(Ambrosio’s note: Every so often, readers ask for my opinion on particular franchises, and I’m happy to oblige if I am familiar with the company. But I’m always upfront if I don’t know enough about the franchise to give an opinion on the spot.
About two weeks ago, I received an email from Anonymous Reader (name withheld upon request) asking about Sub Zero Ice Cream & Yogurt, a franchise I’d heard of but didn’t really know much about. I was able to get my hands on Sub Zero’s FDD but, unfortunately, they don’t make any financial performance representations in their Item 19.
After visiting their website and reading through their FDD, my curiosity was piqued. When I asked Anonymous what attracted him to Sub Zero, he sent me a detailed list of why he likes this franchise. The email was so well written that I tried to convince Anonymous to do a guest blog post on Sub Zero. After some initial hesitation, Anonymous agreed to flesh out his original email with more details and this guest blog post is the result.
and the bad, because all franchise opportunities will have their fair share of both. And if you want to get feedback from me or from readers of Franchise Chatter, I invite you to submit your review as a guest blog post.
In the meantime, here’s what Anonymous has to say about Sub Zero.)
I’m very excited about the potential for Sub Zero, especially after reviewing the numbers you present on your site for leading yogurt franchises. I discovered Sub Zero at a franchise show several months ago. My 11-year-old daughter and my wife were with me and they were immediately attracted to the Sub Zero table. Looking at it from a distance, you could see something that looked like fog rising around the table. My daughter thought it was the greatest thing she had ever seen. We tried the ice cream and the yogurt and were quite impressed with the product.
Here are the primary reasons I am excited about this opportunity:
- I love the concept. The idea of making ice cream on the fly in an entertaining way seems perfect. It has the “gimmick” that will get attention, but it’s backed by a solid product that people will come back for. I love what they are doing with the look and feel of the stores — using the nitrogen tank as part of the decor and using a science/chemistry theme. Atmosphere of the stores are nice, much better than a lot of the yogurt stores I have been to.
- The ability to offer almost unlimited choices of flavors and toppings is huge. Everyone can get exactly what they want — made to order. It has the benefit of customization like the self-serve yogurt places, but without having to make it yourself and without the chaos of kids dumping toppings all over the place.
- The fact that you can choose ice cream, custard, yogurt or soy/rice milk is a great feature. It allows options for folks with dietary restrictions or those simply trying to eat healthy.
- The yogurt — in my opinion — is MUCH better than the soft serve stuff you get at self-serve yogurt shops. The texture is much more like regular ice cream, although you have the option to make it harder or softer depending on preference.
- The instant freeze aspect of this concept means you don’t have to have a huge freezer with an inventory of ice cream. This keeps the costs of the build out lower and also has a benefit on utility costs. All ice cream is always fresh.
- The catering opportunity is significant. Unlike other standard ice cream or yogurt offerings, you do not need electricity to keep the product cold. Just a portable nitrogen tank and a cooler and you can literally be anywhere. Because of the coolness factor, I think this can work for birthday parties, weddings, corporate events, school events, etc. The franchise sells a trailer if you want it, but all you really need is an easy setup and a few tables. Catering is obviously a great way to promote the business as well as create another revenue stream.
- There are a million tools for marketing this concept. I think the PR aspect is great. There are currently no stores in my area and when the first store is introduced there is an opportunity for significant news coverage. The word of mouth aspect will be huge — once people experience it, they will talk about it. The company also has a school program where they do a little science program using liquid nitrogen and, of course, end by giving the kids ice cream and coupons.
- Sub Zero has stores that are doing well in Salt Lake City. Nothing against Salt Lake, but it’s not the greatest market for something like this (low household income, low population density, cold weather part of the year and NO business on Sundays). In other markets I think this can do much better.
- The company has now partnered with a franchising operation called Five Star. They developed and support the Five Star Painting franchise as well as some others. They seem like good guys and they are investing heavily in Sub Zero as their major brand. They seem like they understand what it takes to make Sub Zero a success.
- The caveat is that I only know what I see. It is a small operation and this is a new concept only available in a few markets. There are still things they are figuring out. I find that exciting, but it also introduces risk.
(Back to Ambrosio: Anonymous makes a compelling case in favor of Sub Zero, but allow me to play devil’s advocate. The interactive nature of this concept reminds me of Cold Stone Creamery, a frozen dessert franchise that is known for made-to-order ice cream creations using a variety of mix-ins. My main problem with Cold Stone’s business model is that customization requires a larger crew to execute properly, especially during peak hours. Since ice cream is a relatively low ticket item, consumed only during certain hours of the day, and seasonal in nature, the payroll requirements under Cold Stone’s model seem disproportionate to its revenue potential. Cold Stone has suffered over last few years because of overexpansion, but that doesn’t apply to Sub Zero at this time.
The beauty of the self-serve frozen yogurt model is that you can run the shop efficiently with a barebones staff without losing customers. And with self-serve, you can move customers in and out the doors far more quickly, which is crucial to maximizing revenues during peak hours (and peak seasons).
Is a large staff needed to properly execute Sub Zero’s unique concept? Or has Sub Zero learned from the experience of Cold Stone Creamery and improved upon the latter’s business model and operations? This is a crucial point to consider.
If you have any first hand knowledge of Sub Zero that can help Anonymous make an informed decision, please share your thoughts in the comments section below.)