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

by Franchise Chatter on July 13, 2015

in Chocolate Franchise, FDD Talk 2017: Food Franchises, FDD Talk 2017: Retail Franchises, Franchise Earnings, Retail Franchise



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Kilwins Chocolates Photo by KelleyAdam

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

  • Section I – Background information on the Kilwins franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Kilwins franchise, based on Item 7 of the company’s 2015 FDD
  • Section III – Presentation and analysis of Kilwins’ financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:
  • 2014 average and median Gross Sales for the 82 Kilwins Stores that were in operation during the entire period of January 1, 2014 through December 31, 2014 and that reported Gross Sales to the franchisor, including 6 Stores that are seasonally operated and were not open for the entire 12-month period
  • 2013 average Cost of Sales and Non-Owner Payroll Costs for the 58 franchised Kilwins Stores from whom the franchisor was able to obtain applicable information
  • 2014 average Transaction Value for the 85 franchised Kilwins Stores that were in operation during the year January 1, 2014 to December 31, 2014 that reported complete transaction values to the franchisor, including Stores that intentionally operated seasonally for part of the year (as compared to Stores that may have been operating for part of the year because they opened or closed during 2014)

Section I – Background Information

Don and Katy Kilwin opened their first bakery and candy shop in Petoskey, MI back in 1947. While the bakery portion was satisfying, the confections were their true love, so they sold the bakery in 1971 and focused on the candy, and eventually ice cream as well.

The operation changed hands just twice in all these years, in 1978 to Wayne and Lorene Rose, and then in 1995 to Don and Robin McCarty. It was under the McCartys when more aggressive store expansion began.

With 96 stores and still headquartered in Petoskey, the Kilwins mission is very simple: Create high-quality products from the finest ingredients and provide customers with great service. The chain’s traditional down-home confections and ice cream are all made fresh on-premise from premium ingredients and original recipes.

Theater of Candy

The chain’s in-store craftsmanship makes a true spectacle of candy-making, combining sight, taste, touch, smell and sound into an authentic sensory and taste experience that customers love. That’s why each store needs to be at least 15 feet wide; to make the fudge and confections in the window for all to see, which draws customers into the store.

Tweaking the Model

What Kilwins eventually realized was that its approach to confections and customer service worked best in a particular environment, which is one where people are vacationing. In other words, Kilwins operates as a kind of tourist attraction, working best in areas with high foot traffic, such as historic areas, beaches, boardwalks, and so on. The latest store to open is in historic Old Town Alexandria, VA.

Tradition

Bill Hoffman is the head candy cook. He started with Kilwins in August 1985 and trained under Hershel Dunshee, who in turn was trained under Don Kilwin, the founder who came up with most of the original recipes.

There’s a long tradition of candy-making wrapped up into this operation that the chain continues to honor to this day. Even the equipment dates back to the 1940’s, 50’s and 60’s to keep everything authentic.

The Product Line-up

The line-up includes genuine hand-made premium Chocolates made the same way since 1947 in Petoskey; secret recipe made-in-store products like Mackinac Island Fudge, Brittles, Caramels, Caramel Corn, hand dipped Chocolate products, and “The Perfect Apple” caramel apples; and Original Recipe Ice Cream – a recipe that has not changed in 30 years.

The Fudge

You can’t really understand the Kilwins concept unless you understand its fudge. The creamy Mackinac Island Fudge comes from original recipes developed by Don and Katy Kilwin. They purchased a marble table in 1948 and began hand-crafting fudge shortly thereafter.

Now there’s an impressive array of flavors, including Double Dark Chocolate Fudge, Peanut Butter Fudge, Sea-Salt Caramel Fudge, Chocolate Fudge, Single Origin Dominican Republic Chocolate Fudge, Turtle Fudge, Butter Pecan Fudge, Chocolate English Walnut Fudge, Chocolate Peanut Butter Fudge, Maple Walnut Fudge, and Toasted Coconut Chocolate Chunk Fudge.

Section II – Estimated Costs

  • Please click here for detailed estimates of Kilwins 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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