Forbes - Lauren DebterEvery weekend, gaggles of little girls show up at the Buff City Soap store in the tony Park Cities neighborhood of Dallas for somebody’s birthday party, trailed by parents lugging the cake and presents. They sidle up to the counter to pick a color and a scent (unicorn, mermaid and fruity loopy are all popular) to make their own bath bomb, then begin mixing the powdery concoction together with their hands and stuffing it into plastic molds.
It’s party palooza at the shopping center, where Buff City is pushing to become a destination for birthdays and ladies’ nights out by playing up the bakery-style setup of its stores. The Dallas outlet, which charges $300 for hour-long festivities, is the chain’s No. 1 party place and a model for other locations.
“It’s a great way to get the brand to be more recognized, because whoever organizes the party invites other little boys and girls,” Buff City’s president, Enrique Ramirez, told Forbes. “When they’re picked up, they tell their families about the experience.”
Buff City has burst onto the scene in middle America. It quietly opened hundreds of stores during the pandemic, going from a mere 30 in 2019 to 260 today. Almost all of them are run by franchisees, who the company projects will generate systemwide sales of over $150 million this year, up double digits from last year. With backing from General Atlantic to fuel growth, Buff City has set its sights on ultimately operating 1,000 stores.
“It’s already scaled meaningfully, and we still see a lot of future white space ahead,” said Lexie Bartlett, an investor at General Atlantic who sits on Buff City’s board of directors.
The stores are set up like bakeries — Buff City calls them “makeries” — so that when customers come in they see apron-clad employees behind the counter, whipping up body butter, cutting into freshly-made loaves of soap and lining giant cookie sheets with bath bombs. Everything is plant-based and made fresh in stores daily. “It’s great theater,” said Chad Brizendine, Buff’s chief marketing officer.
The chain’s best-selling products are laundry detergent ($19.50) and bar soap ($8.50 apiece), which happen to be terrific at driving return trips. They come in scents with fun, irreverent names, like All Hail the Queen, Ferocious Beast and Narcissist, the cult-favorite that has notes of patchouli, sandalwood, raspberry and peach.
Because Buff City makes products in store, it encourages special requests from customers. When a young woman walks into the Dallas outlet one morning looking for a shower oil, she says she likes the Pink Sugar but it smells a little too sweet. An employee grabs a bowl and combines it with another scent, Shore Thing, for something lighter and more airy.
“We do a ton of customizing,” said CEO Dorvin Lively, who owns five Buff City franchises and joined the company in February.
Buff City is looking to grab market share in a space currently dominated by Bath & Body Works, but where others like Lush and Dr. Squatch have grown rapidly. Americans have shown that they’re willing to spend on inexpensive indulgences, even as the price of groceries, gas and other items have risen.
However, before the retailer scales any further, it’s getting a few things in order. “If you ask anyone here, they’ll tell you that was too fast,” said Brizendine, referring to the pace of store openings.
Buff City has pumped the brakes on expansion, and will add just 10 or 20 new locations this year. It has brought on seasoned franchise operators like Lively, who came from Planet Fitness, and likes to talk a lot about execution. It has culled product offerings, nixing underperformers like eye moisturizer, toner and dog soap.
It’s honing its pitch to franchisees, too. Startup costs range widely from $350,000 to $1.1 million, according to its disclosure documents. It’s hunting for ways to bring costs down and reduce the payback period, which it currently tries to keep to under four years, said Ramirez.
That’s too long, said Ben Litalien, a franchise consultant who teaches at Georgetown University, and advises franchisees to keep the payback period to 30 months or less so they have sufficient time left on their 10-year agreement to make a return on their investment. “Until you’re over the hump, every dollar coming in you have to use to pay yourself back,” said Litalien.
Like most franchisors, Buff City makes money primarily from royalty fees, taking a standard 6% cut on sales. According to its latest disclosure documents, it generated $5 million in revenue at the corporate level in 2021; It also had another $15 million in deferred revenue that it will report over the duration of its franchise agreements. It’s unprofitable, but that’s not unusual for a rapidly-growing franchise like Buff City, Litalien said.
Buff City Soap was started in 2013 after paramedic Brad Kellum became frustrated that the soap he used on his tattooed skin was made from cow fat and chemicals. He began experimenting with his own plant-based formulations with his future wife, registered nurse Jen Ziemianin, out of their Memphis garage. They tinkered for a few months until coming up with a recipe that used olive, coconut and palm oils, rather than animal byproducts, to make a bar of soap with a hard exterior and a creamy, long-lasting lather.
The couple sold their first products at local farmers markets, to neighbors and to classmates at the law school Kellum had begun attending. The company, then called The Bartlett Soap Co., opened its first 600-square-foot storefront in Kellum’s hometown of Bartlett, Tennessee and generated $75,000 in sales its first year. In 2017, they changed the company’s name to Buff City — a play on Memphis’ nickname of Bluff City — and began tapping franchisees to help expand.
Rather than go into big cities like New York or Los Angeles, many of the first stores were in rural locations, like Dyersburg, Tennessee, which has a population of just 16,000. Kellum priced products low enough that people could afford to buy them on a regular basis, and began saying he intended to make Buff City into the “Starbucks of soap” that would turn its ubiquity into $1 billion in sales by 2025.
“My vision for Buff City is that it’s an alternative in every neighborhood in the country, so you can go buy and know what goes on your body,” Kellum said in one marketing video.
Kellum stepped down before it got anywhere close. In 2019, he ceded the CEO position to an outsider and said he would shift his focus to products and retail experience. Kellum, who no longer has an active role with the company, didn’t respond to requests to be interviewed. He has decamped to Colorado, where he started another business called Bad Boy Boards that sells wooden cutting boards.
Making products in stores is the hallmark of the brand — and it’s no gimmick. Oil comes in 300-pound barrels, dropped on the sidewalk for employees to haul into the store. Some chemicals are caustic, like lye, which is used to make soap, but can cause severe burns if it comes into contact with skin or eyes.
Former employees say it wasn’t uncommon for them or someone they worked with to accidentally suffer a lye burn. In recent years, the company has increased the amount of personal protective equipment made available to employees, which now includes shoe coverings, floor-length neoprene aprons, arm sleeves, gloves, safety goggles and face shields.
“I get that it looks beautiful to see someone pour soap,” said a former store manager. “It’s also dangerous as hell.”
Certain safety procedures, like how to clean up and dispose of lye, have been changed at various times. At one point, employees were advised to clean lye with cool water. Then they were told to let it dry before cleaning it up. “It was kind of like they didn’t know,” said a former employee.
Buff City said it stays up-to-date on local and federal requirements, which may change over time. “The safety of our guests and employees is a top priority for Buff City Soap: in fact, it is part of our core values and we abide by regulatory and industry standards for safety,” the company said in a statement.
Buff City has been pushing employees to book more parties — the party business has doubled this year — while asking that stores remain open during events. That means employees have to juggle parties with walk-in customers. Production also has to be halted during parties, which can put employees behind schedule, especially during busy periods like the run-up to the holidays.
It isn’t always possible to multitask, workers said. If an employee is making soap and the phone rings or a customer needs help, they can’t exactly stop what they’re doing. Once they pour the mixture into the bucket, they only have a certain amount of time before it hardens and has to be poured into giant pans. It then has to be cut once it’s set, but before it gets too hard. “It’s a one-track mind kind of a job,” said Alexis Reaves, who worked at the Dyersburg, Tennessee store for two years.
The company said that its approach to staffing stores “centers around simultaneously providing an exceptional guest experience and producing our handmade products.”
Locations that are struggling to keep up with production sometimes receive shipments from stores that have a surplus. The retailer has also ditched some features, like a face mask bar, that was time-consuming for employees to manage.
The retailer is still moving fast to come up with new products, recently entering the home space. The candles it sold for Mother’s Day were a home run. Its newest launch, a wax melt that gives off a scent without an open flame, made its way into stores in just four months, said chief product officer Shellie Caudill, rather than the 18 to 24 months that’s a more typical timeline. It’s also exploring cleaning products, air fresheners and fragrances.
“We believe our guests are giving us permission to do these things,” said Lively.
