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FDD Talk 2015: The Menchie’s Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on June 23, 2015

in FDD Talk 2017: Food Franchises, Franchise Earnings, Frozen Yogurt Franchises

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Menchie's Yogurt Interior Photo

In this FDD Talk 2015 post, you’ll learn the following:

  • Section I – Background information on the Menchie’s franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Menchie’s franchise, based on Item 7 of the company’s 2015 FDD
  • Section III – Presentation and analysis of Menchie’s financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:
  • 2014 average gross sales earned by 102 of the 105 franchised Menchie’s locations that were procured under Menchie’s Real Estate 2.0 platform
  • 2014 actual gross sales earned by Menchie’s only company-owned location in operation during the entire Measurement Period
  • 2014 average gross sales earned by 28 of the 29 franchised Menchie’s locations in Los Angeles County that were in operation during the entire Measurement Period
  • 2014 actual profit and loss information for five of the 264 franchised Menchie’s locations in operation during the entire Measurement Period. These five franchised locations were selected because their actual gross sales during the Measurement Period were closest to the average gross sales for the 102 Real Estate 2.0 platform locations included in Part 1
  • 2014 average gross sales earned by Menchie’s franchised locations under the Real Estate 2.0 platform located in the four largest regions (Los Angeles County, California; Seattle, Washington; Miami, Florida; and Cleveland, Ohio) that were in operation during the entire Measurement Period

Section I – Background Information

Menchie’s Frozen Yogurt, picked as No. 16 on Forbes’ 2014 list of America’s Most Promising Companies, is on target to hit the 600-store mark in 2015. Menchie’s opened its 400th location in April 2014 in Kitsilano, Vancouver, British Columbia, and today has about 500 stores.

In addition to locations within the U.S., Menchie’s is present in such countries as Canada, China, India, Japan, Saudi Arabia and United Arab Emirates.

Menchie’s announced in December 2014 that it would enter the UK in 2015, planning 200 store openings over 10 years that would create as many as 3,000 jobs. The Menchie’s presence would show up first in the London area.

First Date Inspired Menchie’s Frozen Yogurt

The frozen-yogurt chain was founded in 2007 by the husband-and-wife team of Adam and Danna Caldwell, who still run the company without any outside funding. They opened their first store in 2007 in the Los Angeles suburb of Valley Village. The inspiration for the company stems from the couple’s first date, when they went to a frozen yogurt store.

In 2008, the Caldwells brought in Elie Balas, who is chairman of the board, and started franchising, and shortly thereafter added Amit Kleinberger as CEO. Danna Caldwell is the company president, and Adam Caldwell is chief operations officer.

Kleinberger, who appeared on “Undercover Boss” in October 2013, took part in a panel discussion in May 2014 at the National Restaurant Association Restaurant, Hotel-Motel Show, also known as the NRA Show. Kleinberger joined Andy Wiederhorn of Fatburger and Anthony Wedo of Ovation Brands to talk about the lessons they learned in their TV appearances.

Smiles Are High Priority

The Caldwells’ dream was to create a yogurt store that offered great taste in a fun, happy environment. Along with the bright colors and fun atmosphere in the stores, the brand’s mission statement, “we make you smile,” is also illustrated by a mascot named Menchie, a cute cartoon character whose head is topped with a multicolored frozen yogurt swirl.

Menchie and his friends, who incorporate tastes like kiwi, strawberry and sprinkles into their appearance, are designed to help people smile and illustrate the brand’s mission statement.

Healthful Yogurt

The milk in the Menchie’s yogurt comes from California cows that are free from artificial growth hormones. The yogurt contains live and active cultures, and its endorsement by the National Yogurt Association is illustrated by the Live and Active Culture (LAC) seal.

Flavors feature both typical and unusual choices, from apple pie and strawberry to red velvet cake and pistachio. Toppings include fresh fruit, candies, sprinkles and much more, and the chain offers several pour-over toppings.

New Menu Items

Among the flavors of the month was Nutella in May 2015, through a partnership with Ferrero Nutella. A Nutella topping was also available to complete the hazelnut spread taste experience.

Here are a few other limited-time flavors. They may be gone now, but popular flavors often return, sometimes making it to the regular menu.

  • Power Pomegranate Acai and Carrot Orange Boost Sorbet brought bright, bold flavors to the April 2015 Menchie’s menu.
  • For March Madness 2015, Menchie’s and Reese’s conspired on the Reese’s Peanut Butter Cup Slam Dunk flavor. Menchie’s also brought in Rich ‘n’ Smooth Cookie Butter flavor, which features Speculoos Cookie Butter.
  • Cinnabon Cinnamon Roll, already a Menchie’s flavor, was enhanced in December 2014 with the addition of Cinnabon Morsels to the toppings menu. Cream cheese icing completes the suggested recipe.
  • Menchie’s brought back its popular Cocoa Minty Holiday Cookie flavor for the holidays in November 2014, combined with holiday cups and red spoons.
  • Menchie’s Frozen Yogurt introduced the Girl Scout Caramel Coconut Cookie Craze flavor in April 2014, along with Girl Scout Thin Mint and Samoa crumbles in the toppings bar.

Section II – Estimated Costs

  • Please click here for detailed estimates of Menchie’s franchise costs, based on Item 7 of the company’s 2015 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2015 FDD) and Analysis

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