SMB Growth Tactic: Cross-Brand Partnerships
A leading Taco Bell operator is diversifying by integrating specialty coffee chain 7 Brew into its locations. The strategy highlights a key SMB growth lever: partnering with non-competing brands in adjacent fields to unlock new customer segments, increase ticket sizes, and drive foot traffic.
The strategy extends beyond a single operator; K-MAC Enterprises, the second-largest Taco Bell franchisee in the U.S., plans to develop over 200 7 Brew locations. Additionally, Flynn Group, the world's largest franchise operator of any kind, has a deal to open 160 new 7 Brew locations through a new division called Flynn Growth, designed to scale emerging brands. 7 Brew is one of the fastest-growing chains in the nation, making it an attractive partner. The drive-thru coffee company's sales surged by 163% year-over-year in 2024, while its total number of stores increased by 78%. The Arkansas-based chain celebrated the opening of its 500th location in late 2025, just eight years after its founding. The partnership is fueled by powerful unit economics. 7 Brew's small, drive-thru-only stands, typically 600-700 square feet, generate average unit volumes just over $2 million. This level of revenue is higher than the averages reported by coffee giants Starbucks and Dunkin'. This co-branding model is a well-established playbook for Taco Bell's parent company, Yum! Brands. For years, Yum! has combined its core brands—KFC, Pizza Hut, and Taco Bell—into single locations to increase traffic, boost sales per unit, and make locations viable that might not support a standalone store. The core benefit of such partnerships lies in sharing major operational costs like real estate, labor, and utilities. This model also allows a single location to capture distinct customer segments and dayparts, pairing the morning coffee demand with the traditional lunch and dinner rushes for fast food. Major institutional capital is backing 7 Brew's rapid expansion. Private equity firm Blackstone made a significant equity investment in the company in 2024 to accelerate its growth. Meanwhile, other private equity firms are acquiring its largest franchisees to fund the development of hundreds of new locations.
