How AR Workshop Evolved To Meet DIY Craft Customers Where They Are At

Building a dependable model takes thousands of iterations and a level of grit and determination not every entrepreneur can sustain, especially as stores start closing. After an explosive start of 100 stores in just two and a half years, AR Workshop, the craft- and event-focused brick-and-mortar store, struggled to maintain a long enough runway with only in-store event offerings, especially during the COVID- 19 pandemic.

"With our traditional brick-and-mortar studio where you'd sign up and do one of these experiences, you're limited by the four walls,” said Maureen Anders Pike, CEO and Co-Founder at AR Workshop. “To make the business viable, you can't be too large, but that limits how you scale your business.”

This year, the brand is regaining momentum by focusing on what they do best - getting creative! In 2010, Anders partnered with Andria Ruff to launch the graphic design, party styling and DIY platform Anders Ruff, then expanded into physical storefronts in June 2016 with their first AR Workshop in Pineville, North Carolina. The goal was to create a gathering space where groups could try functional home decor hobbies such as wood sign building, candle pouring and knitting. The business was a huge success.

"It exploded, and we grew so fast," Anders said. "In 2019 alone, we opened 58 stores, which was exciting."

It was during the COVID-19 pandemic that AR Workshop’s core strength of creativity became clear. As a hands-on business, AR Workshop’s main revenue sources were no longer viable. This allowed Anders to use her quick thinking to introduce other revenue options, such as take-home DIY kits, building the brand's comfort with change and evolution that would come in handy later on.

"Honestly, it has helped me become quicker on my feet and make decisions faster," Anders said. "We don't have time to wait; let's just do it and try it. The worst thing that happens is it fails."

Since that initial setback, AR Workshop is scaling quickly again, with about 65 brick-and-mortar locations across the United States. Along with these locations, the brand has added 10 Crafty Cruisers—mobile operations that let operators bring the craft store experience and events directly to customers. With this flexible mobile model, AR Workshop has also diversified its revenue streams into lifestyle and community events such as sourdough baking and mahjong classes, as well as a popular retail element selling branded tools and accessories.

"The accessories are the bread and butter of what we do with our brand, and now we can pull that into the classes we're offering," Anders said. "In our flagship store in Pineville, North Carolina, we are converting the front into a showroom."

Thanks to Anders' ingenuity and a team that works tirelessly to safeguard its franchisee network, the brand is growing again. While the future remains uncertain, AR Workshop has shown that a crafty mind can overcome any obstacle.

Anders joined 1851 Franchise Publisher Nick Powills on a recent episode of the "Meet the Franchise" podcast, where they discussed the brand’s path to introducing these initiatives and building a more robust model. A transcript of the interview has been provided below. It has been edited for brevity, clarity and style.

Nick Powills: Give me the state of the union. What's going on with the brand? Tell me about the business!

Maureen Anders Pike: I am Maureen Anders Pike, co-founder of AR Workshop. My entrepreneurial journey started before franchising. Anders Ruff began as a design company. From there, we evolved to creating this brand called AR Workshop. It was all about empowering mainly moms around do-it-yourself birthday parties, and we designed all the graphics for it, like invitations and printables.

We were always about instructing others on how to be creative and how to be successful in their creativity. We had this spark and this idea in 2016 to launch AR Workshop, which is a hands-on, brick-and-mortar studio that allows you to gather with your friends and create beautiful, functional home decor, things like building a wood sign, pouring a candle, or knitting a blanket.

It exploded, and we grew so fast. We had 100 locations within two and a half years. In 2019 alone, we opened 58 stores, which was exciting. In hindsight, that kind of growth taught us a lot. Many of those locations barely had time to really establish themselves before COVID hit. We learned over time that certain markets and territories really just were not going to last for us. Today we have roughly half the number of stores. Most of those 58 that opened in 2019 didn't make it. They didn't have the runway, unfortunately, but I look at that evolution really as the most important part of our story.

We've always been really good at being creative. That's our business: pivoting and asking ourselves, "What does the customer want now? How do we meet them where they are?" That question is really a big part of why we're evolving our franchise model, which I'm excited to talk to you about.

With our traditional brick-and-mortar studio where you'd sign up and do one of these experiences, you're limited by the four walls. You're paying for rent and you've got 1,500 square feet. To make the business viable, you can't be too large, but that limits how you scale your business. Rents have increased dramatically, and there's only so much volume you can do.

So, we launched what we call our Crafty Cruiser model a couple of years ago, and we flipped that whole mindset. Now we can bring the experience to the customer, which is awesome. We can go to resorts where we have hundreds of people instead of limiting ourselves to 20 or 30. As a franchisee, you can do a private party at someone's home, a corporate event, a school event, or a country club event. Suddenly all these doors open to much larger events.

What's exciting about that is expanding beyond just DIY projects. We used to just be known as a craft workshop, and now we're bringing all sorts of lifestyle and educational community events. We're teaching how to make sourdough bread and how to play Mahjong, and that's really my passion project now.

It connects really beautifully with what we're doing with Anders Ruff, the design company that creates products. We've grown this year into a product line for Mahjong. The mats, the tiles, and all the accessories are the bread and butter of what we do with our brand, and now we can pull that into the classes that we're offering. Our franchisees now can offer that in a retail component. Learn to play Mahjong, but then also buy the beautiful Anders Ruff luxury tiles and mat sets. They have this retail opportunity as well.

That really is where things get interesting. What we could have looked at is, "Oh my gosh, rent is so high, we're done." No, we're not done. We are just helping our franchisees be successful by meeting the customers where they are. So, that's the state of where we are right now, Nick.

Powills: Inside your head, it has to feel like a rollercoaster because you have the hottest thing in the world. People want to buy it, they throw money at it, and they want to become franchisees. Then you have to navigate the realities that a lot of people bought in who had the passion, but did they have the business acumen and the financial wherewithal to do this? You get kicked in the gut with COVID when an experiential business suddenly becomes nonessential.

You have gone through all of these ups and downs. Does that numb you now to any obstacle that comes your way? How do you reengage or reenergize your own entrepreneurial energy to keep going?

Anders Pike: For me, work doesn't feel like work. I love what I do so much. As a kid, I wanted to be a teacher and an artist, and I always had little side hustles, even as a 5-year-old. This is a combination of all those things. When I find something that works, I want nothing more than to teach everybody around me how that works.

People call me a ping-pong ball sometimes because I bounce around. But when I feel in my gut and see data that something is working, I believe in it and I will sell you on it in a way that says, "Please just try it. Prove me wrong."

It has been a rollercoaster, and I'm not numb to it. I think I'm a people pleaser, so early on, we signed on all these locations, and I realized bigger is not better. It kind of hurt when we were losing some stores, and I thought, "They're doing a great job, but I don't know how they're going to last." We are a hands-on opportunity. When you have someone hovering over you to help you use a nail gun, no one wants to do that during COVID. So, we had to find ways to help them make money with DIY kits and things like that.

Honestly, it has helped me become quicker on my feet and make decisions faster. We don't have time to wait; let's just do it and try it. The worst thing that happens is it fails.

Powills: Is your ideal scenario a brick-and-mortar and the mobile unit?

Anders Pike: Yes. There are some really strong brick-and-mortars, like our Frisco and Springfield locations. They just know their customers so well. They have balanced a large enough space along with the retail side to have a model that works where they bring in revenue from the classes and also have the retail side. If they want to go off-site, they can. Just because they are brick-and-mortar doesn't mean they can't go off-site to do what a Crafty Cruiser would do.

Crafty Cruiser gives the business owner the ability to not be tied down by rent in a set space. If you're doing both, you have to market two things, which is challenging: "People come here," and "By the way, I can come there."

For the person who wants a side hustle, the Crafty Cruiser is perfect. You can even keep a full-time job, though you might limit your revenue because you can't put your all into it. But the money is made on these big corporate events, so if you are strategic about it, you can succeed.

Our focus is that I would love people to keep expanding through Crafty Cruiser. We will say yes to brick-and-mortars here and there, but we have so much data now after franchising for over 10 years that I can say with confidence, "This is not a good idea, let's stick to the Crafty Cruiser model."

Powills: What is the build-out cost on brick-and-mortar?

Anders Pike: You can open for $100,000 to $150,000 with ease. We actually did not renew our FDD for brick-and-mortar this year, so I don't have the latest numbers because we have been focused on the Crafty Cruiser.

Powills: The pivot makes complete sense. From where I stand, it wasn't crafting or paint-and-sip that was the magic; it was that there was something to do with the community of people and building relationships. It ended up being a widget. People almost over-indexed on what the service was, and the reality was what it meant. Everything you are talking about is more about gathering, finding entertainment, and finding value in the time that we use. It is a tremendous pivot. How many of your franchisees have converted or added on to go mobile?

Anders Pike: Most of them have not added on because they can do off-site events anyway without signing a new franchise agreement. We have done off-site events since day one. We always targeted getting people to come into the shop, whereas Crafty Cruiser allows us to go to them. We can market business-to-business to hotels, resorts, community centers, and retirement centers. To get 75 retirees on a bus to come to our shop wouldn't fit, but now we go to them.

Right now, we have 10 Crafty Cruisers, and about three locations converting from brick-and-mortar to Crafty Cruiser.

Powills: Is Crafty Cruiser the new name? Is that where the business is going?

Anders Pike: It is Crafty Cruiser by AR Workshop. That is our trademark.

Powills: What is the dream now?

Anders Pike: The dream is the Mahjong product line and experience. The explosion of people wanting to learn Mahjong falls right in line with what we have always done, and it is so aesthetic that it fits us. You are learning to play something that also has a creative component, and we can tack crafts onto it. We have a solo Mahjong board you can paint, take home, and play on. We also have a Mahjong watercolor kit and candle labels.

In our flagship store in Pineville, North Carolina, we are converting the front into a showroom. Anders Ruff sells to other concepts, too. Over 400 Mahjong studios around the country carry our products that are not AR Workshops.

For AR Workshops offering Mahjong, we haven't made it required. The ones offering it sell other brands too because we want customers to shop any brand they like. Helping franchisees grow through this is riding another wave. The trend when we started was wood signs and chunky blankets. People still like those, but learning Mahjong allows you to be in a community, join a league, and do something on a regular basis with friends. That is where the growth is.

Powills: That last line is super important from a franchise standpoint. If you remove the core service when an industry changes, you are left with real estate. Here, you have the mechanism for distribution. Mahjong is hot right now, but when that stops, whatever the next trend is can use your distribution channel. You found another way to protect the franchisee. If COVID happens again, you adjust to social-distancing crafting at a block party.

How many total franchisees do you have right now?

Anders Pike: We have about half of what we had, so about 75 total across brick-and-mortar and Crafty Cruisers. We have 10 Crafty Cruisers plus three converting.

Powills: Do any of them own other businesses?

Anders Pike: None of the Crafty Cruiser owners own other businesses. We have one owner who also owns a dance studio alongside her brick-and-mortar.

Powills: Think about multi-brand franchisees where margins are pinched. A restaurant owner with existing parking could use this to extend their concept out into the marketplace. The biggest challenge franchisees face is forgetting to shake hands and meet people in the community. This gives them a vehicle to push beyond their four walls.

Anders Pike: We love to collaborate with businesses. There are so many businesses trying to offer unique experiences. You can't just be a restaurant or a boutique anymore; you have to offer something unique.

Powills: Look at large-format retail like Home Depot, Lowe's, or Ace Hardware, where retail space has vacated due to online shopping. Opening an AR Workshop inside those stores or using mobile units to extend their brand into the community would pull in a whole new audience.

Anders Pike: We have some Ace Hardware locations that carry our Mahjong tiles and mats because their model allows for that creativity and flexibility.

Powills: Kudos to you. It is awesome when someone can figure out the pivot. Plenty of people get beat down and don't rebound, but you figured out a way to rebound and keep evolving. You are owning the outcome that community demand never went away, and now you have a way to build that community outside the four walls. I look forward to hearing where the story goes.

Anders Pike: Thank you so much. I appreciate it.

Watch the full episode above or on YouTube.