Building a Better Business in a Fragmented Industry with Michael Jacobson

This industry is so old and so antiquated and so fragmented. I was like, holy smokes, there's so much pain, there's so much frustration. There's an opportunity here.

On today's episode, we have Michael Jacobson. He is the CEO of French Florist.

There's two different types of marketing. One type of marketing is called demand capture, and the other type of marketing is called demand generation.

And they're redefining really what's possible with one of the world's oldest industries.

It's really interesting to me as you become more successful The question is really becoming like, what are we going to do with this platform? It's not about the money. It's like, what are you going to go and do with it? But it's a cool personal journey and like the business is just such an amazing platform to allow that. So just keeping that perspective is like how I stay above the business.

Michael Jacobson, welcome to the Above the Business podcast.

Bradley, thank you for having me. It's a treat to be here. Thank you.

Michael, we'd like to go back in kind of get people's origin story, their background, how they got to where they are today. Tell me about yours.

Yeah, I don't know if this is going to turn out to be a villain story or a hero story. It's one or the other. I haven't— I guess, uh, time will tell. But I can give you the origin story, and it starts way back in— I'm gonna start from middle school, and I promise I'm not going to give you a 15-minute journey, and, uh, you know, I won't word vomit my entire life to you, but I'm— but, but I want to I want to bring up my first experience of entrepreneurship before I even knew what that word meant, because I think my feeling is that a lot of the folks that might be listening are like me in the sense that there's kind of like a fire in your belly. And to satiate that, you want to build something, you want to create something. And there's like such joy in the challenge and figuring that out. And it's, it's a rewarding thing, right? It's— and that's, and that's kind of, you know, entrepreneurs have a tough time working a 9-to-5 job because of that. So I got the first taste of what entrepreneurship really was in middle school. I— we— our school banned sodas from vending machines. They said no more sodas, not good for you. And everybody is pretty pissed. Am I allowed to say that here, Bradley? Yeah, everybody's pretty pissed. And I'm sitting there and I'm like, well, shoot, there's an opportunity here. So I convinced one of my parents to take me to the grocery store, and I bought a pack of Coca-Cola and a pack of Dr Pepper and a 12-pack of each. So I had 24 cans of soda. I loaded them into my locker, and that lunch, that next day at lunch, I was selling soda out of my locker for a huge premium. And so that was my first taste of entrepreneurship. You know, the story goes on from there where I hired my— I like I did it during my lunch break and I started to get really hungry at lunch and that was my first problem that I ran into. So I hired my friend and I said, I'll give you $10, and which was so much, that's so much money for a middle schooler. And I'll give you $10 if you do this for me and we split the profits 50/50, you make at least $10 a day. And so that, so anyways, that was my first taste of it. I ended up shutting it down because I thought I was going to get caught and I was like, but that was something really cool where I was like, hey, Maybe I can find something else that is like, quote unquote, legal, I guess. Not that it was illegal, but, you know, middle school illegal. And so I'm going to fast forward all the way to college. And right when I graduated college, I had to make a decision, right? I had joined a couple startups during college, right, to try to satiate that feeling that was, you know, that I don't think that feeling ever goes away. They kind of call it like an existential crisis once you go through. And I don't know if you ever get out of it. But I think entrepreneurship is the same thing. You kind of get into it and I don't know if you can go back to a 9-to-5 after that. But I, you know, I, I was, I had a couple of opportunities after college. I studied finance and I ended up taking a job in corporate consulting. It was a good job where I certainly learned a lot. I have a lot of gratitude for having a good boss and, you know, the things that I did learn, I'm grateful for that. But I only lasted about a year there and it just, it didn't feed that fire in my belly. But I didn't want to take the risk right out of college to join a startup or to start a startup. You just hear 95% of startups fail, right? And there's, there's a lot of fear around that. And I just, I guess I wasn't, I wasn't willing to take that risk, especially I didn't have any money and the corporate job paid more, right? I think a lot of folks fall into that and not that that's wrong, but that's, It's part of my origin story. So I only lasted a year though, and because I was just so unhappy at that job and I could sit there and kind of complain about it, or, and I did, I did complain about it for a while. But one day I woke up and I was like, I need to stop complaining about this and do something. So, and I didn't really know what to do. So I just, I kept my eyes open. I kept my ears out. And next thing you know, about a month later from from me kind of making that decision where it's like, I need to go and do, I don't know what else, but something else. I got, I get a call from my uncle. My uncle says, hey Mike, I have this flower shop. I've been running it for 38 years. It's what he's done his basically his entire life or his professional career, right? And he says, I'm not making any money. The, you know, it's a different world. I'm losing money now. I'm tired. I'm working 6 days a week, 60 hours and You know, he's over 60 years old at this point. So, you know, he wants to retire and he's losing money on this business and there's so much stress. So he goes, you know, he knows that I came up through finance and I've always been interested in the sell side of business. So anyways, he called me and I was going to help him sell the business and I was happy to do it because I was fed up with my corporate job. I— he's family, happy to help him, right? It sounded like a kind of like a fun side quest. So next thing you know, I'm learning all about the floral industry. And what I found was, you know, he certainly was struggling in a lot of different ways. The business had decent bones, had a good culture. Clients were really happy with the service. They were like definitely beyond proof of concept. They were doing a few hundred thousand dollars in revenue. So there were some good bones there, but it was losing money. It was— profitability was negative. So that's a problem. And So that's a tough business to sell. So I went around to other flower shops and I'm like, okay, well, there's a lot of flower shops out there. Other flower shops are doing something better than maybe what my uncle is doing. And the crazy, crazy reality that I got into is all flower shops are struggling with basically the same exact issues. This industry is so old and so antiquated and so fragmented. I was like, holy smokes, this is my whole middle school experience all over again. There's so much pain, there's so much frustration, there's an opportunity here. So, so after I, you know, I spent a couple of months with my uncle, I was lucky to have him kind of teach me the ins and outs of the industry. But, but that got me really excited and I ended up leaving my corporate job. I, I asked my uncle if I could purchase the business from him, and it was never really about this one flower shop, but I said to myself, hey, like, look, if, if we can put some really great technology in place, if we can fix the operational challenges, if we can disintermediate and get away from these like 1-800-Flowers order aggregators, if we can put some good tech in place to write all of these different things, like maybe we can turn this flower shop around. And then if we can develop a proof of concept there, there are so many flower shops that are struggling and maybe we can help them too, right? So long— I'll pause there. But the— that was about 7 years ago and we turned that one flower shop— took about 4 years, but 4 years later into the 7-year journey so far, that one store is producing about $10 million in revenue. We've launched a few other locations that are each producing over $1 million in revenue in the first year. And beyond that, we launched a franchise program a couple of years ago. In order to help us scale to a couple hundred locations across the United States. And all of our franchise locations that are open so far are performing super well. So it's a little— our history—

average. What is the average flower shop in the country do? Like, well, give me a perspective. How many different flower shops are there across the United States?

I'm a finance guy. You're asking me the right questions. I appreciate that. So it's crazy to think about, but there are over 15,000 flower shops just in the United States alone, 15,000, and 99.9% of them are single unit owner operator, like mom and pop, right? You go to your local flower shop. That's what it is. It's a mom and pop flower shop. And, um, the average flower shop is doing about $300K or $350K in revenue. And Bradley, I want to make sure I'm answering all of your questions, but that's, that's, I mean, that alone is a pretty good overview of kind of like the current state. There's, there's no real market leader of a local flower shop. If there is a market leader, it is 1-800-Flowers.

What are the unit economics of a local flower shop?

Yeah, I can tell you that the typical unit economics of a flower shop and then I can tell you our unit economics, right? We're an open book and We can tell you all about our industry all day long, but the typical unit economics are you're having a flower shop that is maybe doing $300K in revenue, $350K in revenue. Bottom line, they're usually pulling in between honestly 5 to maybe 15% profit. So they're only earning maybe $50K, $60K a year in income. So actually, I mean, it's, it's a pretty remarkable thing because you can actually start to buy these flower shops for pretty low amounts because their EBITDA is so low and the multiples on what they can command are also low. So you can get some really good deals out there on flower shops. But we totally turned that around and now our, the, the average unit economics for our flower shops are million to multi-unit at multimillion dollar per, per store open. And then profitability about 20%. So we've really tried to transform both revenue and profitability.

What are the, what does the model look like? For you guys, meaning, so if somebody, somebody decides to, you know, get one of your, your franchises— I'm in Huntsville, Alabama— let's just say hypothetically somebody wanted to do it, to do it here. Is the model to go in and buy an existing, buy and build basically, or is it, nope, we're going to go into, you know, brand new, kind of take the current, you know, model, the franchisee model. We're going to get a space. This is the, you know, typically it's going to be 1,500 square feet. You're going to have— you're going to be open 6 days a week. You're going to be open these— like, what effectively is the operating system model, so to speak, for you guys?

Totally. It's an awesome question. So I'll share all of this with you. I'm— I promise I'm not on the podcast to pitch us as a franchise company. but I, I'm gonna try to speak to this in a way that maybe can translate to any business that you might be looking to get into or acquire. Um, I think the way that we've approached such an old industry actually can translate to a lot of other industries. Uh, and, and so the, how our model works is, um, traditionally, uh, most of the revenue for a flower shop comes in through walk-in customers, right? Uh, or it comes through order aggregators online, like 1-800-Flowers, like kind of like think of how a restaurant might get a lot of orders from DoorDash. It's, um, it's that way from for the floral industry, but really like on steroids. Uh, and the problem with that model is these intermediaries like DoorDash might take 20 or 25%. Um, 1-800-Flowers and those kind of companies, the industry standard for the past like 30, 40 years has been they take about 40% after all of their commissions and fees and everything is taken into account. They're taking like 40% commission. So these flowers are getting wrecked. But, but if, if, if somebody wanted to join our model, we've totally turned that around where 95% of our revenue comes from online. So our model is, to the naked eye, somebody might take a look at our model and be like, oh, this is traditional brick-and-mortar retail. Well, we've heard brick-and-mortar retail is dead. I don't think it's dead, but it's definitely a different world. And I feel like we've been able to figure out kind of the future of retail, at least for us and for our industry, which is the predominant amount of revenue is coming in from online, but we still have a physical footprint. And that physical— that physical footprint isn't necessarily, you know, something for like— it's not an A-plus, beautiful Rodeo Drive level retail store. It's a little bit more of like a production facility and like a fulfillment warehouse. That being said, our stores are beautiful. You certainly— you can walk in and the walk-ins, they do come, they love it, they have a great experience. The walk-ins more than pay for the rent. But where we really make the money and where you can really scale is creating that e-commerce or digital revenue. So our model is predominantly e-commerce driven. But if you want to open a unit in, in Huntsville, you're going to open a physical store. You're going to treat it a little bit like a production facility. You're going to still make it beautiful so you can accommodate all the walk-ins. And there is a little bit of a halo effect where, you know, people see how beautiful the store is and they trust it a little bit more and they, they might purchase once in the store and they might make, they might make all of their future purchases online as well. So the physical footprint is, it's important. It's not the most important thing, but like there's so many things that we thought about that flip traditional retail on its head. A lot of folks will say like, why don't you just go into a warehouse and do this ghost kitchen thing? Well, you know, large language models like ChatGPT and Claude, and even if you're looking at like TikTok, the, you know, emerging search engines out there and traditional searches too, Google still has the lion's share of search. So obviously can't ignore that. But all of those, all of those, we'll call them search engines, are very geocentric for flower shops. And so you having a physical a physical location that's close to your customer is actually going to help you rank digitally better. And so your overhead rent, your physical rent is actually a good digital investment, right? So it gives you a little taste of kind of what our model looks like. But, but it's a lot of fun and it's our model for really, if I had to boil it down into one sentence, it's very digital e-commerce based model.

What is the target revenue, knowing that obviously the average is doing, you know, $350,000, $350,000, $400,000 a year. What is the target that you want to try to get a franchise to from revenue, gross profit, and net profit in a year? Yeah, not in one, not in the first 12 months. I'm talking about like eventually, this is where we're trying to get each one of our franchisees to.

Yeah, totally. Yeah. I mean, I can, I can speak from two different lenses. One is historically what we've been able to achieve and then kind of forward-looking, what would we expect a brand new franchise owner to achieve? So historically, our— the location, because we own and operate a lot of corporate locations as well, we've shifted into franchising as our strategy. We ultimately, we think that's actually going to provide a better client experience. We have— we can develop our core competencies as a franchisor with technology, with supply chain. With marketing and then the franchisee, the person who actually owns the store, is going to care a little bit more about their local market and they can specialize in actually the operational day-to-day, whereas we can specialize in the things that we're good at. We call it the boring stuff. We're really good at the boring stuff and we are really like it, but that's an important part.

So, so anyways, but to answer your question, you answered one of my questions I was going to ask, which was, which was why did you guys decide to go the franchisee model? I was curious about that. So you definitely answered. Answer one of my questions.

Yeah, I'll, I'll, I promise I'll, I'll go full circle to your unit economics question, but a lot of people think that franchising is a way to like use other people's money. I hear that a lot for folks that are thinking about franchising, like imagine opening 300 corporate locations. That takes a lot of money, right? I've never viewed, I've never viewed it in like money is, there's, there's a lot of money in the world. If you have a good business model and good business unit economics, like we could open 300 corporate locations, no problem. And, and honestly, running the organization as a franchisor is super expensive. I think franchising might get a bad rap because there are a lot of franchise systems that don't invest into being a good franchisor.

Yeah.

And, and they do come in with the mindset of like, oh, we can leverage other people's money to expand our system, right? I don't think that's the right approach. I think like if you look at Chick-fil-A, if you look at Orange Theory Fitness, if you look at like the good franchisors out there, it is like— I don't want to say more expensive, but it is. It is very expensive to put those, you know, initial operational infrastructure investments in place in order to make sure that our franchise owners are set up for success. So it's— we were very intentional about why we were franchising and it had nothing to do with to better ROI or this or that. It's like, this is ultimately what we think is best for the industry. And like, this is something that we're fired up to do. So that's why. But on the unit economics, we are the corporate locations that we've been able to open up. We're typically achieving about $1 million in revenue in the very first year. That million dollars is typically profitable in the first year, which is great. It costs about $300,000 to get a unit open. And so that means that our payback period sits between 2 years, it's just shy of 2-year payback period. So our unit economics are pretty strong in that way. And then so that's kind of the first 12 months. If you're looking at a slightly more mature store, so we'll call it maybe 3 or 4 years out, we would expect a store— and in our experience, we've been able to achieve— stores should be able to achieve about $2 to $3 million in top line revenue per store at about a 17.5% net operating profit kind of at scale. Mm. Okay.

Yeah, that's pretty good. I mean, that's throwing off $400,000 in profit, something, something to that effect, you know, over a location, right? Over a couple million dollars. Yeah, that's not too bad. What is the, what is the core like? So for instance, a couple of clients I work with, you know, a pool company is going to run you know, gross profit is going to run 30-35% on a pool that they build, um, from labor and materials. Uh, one of my companies, an exterior remodeling company, we're going to try to shoot for 45%. By the time it's all said and done, we're shooting about 42% gross profit. Uh, a restaurant is going to try to have about 30%, you know, food cost. What is a— what is a florist doing actually? Uh, what, what are they buying the raw material for? And, and And what are they selling it for and what does that— what do those margins look like?

Yep, definitely. Yep. Good question. So basically, if you're taking— as you know, if you're looking at it from a percentage of revenue perspective, you're typically running about somewhere between a 25% and a 30% cost of goods. So let's just be conservative. Let's call it 30%. So you're running 30% COGS. That includes all of the floral products, all of the hard goods like the vases, the ribbons, the ancillary supplies, the designer tools, like all of that stuff. Right. And then labor, you are typically running at about 25%. So, um, 30% plus 25% is 55%. So that leaves you with about a, with about a 45% margin left over for all of your marketing, your overhead, stuff like that. So, um, so those are your two biggest costs right there are cost of goods and cost of labor. Um, you know, your next biggest expense might be marketing and then otherwise, uh, we try to keep our overhead super low and that's, uh, Yeah.

And that's kind of where I was wanting to go next after that, which is, which is what does the marketing actually look like? So here's what's going through my head. Okay.

Yeah.

So I'm like, okay, at the core of this, like this, this podcast is about being above the business. Is that this is while somebody may not obviously reach out to you guys necessarily to open one, it does hopefully what these kind of metrics and numbers is, is for our listening audience is helping them to be like, man, do you know your core economic metrics of your, of your business? So Here's where my thoughts are going. I bet you crush it, and I bet your stores crush it in February. I can see them crushing it in May.

This will be a good—

with graduations and Mother's Day.

We got Mother's Day in May.

Mother's Day.

Mother's Day in May.

Yeah, May's a big month. May's a big month.

OK, so I can see that. But wait, but wait. Yeah, keep going. But I'm going to challenge you on this.

So, and maybe I guess I could get into some fall things, some Thanksgiving, some holidays around that. But what do you do to get me to come in that store to get me— because maybe you guys do. I don't know a recurring subscription model on this. So man, I'd love to know what that is. So what are you doing to get me to come back in a couple times a year except for, oh, Father-daughter dance. That's what was going through my head. I was like, what are those corsages that, that I have to get my daughter for father-daughter dance? And that happens actually this month. But, but what are those situations that I would then be going there other than I got in trouble with my spouse and I need to go get flowers? You know what I'm saying? Like, what are the situations where I'm not thinking about when people go to the florist?

Okay, our, our number one occasion by far, by a pretty big margin, happy birthday.

Okay, that makes sense.

Birthdays happen every single day of the year, right? And the fact that that's our biggest holiday that we service or occasion, that makes revenue— that by itself makes revenue super even. Every January is a big month. February is a big month. And February is a big month because you have Valentine's Day for sure. You get some extra there. But March is good. April is good. The whole year. The whole year is pretty stable, actually more than most what most people would think. So that's good for us. The second biggest occasion is anniversaries. Also happens every single day of the year, right? And our demo— or if you look from like a demographic or psychographic perspective, our number one client is a— like, I'll just get super specific here because I looked at the data, I don't know, at some point in the past 6 months and I remember it. The— our number one customer is— and we have a lot of different types, but our number one is a 44-year-old female buying flowers for her friend, who is also a woman, for her birthday. That is our number one. Isn't that so interesting? A lot of people think it's like men buying flowers for women or like, who knows?

That's incredible data. How do you know that data though? Like, how are you actually collecting that data?

Yeah, there's a lot of different ways that we can do that. Whether you want to hear it or not, there is a lot of different ways where you can purchase data from third-party vendors, right? Even like Fannie Mae, Freddie Mac, the credit rating agencies and bureaus.

Sure.

So we, we Heavily. Look, we're in an industry of emotion. We're in an industry of human connection. We are in an industry of love. There's so much like soft stuff that is probably more important. I don't say more important, but it's like pretty critical that we get that stuff right. But that being said, we're basically a tech company. I would never describe us as a tech company to like a normal person. No, that's hard for us.

But it does. I can see that.

Yeah, we're so tech-enabled and I think that's important for any business. Like we're not a tech company, we're a flower company. But like, if you're effectively—

do you equip then— do I buy— when I buy the franchise fee, am I also getting access to a CRM?

Oh yeah.

That then, that then comes in and, and, and basically like, okay, you got me initially through a Google PPC ad. Okay, got it. And we're going to go into the like go-to-market strategy, you know, something like that in a second. Like, is it Google PPC? Are you running Meta ads? Like, yeah, what's, what's the name? We'll get into that in a second. But like, once you— I was curious, like, okay, you got me as a, as a, as a, as a customer initially, okay, but, and you liquidated that based on, based on what I bought. I'm probably price insensitive. I need this corsage. How much is it? $60, whatever, move on, right, kind of thing. But it's probably the repeat customer, I'm coming back again, is where you're really making the money.

Yeah, totally. So from a marketing perspective, so yeah, anyways, to answer your question too, we, we, um, Yes. If all of our— part of the benefit of joining our franchise system, I guess, is all of that technology. And the technology is inside our organization, meaning the operating system, all of the data, the infrastructure that we built out that clients really never see. But it allows us to run the business really smoothly. And then it also includes all of the customer-facing technology that they get to interact with. And we don't try to overengineer that, right? Because we're, we're not a tech company, we're a flower company. But there's some really cool tech that we can put forward from a customer-facing perspective too. But anyways, for, so just to summarize also, and so I'm going to dive into marketing because it is an interesting topic, but our, we have 3 core competencies. We have more, but I'm just going to like bucket them into 3 for now. We have technology as one, we have supply chain as another. Look, we're like in a perishable industry where we're importing flowers from Thailand and Holland and Colombia and Mexico and Canada and local farms and like the list goes on, right? Like we better be really good at that. And so that's a really important thing that You know, we have gotten good at. And then the last one is marketing. We've gotten really, really good at marketing. So when somebody says like, why would I join your system? What am I paying you for? Like, it's again, it's more than that, but it's predominantly those 3 things are kind of what you're paying for.

Yeah.

On the marketing lens, the way that I look at, like, I'm going to zoom all the way out. I'm going to try to, if you're working in a different industry, I, again, I'm a finance guy, but I happen to love marketing. We have some really smart marketing folks that work on our team. So I can, I can try to do their job for a second and kind of teach you what they've taught me. But there's really, there's two different types of marketing, right? There is one type of marketing is called demand capture and the other type of marketing is called demand generation. Demand capture is somebody is already looking for your product. If you're in the lumber industry, they're building a house and they need lumber. There are, they already made the decision that they're going to buy lumber. They just need to decide who they're going to buy it from. Right. So you're capturing that demand. That demand already exists. You need a corsage for your daughter for that father-daughter dance. You know, you need that flower. That's demand. And when you go to Google or ChatGPT or TikTok, like whatever you're using and you type in, you know, corsage, let's say you're like really in a rush and you're just like at work all day and you're like, I don't have the time for this. My executive assistant is busy. Like, I just— I need to figure this out. I, So you type into Google, I'm just using an example, right?

Like, yeah, it makes sense.

Forage flower delivery, Huntsville, Alabama. Yeah, right. Like, we've gotten really good at even those, like, long-tail keywords, not even like flower delivery and some of the generic stuff, right? Like, we've actually gotten pretty good at the very long-tail keywords where when we know somebody's looking for our product, we can show up on Google not only from a paid perspective, but from an organic perspective as well. So when somebody clicks on that, we're not charged for every darn click. Right? So you've gotten pretty good at that. That's half of the battle. That's demand capture. The other half of the battle is demand gen, demand generation. And that's saying, hey, Bradley, I know, I have full acknowledgement, you don't need flowers right now. You don't want flowers, you don't need flowers, but hey, I'm going to put this ad in front of you and I'm not going to try to sell you something because you're not looking for something right now. You're not looking for what we have to sell. But I'm going to plant the seed and say, hey, did you know that French Florist exists? And did you know that, you know, we kind of promise a 10-day base life and you can leave a video card message and we have like a better quality experience. I'm like, I don't know, blah, blah. I'm not doing that justice. Our differentiators on the consumer side are like awesome. But anyways, we're going to put a bunch of stuff in front of you that's not like hard selling. But yeah, the purpose of those ads are to say, Bradley, I know you don't need flowers now, but the next time that you do, French Florist is going to be more top of mind for you. So like obviously Coca-Cola and like those type of companies have gotten really, really good at that. And demand generation is where you can invest into like a black hole and it can get really cost inefficient. You can lose a lot of money on that kind of marketing. So making sure that you have a really good data infrastructure and you can measure— I'm putting, you know, $5,000 into this type of marketing, how many dollars am I getting back? And making sure you trust that data. That's a really important about, you know, part on demand generation marketing. But, but there's, you know, look like for demand capture, there's Yelp ads, there's Google ads, there's, you know, I guess like direct mail. If you're targeting people like you can buy data that somebody that their partner's birthday is around the corner and like they're probably going to be looking for some kind of gift, I guess you could bucket that into demand capture. Demand generation might be like TV ads or radio ads or billboards or like a different type of direct mail campaign where you just kind of like blast people. I'm not condoning any of those tactics, like different things work for different industries, but doing some experimentation and the reality that we found is also, you know, there's 2 or 3 things that we do that probably generate about 80% of the results also. So the things that really work for us are kind of secret sauce, if you will. We've had to experiment a lot in order to find those things. But when we found them, we've doubled, tripled, quadrupled down on them. And that's allowed us to scale to the level that we have been able to achieve today.

Yeah, I think that's— I think that's such a valuable thing is that once you find 1 to 2 to 3 channels, I mean, at the end of the day, it's a $2 million business. It's not— each location is not a $200 million business. And so, like, you know, what is the average customer value, by the way? And so in other words, in a $2 million— I tell you what, let's just do a million. How many, how many purchases is that over the course of a year? What does that look like on a, on a day, on a weekly or a monthly basis, something like that? I'm trying to get my head around like how many, how many customers are actually running through a store on a daily basis.

Yeah, totally. So our average order value is a little bit higher than your typical flower shop. We like higher average order value because it's— there's a kind of double tailwind effect with that. The higher the purchase price, the more margin there is. So if you're selling a $50 arrangement, um, you might only be making $5 on that. If you're selling a $100 arrangement, you might be making $25 on that, right? Um, so it's not like a linear thing. Our, our average order value is actually closer to $165. Oh my gosh. Wow. We are a more, yep. So part of the marketing thing is like, what's our merchandising strategy? Who are, who are we as a brand? And we are a premium brand. We're a very premium brand. That being said, the beautiful part about it is like we get people that walk into our store all the time and they're like, I only have $30, I want a wrap, okay? And we can give them such an extraordinary experience for that. And they get to interact with what is a premium brand, but, you know, only have to spend $30 on that. So, but anyways, we, we, you know, we make our money from the folks that are spending a little bit more typically. So our average order value is about $165, approaching $170 now.

That's about 20 orders a day is what it looks like.

So about 20 orders a day will get you to be a million to multimillion dollar shop. And, um, and then, uh, the average American flower buyer buys about 2.2 times per year. So if you're looking at that customer lifetime value over a period of 1 or 2 or 3 years, the really cool part about that is that once somebody has an incredible experience with your flower shop, uh, they like they don't have a reason to switch flower shops. So, and, and people don't leave cities that often too, so they could be a customer for like 15 years. So that customer lifetime value gets pretty wild depending on how you calculate it.

And that's what I was just running the math on. And so basically with that is that you need about 3,000 customers effectively, that people that have bought, because then if they purchase 2 times a year, then that's 6,000 purchases. 6,000 purchases times an average, uh, order value of $165, that's, that's That's $1 million. And so then if you're at, you're at $2 million, you've got 6,000 customers, so to speak, in your, in your database. You're doing twice, twice that volume, which really works out to be— if I, if I did this, you know, right, of 6,000 purchases divided by, you know, 52 weeks basically is 115 divided by 6. It's about, you know, 20 a day divided by— I mean, you're basically doing 2 to 3 sales an hour. Ish, something like that. Is it that basically?

Right. It's wild. It's not much. You know, one of the comments that I get a lot of people that come into the store, they're like, you're— we have our newest corporate location. I think did just shy of $3 million. It's a little bit more mature store. It's been open for like just over 2 years. So it's approaching its third year now and it's doing somewhere between $2 and $3 million right now. And people come into that and they're like, this store is doing over $2 million, but it's like, it's so peaceful, it's so tranquil. There's like a couple designers. The delivery driver like comes in and out to like get the arrangements and make the deliveries. But it's, it's pretty calm. It's pretty— it's like not a super intense thing.

It is part of the— so like not on the e-commerce side because that, that, that's tech-enabled. But I'm curious, do you, do you have inside of your operating system effectively a sale? Well, we would call this in our model a sales playbook, but So do you have— do you give them a sales playbook of like, okay, Bradley walks in, he's getting a vase, he's getting something for his anniversary, right? Okay, got it. All right. He comes in, he's going to want this, but you can upsell him with all of these other things. And now that $75 thing is now $160, whatever. I mean, do you guys— do you guys teach that, train that, give access to that?

Um, okay. It's a good question. Remember that 90, 95% of our revenue comes from online. So people are purchasing right out of convenience and they're on their own journey. Now we've gotten really good at kind of making sure, like at optimizing for that average order value. There's a reason that our average order value is so high. We've, we've worked at that pretty hard. Yeah, but of course when we have some B2B clients like we have, we've never done B2B sales, like we've never really tried to do it, but we have and it's taken some time to do this, to get this to this place. It is, you know, it was not an overnight thing. Like, I don't know, we're talking about all the success that we have. And also, by the way, I don't even feel like we're successful right now. Like we're just getting started, right? And we're having so much fun with this, but but it took a while even to get here. And but we have like Cartier and Dior and like Ford and Facebook and TikTok and like all these brands, like brands, brands reaching out to us and like wanting us to do events for them. So of course we like, you know, put our folks through training and how to upsell and like how to price high and, and price correctly. So we do have a lot of that training. But our honestly, like you mentioned subscriptions earlier, I would say subscriptions, B2B events, weddings, corporate accounts, like those are things that we don't even do them that well. So that's the stuff that we're actually working on now to kind of help unlock that next tranche of growth, even in the existing stores. But we have really done a good job of like e-commerce-based happy birthday, happy anniversary, like kind of basic stuff. And we've just gotten really, really good at that. And that's taken us pretty far. But, but yeah, like I said, like we're just getting started. So those are the numbers that we've been able to achieve so far. But that doesn't mean that those numbers can't get higher. Yeah.

Yeah. Yeah. That's pretty cool.

Yeah.

Michael, this has been great. Um, people want to learn more, connect with you guys. Where would you, uh, where would you point them to?

Yeah, look, I mean, um, I'm happy to jump on these podcasts and we've, we've hired some really great people. So, and, uh, and they're making my life a lot easier. So I'm, I get more time to jump on podcasts like these and these are fun for me. So, but anyways, it's, it's been a ton of people have given me like good advice when I needed help. I still ask for advice all the darn time. So if somebody wants to reach out, you're more than welcome to just like shoot me an email and I'm happy to be a resource. My email is michael@frenchflorist.com. If for some reason you're interested in the franchise program, you can go to frenchfloristfranchise.com. And then probably the most important thing, if you're interested in buying flowers, which is you should definitely buy flowers, You can just go to FrenchFlorist.com.

That's great. Michael, as you're growing the corporate locations, you're growing the franchise part of it. How do you get about the business?

I view this as a very deeply personal journey. When I work, like, for the first 2 or 3 years, we were not making a bunch of money relatively intentionally, like we, any tiny little profit that we were able to turn from the business for the first couple of years, I said, look, like, we, we want to do this right. We want to invest in good talent and we're going to put all the money back into the business. And I felt like I was in a really lucky position because, you know, we— it was pretty rough for a couple of years where we didn't have any money and it sucked. But as soon as we started making a little bit of money, it, I always kind of knew it's not really about the money. It's about like the education that I'm getting by running this business and all the learning lessons that I've gotten, the ability to like hopefully maybe give back on the things that I've learned too, and maybe like go and do more. And it's really interesting to me as we do, as we become more successful, the question is really becoming like, what are we going to do with this platform? It's not about the money. It's like, what are you going to go and do with it? Are you going to go travel the world? Like, are you gonna go and spend more time with the kids? Are you gonna go and start a charity? Like, I, I don't really know what that answer is, but, um, but it's a cool personal journey, and like, the business is just such an amazing platform to allow that. So just keeping that perspective is like how I stay about the business.

Yeah, it's awesome. Michael, great having you on the podcast. Thanks for coming on.

Thanks, Bradley. Cheers.

Well, I hope you enjoyed that episode with Michael. I think, as I said at the beginning of the intro, that there's a lot of different things that you can learn from there to be able to kind of apply back to your business. I think one of the biggest things the discussion of average customer value. Do you know your average customer value? What is the average customer worth? And how, what are the things that you and your team can do to be able to increase your average customer or average cart value? I think in the age where customer acquisition cost continues to go up, one of the bigger levers that you can pull on more often is how do you increase the lifetime value? Of a customer. And that episode, I felt like, gave us some really good tips to be able to do that. Shout out to our podcast and brand partners, Coach B Consulting, DirectClicks, and Autopilot Recruiting. If you want to be able to build and scale your team, you got to do it through your team, and you got to do it through marketing. First of all, you got to get really good people in the team. Team is first. Best way to do that, work with Autopilot Recruiting. They can help take the idea of always be recruiting and actually execute on it for you. Go to autopilotrecruiting.com. Secondly, you've got to be able to invest in marketing. But if marketing feels more like a guess as opposed to a math problem, DirectClicks can help you. Go to directclicksinc.com/above-the-business. DirectClicksinc.com/above-the-business. Book a call with one of their account managers and reps and see what they can do for you and your business with your marketing. DirectClicksinc.com/above-the-business. /above-the-business. And if you were specifically an insurance agency owner, you probably have heard of David Peterson. He has been able to scale his location from struggling to an unbelievable, impressive organization. Go to coachpconsulting.com, and he can help you and your team members to be able to get above the business and think differently and give you some specific plays that you can install in your insurance agency. CoachPConsulting.com. All right, everyone, till next time, lead well and go be great.