every coffee lid from day one. After about four months, the first Scooter’s began breaking even and they hired their first employees. The second location opened about three months later.
By the fifth store, the Eckleses had borrowed $150,000 to build two small coffee kiosks at a nearby mall, but construction costs rose and nearly threatened the business. They later decided to franchise in 2001 at the request of friends, family, and customers who wanted to open their own locations.
Franchising was supported by the lower cost of Scooter’s kiosks compared with typical fast-food sites: most are 644-square-foot kiosks with a drive-through window, rather than the larger two-acre sites commonly required by other restaurant franchises.
When M-One Capital invested in 2018 at Buffett’s suggestion, the business model shifted. Eckles said the company gave investors stock and paid out 75% of taxable income as distributions. Over time, he said that level of payouts limited reinvestment needed for growth.
They ended the 75% profit payouts for early investors, using part of the M-One Capital cash to reward the friends and family who had backed the company at the beginning, with future distributions intended mainly to cover taxes. The remainder was reinvested into people, facilities, and equipment.
Joe Thornton became Scooter’s CEO in 2024, and the company’s growth has been supported by its relative lack of competition in its core Great Plains territory, even as other drive-through chains continue to expand.
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