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

by Franchise Chatter on July 7, 2015

in FDD Talk 2017: Food Franchises, Franchise Earnings, Pretzel Franchise

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Auntie Anne's Franchise Photo by Nick Stango

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

  • Section I – Background information on the Auntie Anne’s franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for an Auntie Anne’s franchise, based on Item 7 of the company’s 2015 FDD
  • Section III – Presentation and analysis of Auntie Anne’s financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:
  • net sales or average net sales, average expenses, and average net operating income for the year ended December 29, 2013 for a majority of Auntie Anne’s franchises that operated under the same ownership for the entire year
  • average net sales per transaction experienced by Auntie Anne’s enclosed mall locations which were open and reported sales for the entire fiscal year ended December 28, 2014

Section I – Background Information

This pretzel bakery franchise got its start in 1988 when Anne and Jonas Beiler bought a stand in a Pennsylvania farmers market in Downingtown and experimented with creating hand-rolled pretzels.

Franchising began in 1989 with the opening of another location at Saturday’s Market in Middletown, PA. By 1992, the 100th location opened at the Granite Run Mall in Media, PA.

In addition to malls, they started popping up in both train stations and airports, and more recently have appeared in food trucks and amusement parks.

With headquarters in Lancaster PA, today there are more than 300 franchisees operating in excess of 1,500 locations in 48 states of the U.S. and 30 countries around the world. Here’s how Auntie Anne’s twists up the competition in the pretzel industry:

Backed by Focus

In 2010, Auntie Anne’s was acquired by Focus Brands, the parent company of such franchising blockbusters as Carvel, Cinnabon, McAlister’s Deli, Moe’s Southwest Grill, and Scholtzsky’s Bakery Café. Focus Brands is itself owned by Roark Capital Group, a private equity firm.

A Long-Standing Tradition

Few people realize just how long pretzels have been around. They date all the way back to 610 AD when an Italian monk rewarded good students with pretiolas, “little rewards” of twisted dough that he thought resembled arms folded in prayer. They quickly caught on throughout Europe as they were considered symbols of good luck, prosperity, and long life.

Auntie Anne’s keeps the tradition alive, having rolled more than 1.8 billion pretzels over its 26-year history to date.

Diversified Revenues

Besides its store locations, Auntie Anne’s also enjoys revenue streams from two other major sources. Schools and community groups can take advantage of the company’s gourmet fundraising products in the form of baking kits and frozen pretzel products. Those same products are also available in the retail arena through a variety of super centers and regional grocery chains.

Innovative Offerings

Auntie Anne’s has rolled out new products over the years, and 2015 saw its first new item in more than two years: Cheddar Stuffed Pretzel Nuggets offering the freshly baked taste of a soft pretzel filled with melted cheddar cheese in a bite-size nugget.

Some major menu additions prior to that include 2003’s introduction of Original and Cinnamon Sugar Pretzel Stix, the Pretzel Dog in 2004 (an Auntie Anne’s pretzel freshly baked around a Nathan’s Famous Hot Dog), the Pepperoni Pretzel in 2009, Pretzel Nuggets in 2010, and Mini Pretzel Dogs in 2013.

Keeping Up With Digital Age

The My Pretzel Perks app is available for download for free in Apple’s App Store and Android’s Google Play Store. The app allows users to accumulate points for every $1 spent at any Auntie Anne’s location. My Pretzel Perks loyalty members also receive free pretzels on their birthday and exclusive information about fresh, new products.

Section II – Estimated Costs

  • Please click here for detailed estimates of Auntie Anne’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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