Black Rock Coffee Bar received a rough introduction to the public markets. | Photo: Shutterstock.
Black Rock Coffee Bar received a bit of a cold introduction to the public markets.
The coffee chain’s stock is down 39% since its IPO last year, despite sales and profitability that would be the envy of just about any other company.
At least part of the problem was related to delays on new units, which Black Rock blamed on landlords, which delayed permits and resulted in locations opening later than executives had initially projected.
That messed with the company’s projections on the number of weeks its stores are up and running, something analysts and investors are looking for from growing chains.
But executives with the company believe they’ve figured it out. They have plenty of demand from landlords for potential new units and they have the people coming up through the ranks to supply those stores with management. All that should fuel the company in the coming years as it works to reach 1,000 coffee shops by 2035.
“When we went public, we had a pipeline where we felt we had enough buffer,” CEO Mark Davis told analysts, according to a transcript on the financial services site AlphaSense. He said that the company was able to open the delayed locations in the fourth quarter. Black Rock has since added to its pipeline to ensure better results in the future.
“When you look at the 2026 pipeline … we have a larger pipeline and we have more buffer,” Davis said. “Based on that, you’re going to see better performance on store weeks. We’re going to have this strong pipeline of quality stores and a goal again.”
Investors reacted positively. The company’s stock rose nearly 10% on Wednesday.
Getting those projections will be crucial for the chain to get investors focused on the rest of its numbers, which were spectacular.
Same-store sales rose 9.3%, due at least in part to its status as a newly public company, which typically brings in benefits in the form of customer attention. Still, no other public company reported a stronger number.
Revenues rose 25.3% to $53.6 million. The company generated a $1.8 million profit, up from a loss the year before.
Adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, rose 52.4%.
Most importantly, store-level profit margin rose 130 basis points to 29.2%. That kind of number is crucial for growth, because it means the company can generate a quicker return on new locations.
Black Rock has plans to build its loyalty program. Digital sales are up and the company has strategies for both linear and social media marketing.
The company currently operates 181 locations and has plans for 36 more this year. And executives believe they are getting plenty of attention from landlords to fuel growth in the coming years. Executives are not worried about competition from other beverage chains that are also growing.
“When you look at the availability [of sites], we have seen no pressure,” Davis said. “If anything, we’ve seen significant opportunity of volume. The quality of sites has improved and nothing has suggested that the market dynamics are changing. Us being a growing brand has made us a really attractive tenant.”
Davis also said that the company has a pipeline of talent to fill those stores with managers. He noted that 98% of the company’s team members above the barista level were promoted from within.
“We’ve got an incredibly deep bench,” Davis said. “When you think about the career development, both professionally and personally, it’s really helped. And that ownership from the team, from the ground floor, has really made us a great, growing company.”
