In Utah, Arizona and Idaho, soda shops, such as Sodalicious, Swig and Fitz, have been proliferating. Located in states known as the Mormon corridor (though the Mormon church is now called the Church of Jesus Christ of Ladder-Day Saints), these stores have flourished, to some extent, because this church prohibits drinking coffee and tea.
Hence, these shops out west, specializing in sodas, instead of coffee, are operating as Starbucks does in most of the country. In fact, Kevin Auernig, the president of Sodalicious, told the New York Times that “What Starbucks originally did for coffee was kind of our idea with soda.”
Experts wonder if these soda shops will flourish outside of the west since soda consumption has been on the decline in the United States.
Auernig, the Provo, Utah-based co-founder of Sodalicious with his wife Kate, which has 25-locations in Utah, Arizona and Idaho, expects to double that number in the next few years. All of its locations are company-owned, as will be its new locations. None is franchised.
Asked which states beyond those three it’ll be expanding in, Auernig replies, “We’d like to keep that under our hat for the time being.” He acknowledges that “We’re expanding outside of the Mountain states.”
Would it work in multi-cultural California? Auernig replies, “Sure it would. It would entail educating the customer and showing them another way to have a pick me up other than coffee,” he says.
For example, his shop in Price, Utah is doing well, despite its population consisting of 80% Catholics. Certain stores in Arizona also attract a more diverse clientele.
Nor has it accepted any venture capital or private equity funding. All of its expansion is financed by cash on hand and a line of credit.
Since Sodalicious debuted in 2013, the couple has plunged its profits back into the business and own a 100% of it. They prefer dealing with banks better than venture capitalists because there are fewer personalities involved, and banks don’t create a three-to-five-year plan to sell the business, he suggests.
Speaking of venture capitalists, he says, “It’s widgets to them. We’re still building it out and don’t have to answer to anyone. Not answering to anyone is the American dream.”
Sodalicious offers brand-name sodas such as Coke, 7 Up, Dr. Pepper, Pepsi, or Mountain Dew and then mixes them into mixed energy drinks, adding flavored syrups and fruit purees. For example, the Castaway drink consists of 7 Up blended in with coconut guava, and fresh lime.
Sodalicious also sells energy drinks such as Monster and Red Bull, cocktails such as Blue Buzz, consisting of Red Bull, blue raspberry and coconut.
It also specializes in an array of cookies including its pink-frosted sugar cookie, snickerdoodles, and during the holidays, peppermint fudge cookies.
It doesn’t offer sandwiches or food beyond that, and Auernig concedes that “we’re not a lunch or dinner destination.”
They’ve experimented with selling breakfast and other sandwiches, at times, but learned that “Our customer is coming to us for their soda and a cookie,” he says. Since it owns its own bakeries and produces the cookies, it keeps its costs down and margins high.
Someone once said to Auernig, “You’re running a glorified lemonade stand.” His response: people want it and why mess with success?
Despite not specializing in meals, it has rather lengthy hours, opening at 8 a.m. and closing at 9 p.m. and later on weekends. It also increases sales by using one third-party delivery service, DoorDash.
He describes its target audience as most customers stopping by on their way to work in the morning, parents who come after dropping their children off at school, business professionals for an after-lunch break, and soccer moms stopping by before their kids’ practice.
What differentiates Sodalicious from competitors such as Swig and Fitz? Auernig replies that it’s selling more than soda. “I’m selling experience. It’s like ‘Cheers’ where everyone knows your name, but we know the orders of regulars,” he says.
He describes the effect of the pandemic on Sodalicious’ business as riding a “roller coaster. We had to close our lobbies for a while and only use the drive-thru window.” Since most of its business derives from drive-thru sales, its sales were affected only slightly.
It had to “reevaluate our through-put and find ways to move cars more efficiently, and with that, came an increase in sales,” he says.
In the past, it took over and remodeled a variety of retail shops including restaurants, bike shops, and insurance offices. But since it’s relying more on drive-thru windows, it requires less space. Its new stores don’t even have lobbies, he says.
Two years from today, he expects to have doubled its number of outlets, “elevated the brand and found new ways to work with customers and vendors.”
He describes the three keys to its future success as: 1) Retaining current labor and attracting new labor, 2) Being innovative, 3) Sustaining its culture of having fun, being playful and judgment-free.