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Low Investment Costs
The total investment necessary to begin operation of a Menchie’s store ranges from $242,317 to $496,792. This includes $43,114 that must be paid to the franchisor. Mathews said the total investment decreased $75,000 from the previous year because of continued improvements in the construction process and stronger real estate services for finding optimal locations.
“We’re about the lowest investment in the category,” he said.
Menchie’s added 45 units in 2012, including nearly 30 in the United States, bringing its total to 256 in the U.S., Canada, and overseas.
According to a company press release, the growth mimics the food industry’s frozen yogurt segment, which has surged in the last decade after a lull during the 1990s; the frozen yogurt category grew 8 percent from 2010 to 2011, reaching an estimated $1.6 billion in revenues, according to IBISWorld.
In 2010, Menchie’s was named No. 1 in Restaurant Business magazine’s Future 50 list, ranking it the fastest growing franchise in the restaurant industry with a 748 percent growth.
Mathews said that rapid expansion has made the company focus even more intensely on “intelligent” real estate selection. The company has also enhanced its training program for franchisees recently, lengthening the training period and increasing the company’s support structure to get new franchisees up and running more quickly, he said.
As vice president of franchise development, Mathews said the company has done very little formal recruitment to attract new investors, but that will change as company goals for new units accelerate.
“Almost every franchisee that has come on board, almost every one came through from a positive customer experience,” he said. “They came in (to a store) to buy $4 worth of yogurt and left wanting to spend $400,000 on a franchise. There’s pixie dust on this model. Menchie’s is about as close to Willie Wonka as anyone is going to get.”
Still, Menchie’s is now using franchise broker channels and employing electronic media to assist franchise development.
As it continues to grow the brand and increase brand awareness, Menchie’s has several current marketing campaigns aimed at various demographics. This year, it will do a movie promotion with the film “The Smurfs 2” and is continuing its efforts to create awareness by encouraging photographs that show various celebrities such as Nicole Richie, Jennifer Garner, and Miley Cyrus, eating Menchie’s frozen yogurt.
To illustrate the strength of its various marketing efforts, Mathews points to the fact that Menchie’s has about 200,000 Facebook friends and has issued some 2.5 million “My Smileage” customer-frequency cards that reward patrons for visiting Menchie’s often.