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

by Franchise Chatter on July 16, 2015

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

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HoneyBaked Ham Co. and Cafe Photo by bkpartonatcn

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

  • Section I – Background information on the HoneyBaked Ham franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a HoneyBaked Ham franchise, based on Item 7 of the company’s 2015 FDD
  • Section III – Presentation and analysis of HoneyBaked Ham’s financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:
  • 2014 average net sales for the 170 franchised HoneyBaked Ham Stores that were in operation for three years through the end of the company’s last fiscal year, which included the period from September 30, 2013 to September 28, 2014
  • 2013 average net revenue, cost of goods sold, gross profit, labor costs, miscellaneous/all other expenses/royalties, advertising expenses, rent, and EBITDA for the 56 franchised HoneyBaked Ham Stores that were open during the entire period from January 1, 2013 to December 31, 2013 and that provided year-end profit and loss statements to the franchisor on its standardized form for this period

Section I – Background Information

Harry Hoenselaar was born in 1908, and in 1926 went to work for The Honey Baked Ham Company in Detroit, MI. Not only did he have a knack for the tricky process of slicing ham from the bone, he also invented the prototype for what became the first spiral-slicing machine. He built many more slicing machines over the years, but was unable to find buyers for his innovative equipment.

Then in 1957 the widow of his former employer called him up and offered him the opportunity to purchase The Honey Baked Ham Company for just $500. He re-mortgaged his house, made the purchase, and opened the first HoneyBaked Ham location in October of that year.

After he passed away in 1974, the company continued on in the hands of his children and grandchildren. Today, HoneyBaked Ham operates more than 400 locations, offering fully cooked entrées of ham, turkey, and other items.

Food retail is a tough segment for any company. Here’s how family-owned HoneyBaked Ham is making it happen:

New Territories Opening Up

Now headquartered in Alpharetta, Georgia, HoneyBaked Ham didn’t previously offer franchising in the Northeastern states, but has now opened that region up for new locations.

HoneyBaked Ham has been slow to pick up the franchising concept, which it only began after 2002 when it purchased Hickory Ham and Heavenly Ham, both of which operated on the franchise concept.

Most HoneyBaked Ham locations are company-owned. Of its 400 locations, less than half are franchises, and the company is keen on making that number grow to supplement its corporate store growth.

Flexibility in Channels

The chain definitely considers itself more on the retail end of the spectrum than the restaurant end, but many locations do operate a café for diners. Its approach is flexible so that locations have the freedom to pursue the channels that make the most sense in their local markets.

The café side of the business tends to dovetail nicely with catering efforts, and many businesses and organizations come to rely on HoneyBaked Ham for quality meeting food.

The model is a kind of hub-and-spoke affair. The store is the hub where the turkeys and hams are hand-glazed. The spokes could take a variety of forms ranging from holiday pop-up locations; partnerships with area grocery stores, malls, or military bases; even mobile sales at area events, sports arenas, and racetracks.

Stay tuned as the company tests a “lunch express” concept.

Business Basics

HoneyBaked Ham takes the time to get to know franchisees in terms of their needs and what headquarters can do to support them.

When it comes to putting together projections and other financial documents for lending agencies and banks or getting ready for a grand opening, the company figures out what support is needed and then delivers it.

Expanded Offerings

The company is obviously most famous for its hams, but keeps pace with changing consumer preferences by adding new offerings.

Other meats include HoneyBaked smoked and roasted turkey breast, fully cooked whole turkey, pot roast, bacon, and ribs.

Sides include cinnamon apple slices, sweet potato soufflé, au gratin potatoes, Yukon mashed potatoes, broccoli rice casserole, macaroni and cheese, and more.

The company also offers desserts like southern pecan, pumpkin, and apple caramel walnut pies; cheesecake; coffee cake; and carrot cake.

Section II – Estimated Costs

  • Please click here for detailed estimates of HoneyBaked Ham franchise costs, based on Item 7 of the company’s 2015 FDD.

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

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