So there, four years ago, was Nick Bayer, the 35-year-old CEO of Saxbys, taking stock of what he had built. Or, more accurately, of the mistakes he’d made. Because, honestly, at that point, things could have gone either way. His company was coming out of a bankruptcy reorganization, and Bayer had to look himself in the mirror. In 2005 in Atlanta, he’d started Saxbys—a made-up name inspired by the combination of letters of successful brands like Saks, Starbucks and Sotheby’s—without writing a business plan and having raised no capital. A partnership destined to blow up had led him to Philadelphia, where it was dawning on him that his plan for selling franchises was perhaps his greatest misstep.
After all, he’d gotten into the coffee business without even being a coffee drinker. He’d grown up in Chicago, watching his hard-working parents trudge off to jobs that were, well, just jobs—his mom a receptionist, his dad a logistics manager. At Cornell, his peers sought six-figure starting salaries on Wall Street; he walked into a Denver coffee cafe and fell in love with the vibe and found what he was meant to do. “I opened up that door, and there was music and a human vibrance,” Bayer, now 39, told me recently over lunch at Parc, just days before he was recognized as Ernst & Young’s Social Entrepreneur of the Year and a couple of weeks before speaking at Drexel’s commencement.
Tall and lean, Bayer carries himself with the understated confidence of an aging jock, peppers his speech with the names of those he’s addressing, and holds eye contact, all of it combining to project an air of candor and self-inspection. “That’s euphoria for someone like me, people who love being around people,” he says. “I looked around and I couldn’t tell who was rich or poor, or educated or not. None of that matters. People that go to cafes like to be around other people. That’s a perfect business for me.”
But, as Saxbys cafes started to dot our landscape, it became apparent that Bayer’s values were not necessarily shared by his franchisees. He’s a businessman, yes, but an idealist at heart; as he preached to franchisees about Saxbys’ commitment to “make the world a better place,” he sensed in many of the reactions the difference between mere compliance and true buy-in.
“We’ve become a preferred employer for YouthBuild and Covenant House” Bayer says. “If I don’t screw this up, Saxbys will be the nation’s best first employer—not just for the kid out of Lower Merion High School, but also for the kid who dropped out of Bartram High School, or the kid who is homeless. If they get our love and support and are challenged to be great, they can become CEOs.”
In the aftermath of the Great Recession, Saxbys struggled and Bayer was embroiled in messy litigation with former partners. Guest-lecturing at his alma mater, Cornell, Bayer started to realize that great cultures can lead to sales—instead of the other way around—and that embracing social impact can result in for-profit success. Bayer started to suspect that coffee didn’t really matter—and, somehow, in that recognition, lay liberation.
“The world doesn’t need another company that says we make great Costa Rican coffee,” he says. “Plenty of companies make great Costa Rican coffee. We need more companies that make an impact. I realized we could do that through jobs and education, by developing a core mission and values and making Saxbys the best first job for anyone, anywhere.”
So Bayer went to Radnor’s MVP Capital Partners, the private equity firm that had acquired Saxbys in its reorganization, and explained that he wanted to scrap the franchising model and turn Saxbys into a culture company that focuses on double impact — the business model movement through which for-profit companies solve social problems, not to cynically score public relations points, but as part of their very mission. (Under former Massachusetts Governor Patrick Deval, Bain Capital has been a major driver of the double impact trend.)
MVP, which has been in the private equity game since 1985, reacted to Bayer’s dream counterintuitively. “They said, ‘There’s something in your head and heart that leads you to want to do this, so let’s talk about it,’” Bayer recalls. “They challenged me, but gave us a chance. Coming out of reorganization, we spent $370,000 to open Saxbys Drexel —a cafe designed and exclusively run by students. Now that’s our model.”
Bayer says Saxbys has been “built from the ashes,” and it is now among Inc Magazine’s fastest growing companies in the nation—with over $5 million in 2015 revenues and in excess of 30 percent annual growth forecasted—and the focus is on building its “experiential learning” cafes. A student-run cafe at Millersville University has been just as successful as at Drexel, where another cafe will open at 33rd and Chestnut this month. A cafe is also planned for Temple University.
“We’re repaying MVP, and repaying the region, too,” Bayer says. “We’ve become a preferred employer for YouthBuild and Covenant House. If I don’t screw this up, Saxbys will be the nation’s best first employer—not just for the kid out of Lower Merion High School, but also for the kid who dropped out of Bartram High School, or the kid who is homeless. If they get our love and support and are challenged to be great, they can become CEOs.”
By CEOs, Bayer means “Cafe Executive Officers;” each Saxbys is run by a CEO who has all the responsibilities of running all aspects of his or her own business: customer-facing, hiring, firing and managing staff, financials. The first student CEO of Saxbys Drexel is now the CEO of the cafe at 11th and Locust, where Bayer recently showed up to work a shift, part of a monthly excursion where all headquartered personnel fan out to the company’s 24 cafes to take out the garbage and fill orders. Rising fast in the company’s CEO Training Program is Dante Wilson, who had been homeless for four years when Bayer discovered him at Covenant House.
“We have a business predicated on the idea that you do best for yourself when you serve others first,” he says. “The love that I have for Dante, and that he has for me, is far more valuable than any material possession I could get for myself.”
At Saxbys’ sleek 10,000 square foot headquarters at 23rd and Chestnut, with its glass walls, exposed brick and state-of-the-art coffee bar, the company’s mantras are scrawled on the walls, sayings like “Serve Yourself By Serving Others” and “Embrace Being O.D.D. (Outgoing, Detail Oriented, and Disciplined).” On Bayer’s desk sits two books that are mandatory reading: The New Gold Standard: 5 Leadership Principles For Creating A Legendary Customer Experience Courtesy of the Ritz-Carlton Hotel Company and Setting The Table: The Transforming Power of Hospitality in Business by restaurateur Danny Meyer. Bayer calls Meyer, who he has met twice, his company’s business and culture icon.
“He’s adamant that it’s about putting your employees first, not your customers first,” Bayer says. “It’s not about the quality of the Kobe beef—that’s subjective. Human beings are going to like different things. But we’re all incredibly similar when it comes to human experience. We like to be looked in the eyes, we like to be remembered, we like to be thanked for our support.”
According to a paper written by Kelsey Chong of the Haas School of Business at the University of California, Berkeley, more than 9 of 10 millennials would switch brands for one associated with a cause and would even take a pay cut to work for a socially responsible company.
Bayer moved the company here from Broomall, because, again, culture—he knew that people would want to work in a cool space—and impact. Two years ago, he was in the room when entrepreneur Steve Case rolled through town on his Rise of The Rest tour, which aims to jumpstart local startup ecosystems throughout the country. At a breakfast at the Old City Continental, Bayer and other budding masters of the universe heard a message from the former AOL CEO about the unique opportunity they faced: “This city is so special,” Case told them. “You have the haves and have-nots in such close proximity, you have all the capability to make a big social impact. You can build successful businesses that also make Philadelphia a better place.”
For days, Bayer ruminated on Case’s pep talk and determined that he could do more. “I choose to live in the city and educate our son here,” he says. “But I realized Saxbys had to grapple with what Steve was talking about. We have more young people moving here year after year—they’re in our cafes. And they want to make the world a better place. Most young people do, and then they have that taken out of them by corporate America.”
And—as Bayer was to find out—such thinking isn’t just fuzzy-headed kumbaya. It’s actually smart business. According to a paper written by Kelsey Chong of the Haas School of Business at the University of California, Berkeley, more than 9 of 10 millennials would switch brands for one associated with a cause and would even take a pay cut to work for a socially responsible company. “Exceeding 80 million in population, and accounting for about one trillion dollars in total consumer spending in the United States, it’s no wonder that businesses are now scrambling to appease the demands of this up and coming consumer base,” she writes.
That’s just the thing, though: The minute Saxbys’ good works seem calculated to inure to Bayer’s bottom line will be the moment his customers leave to seek something more authentic. Bayer knows this…and so he keeps his head down, focused on providing opportunity to those who haven’t sniffed it before, and preaching to his staff about the transformative effect of “taking care of each other, and taking care of our guests.”
Nick Bayer is something of a backslapper, a big personality who can fill up a room, but he confesses that he’s always felt like an outsider. There will, he says, always be a part of him sitting in the Chicago kitchen of his youth on Sunday nights, watching his parents ready themselves for another week of jobs that didn’t define them. His greatest contribution, after all, might be giving himself and others—college students, civic-minded grads, homeless youth—something to love doing, an identity beyond the circumstances in which they find themselves. When I say something like this to him, Nick Bayer smiles: “I told you,” he says. “It’s not just about the coffee.”