(exciting music) - [Announcer] This is "Carolina Business Review."

Major support provided by High Point University: The Premier Life Skills University, focused on preparing students for the world as it is going to be.

BlueCross BlueShield of South Carolina, an independent licensee of the BlueCross and BlueShield Association.

Sonoco, a global manufacturer of consumer and industrial packaging products and services with more than 300 operations in 35 countries.

- By and large, it seems like we've kind of forgotten about and stopped talking about the quote, unquote "recession" that's been around for the last two years or so.

Welcome to the most widely watched and the longest running dialogue on Carolina business policy and public affairs in the Carolinas.

As we center down now squarely in the middle of this holiday, the energy, the enthusiasm, the gift-giving, the stress, the activities, even some emotional anxiety is distracting us from whether economic activity is rising or falling.

So in a moment, we will begin the dialogue and try to unpack that.

And later on, is this CEO and his company just another coffee shop in a long line of ubiquitous places to get a cup of joe?

We'll ask him.

- [Announcer] Major funding also by Foundation for the Carolinas, a catalyst for philanthropy and driver of civic engagement, helping individuals, nonprofits, and companies bring their charitable visions to life.

Truliant Federal Credit Union, proudly serving the Carolinas since 1952 by focusing on what truly matters, our members financial success.

Welcome to brighter banking.

And Martin Marietta, a leading provider of natural resource-based building materials, providing the foundation on which our communities improve and grow.

On this edition of "Carolina Business Review," Jason Thomas from SC Biz News.

Tony Mecia from the Charlotte Ledger and special guest, Darren Spicer, co-founder and CEO of Clutch Coffee.

(exciting music) - Hello.

Welcome again to our program.

Thank you for joining us.

Tony, nice to have you here.

Jason, thanks for hauling it up from the upstate of South Carolina.

- Great to be here.

- [Chris] Tony has to like, walk a couple blocks.

- It's very challenging.

Yes.

- Had to dodge a lot of orange cones on the way.

- Tony, commercial real estate, you know, it was all the worry in the rage the last 12 months and how some of these urban cores we're gonna be able to backfill some of the very large vacancy rates in Charlotte.

It's what they're calling the whisper rates, more than 20% vacancy rate.

And talking to a commercial real estate executive last week, he told me that he thought that that would take at least a decade to absorb that.

What are you hearing about in places like Charlotte?

- Yeah, I mean, I think it still continues to be kind of challenging.

You know, if you talk to real estate brokers, commercial real estate brokers, they sort of have a congenital optimism that things are gonna turn around, that we're gonna get more companies moving here, filling up some of these spaces, that kind of thing.

But like you said, there are some very large spaces, a lot of large office buildings in Charlotte that are at, you know, historic vacancy rates, north of 20%.

And it can't really be backfilled.

So leaders, I know, in Charlotte are working on it.

They're trying to put together some policies.

How do we, you know, recruit more?

Can we convert these?

What sort of incentives can we have, so, you know, for the Carolinas that have had such tremendous growth, it's a little bit shocking to some people.

I think that some of these national trends are still playing out here.

- Yeah, and to use the term Chicken Little, the sky is falling.

While there was a lot of concern about that, and of course, if you own a property, you wanna have it, but it doesn't seem to be stressing the banks or anyone else other than if you just own a building.

- Yeah, I mean, you know, as far as it causing sort of widespread economic destruction, that's certainly not happening.

I mean, it's definitely isolated.

There are bright spots, you know?

This tends to be older buildings.

I know in Charlotte, they've started referring to it as "vintage office," which is a little bit of a euphemism maybe.

But there are bright spots.

There are companies moving here, there are, you know, new buildings getting built, a few of them.

So, you know, it's sort of a hit or miss.

- Greenville, Columbia, Lowcountry, are they having the same issues?

- Well, it's kind of a tale of two markets with the upstate and the Lowcountry and South Carolina industrial space demand in Greenville and Spartanburg has driven vacancy rates down to the lowest of the year in quarter three in Greenville and Spartanburg.

We're seeing, in Greenville, Spartanburg, the tail end of a building boom, is what 37 million square feet of an industrial space came along the past three years.

And now that's starting to get swallowed up a little bit and they're predicting a very strong 2025 with distribution and manufacturing demand in the upstate.

Now in the Lowcountry, it's a totally different story.

We're seeing these massive spec buildings in the Charleston region just sitting there.

It's causing a huge spike in the vacancy rate.

It's up to, some are saying up to about 17%, which is the highest it's been in the past decade or so.

One report said that about 3.5 million square feet of industrial space came online in Charleston this year alone.

So it's a lot different down in the Lowcountry right now.

- Are you surprised by that in Charleston because they had such the hot hand for so long?

I mean, for a long time, Charleston, it may still be the fastest growing urban center in the country.

- 34 people moved there a day in Charleston.

It is a little bit surprising, but I think, you know, a lot of it was a lot projective with the speculative builds and it came online so maybe they predicted a little bit too much.

But I think once the market settles down a little bit, it'll start to get filled up next year.

It's kind of a "wait and see" approach.

- Do you think we're gonna have a recession next year, Tony?

Do you think all this is gonna kind of come to roof?

- I mean, that's kind of the big question, but it's certainly, if you look at the stock market, there's a lot of optimism that the economy's going all right.

You know, the consensus seems to be we're in a good place, maybe not a great place, but it's not horrible.

So, and I know a lot of policy questions, you know, with the new administration coming in, how that can affect things.

So, you know, your guess is as good as mine, really.

- [Chris] Given South Carolina's manufacturing base in tariffs, is this a real headwind that many are concerned about?

- Concerned?

Yes.

You know, we talked to Jonathan Dawley, CEO of, oh gosh, I'm blanking out.

CEO of KION Manufacturing there in Somerville.

You know, he's calling it scenario building.

They're just really concerned about what Trump's tariffs might do to the supply and demand and, you know, the supply chain and if cost might rise on some of their goods.

And so, you know, they're really just kind of stepping back and really evaluating where they are and the steps they might have to take if prices do go up.

But you have the flip side of other folks who are seeing this as a golden opportunity, maybe that they can secure goods at a faster clip.

So it's a lot of just kind of sitting back and seeing where the market's gonna go once Trump takes office and if he makes good on his promises for these tariffs.

- With a Trump administration, Tony, in North Carolina, North Carolina, in the last election was interesting in that Trump easily won North Carolina, but democratic leadership cemented their hold of North Carolina and you've got that bifurcated kind of settlement that voters have.

Do tariffs and less regulations influence what you're hearing kind of in cocktail party chatter around business and policy?

- You think I go to cocktail parties for all my information?

- [Chris] Well maybe people you know.

More social people.

- Yeah, I do go to occasional cocktail parties.

I do hear things.

Of course, my job, I talk to people.

- [Chris] But after T-Ball doesn't count.

- (laughs) Okay.

- [Chris] Bring back the 1950s.

- But yeah, I mean, I do think people are talking about it.

I do think it's hard.

It's really hard to know.

I mean, North Carolina has a great reputation as being very strong in business, you know, in terms of, you know, regulations and taxes.

I know South Carolina, you know, same way.

Very desirable place to do business.

I don't think that people are anticipating that that is gonna change.

It's at least not relative to others.

But, you know, there's so many question marks, I think, on where things are going, you know, with tariffs, you know, regulations, a lot of these issues.

- Chris, I did wanna make one quick point again, back to what Jonathan Dawley said.

You know, the whole push about the tariffs, a lot of people are wanting to get the focus back on domestic manufacturing, right?

But Jonathan Dawley made a really good point that, you know, local ain't free, right?

So it's gonna take a long time for this to play out if domestic manufacturing focus is put back on there.

This thing just doesn't happen overnight, right?

So there's a reason why we import a lot of goods from overseas.

So it's really interesting.

- And it is more than just manufacturers, obviously.

I mean, manufacturers, I think, are certainly watching it on supply chains.

Are there benefits of manufacturers if you have tariff?

Possibly.

Certainly retailers and you know, the price of goods, that's something a lot of people are watching, and you know, who knows?

- Are you either one of you, quickly, in about one minute or less, Are either one of you getting a sense that there's an acceleration in layoffs happening?

Maybe not swaths of it, but, you know, pockets more and more are appearing of layoffs.

- Not overall, but we have done a couple stories lately where there have been some pretty big chunks of layoffs happening.

So we'll see if the demand results in fewer jobs.

- [Chris] In manufacturing or services?

- Manufacturing specifically.

- [Chris] Ahead of what may be coming in 2025.

- You never know.

I mean, there's always belt tightening this time of year.

Maybe you don't see those.

Maybe it's the first of the year kind of thing.

If that is to happen, you know, certainly everybody's watching expenses.

- Thank you guys.

Stay around with us please.

Speaking of "from the horse's mouth," what are CEOs saying about some of these things like tariffs, like less regulation, like layoffs?

Coming up on our program, we have the chairman and CEO of Martin Marietta, Ward Nye will join us again.

And they are the largest aggregate supplier in this country.

And then also Howard Coker, chairman and CEO of Sonoco in South Carolina will also join us.

With close to a couple of dozen locations in North and South Carolina, the question is, what makes, and this decidedly sounds a little skeptical, yet another coffee shop so special?

Our guest feels like they have cracked the codex maybe.

They are a small business with big community ideas.

Joining us now as the co-founder and chief executive officer of drive-through Clutch Coffee, Darren Spicer.

Darren, welcome to the program.

- Thank you for having me.

- Darren, I promise it's not flippant, but Darren Spicer selling coffee is kind of like Larry Sprinkle doing the weather.

A little bit, right?

And I say that with respect, - [Darren] Just enough to have a conversation about it.

- (laughs) Okay, thank you.

Put me in my place.

Thank you, sir.

Well, Darren, welcome to the program and thanks for joining us.

So, you know, when coffee is ubiquitous, I mean, you could even argue that QuickTrip has great coffee and you can stop in and get there.

Why are you so excited about a drive-through coffee location?

What is it about that?

- I think the biggest thing for us is that we are looking to elevate the coffee experience in general and what we've kind of become accustomed to.

there's more to achieve there for us.

So the best analogy I could give you is, when you got your first smartphone, you didn't realize you needed it until you had it and you said, "Wow, this is a lot better than what I used to have."

That's kind of the analogy I would apply to where people might get coffee now, from the customer experience and the quality and the speed aspect and that's what we think we can deliver better on.

- In all of that rationale, where does the quality and the taste of the coffee come in?

- You can never compromise that.

There's no cutting corners on that because customers are very smart and if you don't have a great product, especially with today's coffee prices, if you're gonna charge $5 for a latte, it better be phenomenal.

So it's at the top.

- I'm sorry, I'm not trying to take all the air out of the room here guys, but I wanna make sure I get this.

What makes a good cup of coffee?

I mean, how do you know when you taste it?

You go, "Yeah, that's a good cup of coffee."

- I mean, it's a little bit like wine I think, right?

It's a little bit to your personal palate, but we've worked with an award-winning roaster for the last seven years since we started.

We went through a very lengthy process to find the right roaster that we felt was gonna deliver something that was welcomed by the majority of people.

So it's a medium blend.

It's not dark, it's not light, it's very down the middle of the road, but an incredibly quality blend.

It's not cheap, it's very expensive.

But we believe in the quality aspect.

- Yeah, Tony, great story of what you're building there.

My question's really about growth and it sounds like what you're doing is you're seeing an opportunity that, you know, some, I think, of Chris' skepticism is on, you know, it sounds like a commodity product.

Obviously you have Starbucks, you have a lot of these big national chains that are everywhere.

And how do you break into that?

How do you manage to keep that quality up as you're growing and so that you don't create an opportunity for another competitor to come in down the line?

- It's a great question.

I mean, the quality and the consistency and being able to be accountable and disciplined on that is paramount.

So for us, it really comes down to people and it's having the right people in the right positions who are executing what we want them to do and are very relentless about holding it to the brand standard.

So you can get good coffee in other places.

You know, the things that we try to focus on with the experience, the speed, the quality.

We're reviewing those every single week, sometimes even daily, depending on how new the store is, to make sure that we're delivering on that, 'cause if we're not, to your point, how are we any different, right?

How are we better?

So, just very intentional, I think is the big thing.

- Medical background, went into coffee.

- [Darren] Correct.

- Tell us a little bit about your financial journey with securing investment.

So many startups I talked to, this biggest challenge of raising money.

I understand y'all just had some more investment come online, but where did you start and where do you see yourself going?

- Great question.

So we started, I left a very promising medical device sales career to chase the dream.

Took an 80% pay cut, which my wife was thrilled about.

And so it was myself and two other co-founders that pooled our own capital together to start the business.

And you know, I saw the opportunity and I didn't wanna look back 20 years and say, "That could have been me."

So we went for it and we self-funded the first five.

And then as we continued to grow, we say, "Gosh, you know, if we really wanna put a jet pack on this, we're gonna have to raise some outside capital to scale."

So at that point, we brought on a investment partner who also helps to do some of the development.

And that's helped us go from five to 14 in the last couple years.

- You know, back to the beginning of COVID, and this is my way I describe it, Darren, is the idea that so much money was pumped into the system through programs to help people during COVID.

And that money is still, by and large, sloshing around the system.

Does that make it easier for you to do another round and another raise and to ask people for money?

Do you feel like it's easier now than it would've been pre-2020?

- I don't know if that was...

I mean, potentially yes.

I will say that during COVID, that was actually a very beneficial time for us because of the nature of our business.

So I feel bad for cafes that were walk-in only because that was tough during a lot of the regulations.

For us being a takeaway business, not only were we set up in the right manner, but also, frankly, people want to get out of the house and see a different face and talk to someone else, another human, and build a, you know, relationship, which is what we're about.

So I think that was a nice launching pad for us to continue to go.

But also, the coffee business has been recession-proof for the last 20-some odd years in the drive-through space.

So a lot of other things have turned down, but whatever your vice is to get you through the day, whether it's coffee or an energy drink or something of that nature, people are usually willing to go for that.

- Do you still have easy access to capital?

- [Darren] We do.

Yeah, we do.

And I mean, trying to be very measured in how we raise that, you know, my pockets are not as deep as our investment partners.

So the more they invest, the more dilution I take.

But in the right growth mechanism, you know, we have a lot of opportunity support behind this.

- So was there an "a-ha" moment for you?

I mean, a lot of entrepreneurs, they, you know, have an experience or they see some problem that needs to be solved.

Again, this is something, you know, coffee is everywhere.

You can brew it in your house, you can go get it any number of dozens of places, right?

Was there a particular moment where you said, "Hey, there's a real opportunity here?"

- Yeah, I think it was when I got into coffee when I was a lot younger, at first, as a customer, and then as an employee.

I think I was 18 years old and you know, most QSR drive-throughs you'll go through, you're pretty conditioned where it's very transactional, right?

You order at a speaker box, you pull up, they'll exchange the money, close the window, turn their back.

Very transactional.

So one of the companies that I worked for when I was younger was the antithesis of that and was very focused on face-to-face interactions, building that relationship.

And I saw that and I'm like, not only is that amazing, but I wanna be part of that.

And so I applied for a job there, beat down the door to get in there, and then that really gave me a good foundation.

And so then as we grew, you know, we saw an underserved area in the Carolinas in terms of, it's mostly just Starbucks and Dunkin' traditionally.

And so we saw an opportunity for our style of that to come in.

- And can I also ask you, how important is the real estate and the locations?

'Cause I mean you look at the Carolinas, the Carolinas are growing, there are any number of places you could go.

What do you look for in where to locate?

- It's a great question.

Yeah, and I'm transparent about it.

I mean, we've made some phenomenal decisions.

We've made a couple that I wish I could have back.

So I think location is incredibly important.

How accessible is it?

How visible is it?

What's the traffic count on that road?

Are there enough cars going by that you say, "Okay, mathematically, we assume we're gonna get a certain percentage of those."

So really, it's the visibility and accessibility.

People like easy things.

If you make it hard, they're not gonna want to go.

So those are probably two of the biggest things.

And then, you know, where are you at relative to competitors?

Are you out positioning them?

Are they out positioning you?

Those are probably the top-line things we look at.

- Clutch seems really intentional about marketing and social media.

You're really in tune with that.

What is your philosophy with that and how does it affect your bottom line?

- I am more vested into marketing than I probably should be.

And I think that the biggest thing there is, it's a generational shift, I think, from traditional marketing to more social media and you look at where your consumers are or where they're gravitating towards.

It's also a very effective way to get your message directly in front of the certain demographic that you want.

- That was my next question.

Are you going for a younger crowd?

- I mean, we have regulars.

We literally have regulars who are high schoolers, teenagers in high school, and we have retirees who come through, so it's a very wide spectrum.

I would say that we're a youthful brand, so we have a youthful energy, but we serve all, but being able to put our advertisements directly in front of the right people and give them a chance to press a button on an ad to take them directionally to the closest one, that's just a very huge opportunity for us to expand on the marketing side.

- Do you wanna be like Chick-fil-A?

Because it sure sounds like that.

- I don't know if we would say "my pleasure."

- They probably have that protected anyway.

- (laughs) Yeah.

- Exactly.

- I'll tell you this, the biggest compliment that we get right now is you'll see some of the reviews we have online where someone says, you know, Clutch is like the Chick-fil-A of coffee.

That's about a high of a compliment as I think we can get because they traditionally have been the gold standard on customer service.

- But you are open on Sundays.

- We are.

Seven days a week from 5:00 AM to 9:00 PM usually.

- But just a little bit deeper on that, what does Chick-fil-A get right?

Are they authentic?

Are they genuine?

Are they just checking the boxes and saying all the right things?

- Well, I think they have a really good product, first and foremost, right?

'Cause you've gotta have a great product to stand behind.

So I think they're great at that.

I think they're very intentional about the structure of their operations.

So most of their franchisees can only have one location.

They want you living, eating, literally breathing that culture and they're very relentless about holding people to that brand standard.

And if you don't, you will not have that opportunity.

So I think they're just very good execution-wise on the operation.

- Can you scale that kind of quality?

- We're gonna find out.

We'll see.

I will say, going from the first couple we opened in Mooresville, north of Charlotte, to now having 14 across Greenville, Columbia, going into Charleston this spring, it's gonna be a journey to see how great our people are.

But we will never sacrifice the core things that we're focused on.

- Is it hard to find quality people?

- Yes.

(everyone laughs) Yes and yes it is.

And so when you find the great ones, you know, really investing into them to make sure that they say, "Gosh, I love coming to work here.

I want to be here."

Because not only do you have the opportunity cost of potentially replacing them if they moved on, but when you have that great energy, that great person, it spawns onto other people as well that they touch.

- What do you do to find them?

Or do you just interview a whole bunch?

- Go to Chick-fil-A.

(everyone laughs) - He'll be selling chicken sandwiches soon.

- It's a lot of intentionality on, you know, we might interview a hundred people and there's only five or six that really stand out.

So being disciplined in looking at who we want, do they fit, you know, what we're looking for.

And it's not just, we're not looking for someone who necessarily has barista experience.

It's the intangibles.

Are you coachable?

Are you outgoing?

Do you have positive energy?

Those are the things that, if you've got those, we can teach you everything else.

So it is tough.

We search high and low, referrals are a big part.

If someone is really great and they refer someone, that helps us as well.

- [Chris] Jason.

- When I think about a coffee shop in my neighborhood, I love going in there and taking my time, you know, open up my laptop, sipping on my coffee, seeing people.

This is a total departure from that.

Is there two audiences when it comes to coffee and you got your drive-through and how do you kind of marry both of those?

- That's a great question.

And when I travel, I mean, I do use that in the same manner, like at Starbucks.

Yeah, I think some people might use that as a spot to actually work for the day.

A lot of our customers are headed to work or headed home from work to pick up kids, to go to practice.

So really we're designed for people who are on the go.

We have mobile ordering we recently launched as well, so, you know, say, "Hey, love your coffee, but I don't have time to wait."

Awesome.

Let's get that in.

So I do think it is, to your point, a little bit of a different niche or demographic.

You know, we have tables usually outside for people if they want to use it as a meetup point, but it's not a sit down for several hours.

- We've got a couple minutes left and community is big on your website and I know it means a lot to you and your team members, but everybody talks about community.

What does community mean to you and how do you maybe reinvest back into the the local community?

- Yeah, I think community simply means investing every angle and every component we can into the people that call that place home.

So we opened up a location recently in Indian Trail.

We did a give-back day to a local high school there, Porter Ridge High School, where we donate 100% of the proceeds directly to that school.

We don't make a dime that day.

And we do that with every single store opening.

And we do proceeds days probably four or five times a year.

And those are really designed, like we want to give back to the community, but we are a reflection of the community as well.

So when things happen, we look at ourselves as a vehicle for good where we are a centralized place that people can help by visiting us on a certain day in particular.

We can help raise funds to give to, you know, whatever the cause might be.

But we're just very, very big on supporting local because we are a reflection of the community.

- In about a minute, where's your tipping point?

Where do you think you have to get to before the next J curve?

- I think it's somewhere around 20 to 25 locations.

That's when you're kind of starting to hit a different level of scale.

You know, we grew this last year from nine to 14, in 2025, we'll go from 14 to 21.

So that's where you really find out how strong your people are or if you need to promote someone to customer to make room for someone better.

- Yeah.

Well thank you.

Thank you very much, Darren.

And we're gonna be watching for you wearing a black turtleneck on TED Talk sometime talking about the new business model that you've discovered.

But best of luck going forward, please come back.

- Will do.

Thank you so much.

- [Chris] And bring coffee.

(everyone laughs) You've been a good sport.

Jason, thanks for making the trip.

Always like having you from the upstate.

- Absolutely.

- And you're from Charlotte too, Tony.

Best of luck at the Charlotte Ledger and going forward.

- Thanks for having me.

- Thank you all.

Thank you for watching our program.

Coming up very soon, Ward Nye, Martin Marietta, Howard Coker from Sonoco.

But in the meantime, as we head very close to the Christmas holiday and the new year, we wish you all a happy New Year, merry Christmas, happy holidays.

Goodnight.

- [Announcer] Gratefully acknowledging support by Martin Marietta, Truliant Federal Credit Union, Foundation for the Carolinas, Sonoco, BlueCross BlueShield of South Carolina, High Point University, and by viewers like you.

Thank you.

(exciting music)