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Should I Invest in a Yogurtland Franchise?

by Franchise Chatter on April 14, 2011

in Franchise Reviews



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To learn more about the top frozen yogurt franchises to invest in, check out Fro-Yo Files.

I was in Las Vegas the week after Memorial Day last year, vacationing with family from the Philippines.  Of course, being the typical Filipino tourists, shopping was at the top of our agenda.  We visited all the major shopping centers on the strip.  After we were done with the usual favorites, we decided to check out the outdoor shopping mall called Town Square, just a few minutes cab ride from Mandalay Bay.

It was a nice, spacious shopping center, with a few retailers that weren’t on the strip, like Borders Books.  It was also much quieter than any of the other malls in Vegas (we were there on a weekday afternoon).  But one store stood out because it had a line snaking out its door.  It was Yogurtland.  We knew we had to try it.

I’m so glad we did.  The variety of interesting flavors was just dizzying.  They had Taro, Toasted Coconut, Red Velvet Cupcake Batter, Pecans & Pralines, Peanut Butter, Pumpkin Pie and so much more.  There was also an amazing array of toppings, but I decided to skip those because I wanted to savor the actual flavors of the yogurt.  I couldn’t decide which flavors to try, so I ended up with a pretty delicious mess.  But I was in heaven with every bite.



I enjoyed the experience so much that I returned to Town Square by myself to have one last taste of Yogurtland before flying back to Vancouver.  This time, I focused on fewer flavors, and enjoyed the experience even more.

I’m surprised that the self-service yogurt trend hasn’t hit Vancouver hard yet.  Considering that the locals here live a very healthy lifestyle, I would think that they’d appreciate a healthier alternative to Dairy Queen.

We have a couple of Yogen Fruz, but they don’t offer the self-service option and their yogurt flavors are limited to just a few.  There’s also a new BC-based chain called Qoola, but they don’t have any locations near me and I wasn’t as excited about the flavors they offered when I visited.

So should I invest in a Yogurtland franchise and open a location in downtown Vancouver?  Here are my thoughts on the pros and cons of this franchise opportunity:

The Pros:

1.  Excellent Product – I think they’ve succeeded in making a healthier dessert option like yogurt extremely accessible and appealing to the general public.  The self-service format makes it really fun for entire families, especially those with young kids and teenagers, as evidenced by the crowd in Town Square Las Vegas that day in May last year.

2.  Simple to Run, Streamlined Operations – The focused menu makes it easier to run compared to other food service operations with a more extensive menu.  The menu consists of only 2 categories:  yogurt and toppings.  I’m confident that I will find the food preparation aspect of this franchise manageable.

3.  Small Footprint – The typical location size is 1,000 to 1,500 square feet (I personally favor a smaller location to reduce overhead costs).   Most retail franchise concepts typically require more square footage, so the fact that this concept can fit in a compact space is definitely appealing.

The Cons:

1.   Seasonal Product? – I’d personally eat at Yogurtland any time of the year — rain, snow, or shine.  I have a sweet tooth and I’d like to feel less guilty when indulging in dessert.  I can see myself managing my sweet cravings by visiting this store a few times a week, especially since the self-service option gives me the power to control portion size.



But, unfortunately, I’ve observed that the ice cream and gelato shops in my area are pretty dead during the winter months (and Vancouver winters are not even harsh!).  This worries me.

I also noticed that most of the current locations of Yogurtland are in Southern California, Texas, and Florida — regions of the United States known for year-long warm weather.  I’m sure this is not a coincidence.  And, looking back on my experience, I visited Yogurtland in Vegas at the start of the summer — so of course, it was very busy!

On the positive side, however, this business model could still work in a city with a more seasonal climate since the retail space required is so small.  By keeping the fixed overhead costs low, a savvy franchisee can ride out the slow winter months, and really try to make up for it (and more!) during the spring, summer, and early fall.

2.   Is the Product Differentiated Enough? – I personally think the flavors offered at Yogurtland are unique and worth a special trip.  But would most people settle for a competitor’s offerings if the location was more convenient to them? Perhaps.

Another fear is if the trend really takes off in my city and a competitor opens a franchise store nearby.  Will Yogurtland’s offerings be distinctive enough to ward off the competition? I don’t know for sure.

I’m curious to see if the franchise company can continue to innovate with its menu to stay one step ahead of the competition.  I’m wondering if a product extension in a related category (like crepes or waffles) would make sense for this business in the future.  I think their current offerings are simply the most creative, so I’d definitely keep an eye on them for future developments.

In summary, the Yogurtland franchise opportunity appeals to me because I love the product, it’s easy to run, and the overhead costs are low.  But I really have to do more research on my local area to determine if downtown Vancouver can support a store like this.

What do you like and don’t like about the Yogurtland franchise opportunity?  Are you a current franchisee of Yogurtland?  What are your thoughts? Do you work for the Yogurtland franchise organization?  Do you want to add anything to the conversation?



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{ 25 comments… read them below or add one }

Anthony Fellows June 8, 2011 at 7:36 pm

Dear Ambrosio,

I have watched Yogurtland here in South Florida for the last year, I also happen to be a 20+ year veteran of the industry. As a consumer I personally value Yogurtland over all the others, hands down. For a couple of reasons, 1. proprietary blend ( high quality ), 2.the price .33/oz., and 3.the feel of the store….cool vibe, beautiful colors and finishes, yet they want you in and out, not a Starbucks kind of experience where you could stay in the shop on facebook all day.

With that being said and Florida being developed by one extremely well financed individual, I started to consider to bring Yogurtland elsewhere. My concerns were your concerns, however in your assessment you leave out some critical points, the most important being 1. Your initial capital layout per 1200 square foot store ( after doing a business plan I came to a number that was all in with 20k of working capital to be right around $525,000). 2. Ongoing costs ( high quality product ( franchisee is required to purchase) + .33/ounce ( franchisee required to sell extremely cheap)= HIGH FOOD COST, LOW PROFIT MARGIN FOR FRANCHISEE) Yes I do believe Yogurtland to be the KING for many reasons and I do believe like the real estate market of South FLorida from not too long ago, this YO-Fad is gonna FALL HARD ( local guys busting out already), I believe Yogurtland ( the well financed franchisees) will be the one standing when the dust clears, however If one has 500k to invest I feel there are many more options to ensure a safer ROI than a yogurt store. As a frozen dessert fanatic I have always said, “I LOVE HAAGEN DAZ AS A CONSUMER, HOWEVER I HATE HAAGEN DAZ AS AN INVESTMENT!”

Good luck and I hope I was able to provide some insight to the industry

Reply

Ambrosio June 8, 2011 at 8:08 pm

Dear Anthony,

You raised some excellent points. I agree that from a strictly financial perspective, there are other franchise models that offer the potential for a greater ROI. But I think the reason why there’s so much interest in frozen yogurt franchises is the impression that it’s an easy and enjoyable business to run and, of course, everyone just loves the product. It’s more of a lifestyle choice for a lot of folks.

By the way, please check back in the next few days because I’ll be posting my exclusive interview with the VP of Development and Operations for Yogurtland. It’s a good read.

Thanks for dropping by!

Best regards,

Ambrosio

Reply

Nanda March 25, 2012 at 1:23 pm

want to hear the follow-ups to this thread

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Michael Thaler March 28, 2012 at 5:07 am

My interest in franchising lays in the balance of how much an average store can gross and net a year. I am having difficulty finding the answers to this nuts and bolts question . If im paying out 8% to Yougurtland and another 5k per mounth in rent + principal and interest on the note what do the EARNINGS look like?

Reply

Ambrosio March 28, 2012 at 7:44 am

Hi Michael,

I totally get where you are coming from. For prospective franchisees, potential earnings are foremost on everyone’s mind. But most franchisors do not disclose average earnings because it has the potential to mislead first time entrepreneurs into thinking that each store makes roughly the same amount of money. As a former franchisee of The UPS Store, I can tell you that there are franchisees who make a lot of money, some who make a decent amount, and many who do not make any money at all. There are just so many factors that are variable.

Anyone else have any thoughts on this?

Best regards,

Ambrosio

Reply

Steven April 20, 2012 at 3:30 am

Hi, I was wondering why Yogurtland has not opened any franchises in Canada?

Reply

Ambrosio April 20, 2012 at 4:16 am

That’s an excellent question, Steven. Let me ask someone from Yogurtland. Stay tuned.

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Steve April 20, 2012 at 4:35 am

Thanks! Great blog you have here. Have been looking for info about frozen yogurt franchises. Am thinking about opening one in Canada.

As for suggestion about future content, maybe a post about the current market and franchising opportunities in Canada? (Similar to your top 2011 frozen yogurt post) this would tie well into the response you receive from Yogurtland.

Steve

Reply

Ambrosio April 20, 2012 at 7:32 am

Thank you, Steve! I’m not too familiar with the franchise landscape in Canada because my franchise experience was in the US (although I’m now a resident of Canada). I need to do further research on what franchises are doing well in Canada specifically. But I’ll definitely keep your suggestion in mind.

Thanks for your support!

Best regards,

Ambrosio

Reply

Ambrosio April 20, 2012 at 9:40 am

Hi Steve,

Here’s Larry Sidoti’s response to your question. Larry is VP of Development at Yogurtland, and the subject of my exclusive interview last year. (Thank you so much for taking the time to answer Steve’s question and for your kind words, Larry!)

“International deals are typically complex and require significant resources on both sides of the relationship. Our approach to international development is to partner with food service operators with experience with American brands. With regards to Canada specifically, they have rigid requirements with regard to dairy imports that require extremely high tariffs. As you know we are very protective of our frozen yogurt recipes and do not allow outside production. Ultimately when we have the right franchise partner in place in Canada, we may opt to identify a manufacturing partner which would allow us the option to produce within the country. Again, Ambrosio our product is the foundation of our brand and we will not do anything or enter a market if it may compromise the quality of our products.”

“Ambrosio, I do appreciate your interest in our brand and enjoy your blog. You are a positive influence for the industry. We recently opened our 180th store and entered the Chicago market. We have plans to reach 250 units this year. It has been a treat to see the excitement around the Yogurtland brand as we enter new markets.”

Best regards,

Ambrosio

Reply

Steven April 21, 2012 at 11:47 pm

Thanks for the response Larry! (and Ambrosio)

Guess I can count out Yogurtland for now…Ambrosio, do you have any info or could do an FDD post about Tutti Frutti?

Steve

Reply

Ambrosio April 21, 2012 at 11:56 pm

Hi Steven,

You’re welcome! I’ll look into the FDD of Tutti Frutti this week to see if they make any financial disclosures under Item 19. If they do, I’ll definitely write an FDD Talk post on the company. I’ve actually been to a Tutti Frutti location in Manila, so I’m familiar with the brand as a customer. 🙂

Best regards,

Ambrosio

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Derrick May 19, 2012 at 5:39 pm

This is a great blog post. All the pros and cons are things that I was considering. I always wondered why there was such a high startup cost ($400K-500K). I’m no expert by any means of starting a business, but I’m really wondering what the $400K buys you. Does that also include expenses for rent for up to a year? Seems rather steep to me? Any one else think so?

Reply

Ambrosio May 21, 2012 at 10:18 am

Hi Derrick,

Great question – I’m doing a blog post on this very subject, which will be published later today. But here’s a sneak peak. The rent and lease deposit included in the initial investment is from $3,000 to $20,000. This estimate assumes rent for 3 months, security deposit, and last month’s rent. Most of the expenses are build-out related. Thanks for checking out the blog, Derrick!

Best regards,

Ambrosio

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Grahame Clark June 2, 2012 at 4:22 am

When you open a Yogurtland franchise, you can’t just think about the success of your individual business. You must also consider your business’ effect on the franchise’s reputation as a whole. In the end, if you do your best to increase the public’s perception of the brand, it’ll help you, too.

Reply

tom assenzio July 16, 2012 at 6:40 am

Looking for what the average Tutti Frutti store makes….just a best guess estimate. I am thinking after everything is paid, you would be left about 10K profit for the month?

Reply

Franchise Chatter July 16, 2012 at 7:19 am

Hi Tom,

Hard to speculate without seeing their financial performance representations under Item 19 of their FDD. But I do know that the average cash flow of the corporate-owned stores of Yogurtland (for me, the industry leader) is more than that.

Best regards,

Ambrosio

Reply

shane October 5, 2012 at 6:10 pm

HI Ambrosio
have you heard “FrozenYogur” ? it has many branches…

Reply

shane October 5, 2012 at 6:16 pm

what about yogurberry?

Reply

Jim February 23, 2013 at 3:38 pm

Ambrosia,
I am curious as to the $35000 franchise fee that is non refundable. I am wondering if this is to be paid bedore agreeing upon a desirable location or would they consult with you on a couple locations before hand. I know Yogurtland is known to be quite picky on locations. What if you pay the fee and they cant provide you with a desirable location or agree upon one? Much thanks for the help!!!!

-Jim

Reply

Franchise Chatter February 23, 2013 at 5:49 pm

Hi Jim,

Thank you for your question. The franchise fee is paid in a lump sum upon signing the Franchise Agreement.

According to Yogurtland’s FDD, “When you sign your Franchise Agreement, if we have not already approved a site for your proposed store, we will approve a general area, where you can search for a location.” It adds, “You may not open a location that we do not approve” — a statement that is fairly standard in FDDs.

Implicit in the first quoted statement is the possibility of signing the Franchise Agreement with an approved location. However, in any case, the responsibility for choosing an acceptable location lies with the franchisee. The franchisor will generally not disapprove a location unless they have serious concerns about its viability. I would rather have a franchisor that is more discriminating with site selection, because I believe this is the single most important factor that will determine your success.

Hope this helps.

Best regards,

Ambrosio

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Susan March 6, 2013 at 12:31 pm

Hi Ambrosio,

I am interested in opening a Yogurtland in Morgan Hill, CA. I already have a location in mind with available leased spaces. But I’m not sure where and how to begin. And how long does the whole process generally take before the actual store can open to the public?

I look forward to hearing from you.

Thanks,
Susan

Reply

Franchise Chatter March 6, 2013 at 3:39 pm

Hi Susan,

Thank you for your question.

I suggest that you contact Yogurtland directly via their website. Once you hear back from their franchise development representative, ask him or her if that territory in Morgan Hill, CA is still available. Just because there is no Yogurtland store currently open in the area does not mean that the territory is still available. It could very well be spoken for by a multi-unit franchisee who has purchased multiple territories, with plans to open stores over a period of time.

As for the pre-opening timeframe, anywhere from 3 to 6 months after the franchise agreement is signed is fairly typical. You may be able to open sooner if you sign the lease agreement soon after signing the franchise agreement.

Best of luck!

Best regards,

Ambrosio

Reply

eduardo July 6, 2013 at 10:05 pm

good day
Im just wondering how come Yogurtland figure out that the opening cost will be 400 to 500k
it looks like a lot of money, so my question is if I can build my very own location and just use their name, products and obviously marketing
Im sure I can put together a place with no more that 150k
there is a lot of auction for restaurant equipment where you can buy tables chairs or a walking cooler with a freezer compartment for less that half the price on a new one
whats your thoughts on this
also what that amount of money covers:?? do you know by any chance

regards
a dreamer with ambitions

Reply

Franchise Chatter July 6, 2013 at 10:19 pm

Hi Eduardo,

Check out this post with the actual breakdown of Yogurtland franchise costs.

https://www.franchisechatter.com/2013/06/12/franchise-costs-2013-detailed-estimates-of-yogurtlands-franchise-costs-2013-fdd/

I think the essence of your question is whether it makes sense to go with a franchise or just start your own business from scratch at a much lower cost. You have to assess whether Yogurtland’s brand, proprietary products, and ongoing training and support are worth the additional expense. This is a fundamental question for anyone interested in buying a franchise.

Best of luck with your due diligence.

Best regards,

Ambrosio

Reply

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