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

by Franchise Chatter on February 9, 2016

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

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Zoup Photo by tory.me

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

  • Section I – Background information on the Zoup! franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Zoup! franchise, based on Item 7 of the company’s 2015 FDD
  • Section III – Presentation and analysis of Zoup!’s financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:
  • 2014 average, high, and low gross sales for the 56 Zoup! Restaurants that were opened for a full 12 months during 2014, divided into 3 subgroups, namely:  (a) Restaurants operated in typical locations (41 Restaurants); (b) Restaurants operated in mall locations (4 Restaurants); and (c) Restaurants operated in downtown locations (11 Restaurants)
  • 2014 average percentage of annual revenue per quarter for the 56 Zoup! Restaurants open for a full 12 months during 2014
  • 2014 average payroll costs, including compensation for the general manager, as a percentage of gross sales, for the 2 Zoup! Restaurants owned and operated by the franchisor’s affiliates for a full 12 months during 2014
  • 2014 average cost of goods sold (food and paper), as a percentage of gross sales, for the 2 Zoup! Restaurants owned and operated by the franchisor’s affiliates for a full 12 months during 2014
  • 2014 average ticket information for the 56 Zoup! Restaurants opened for the full 12 months during 2014

Section I – Background Information

Zoup! is a fast-casual restaurant chain that specializes in soups. The company operates a network of more than 80 restaurants in the U.S. and Canada, and offers franchise opportunities to qualified candidates.

The first Zoup! opened in suburban Detroit in 1998. Over the following five years, the founder, Eric Ersher, opened five more Detroit-area locations, before franchising the concept in 2003. The privately-held company, which is headquartered in Southfield, Mich., has aimed to avoid aggressive and fast growth.

Zoup! restaurants feature a daily selection of 12 rotating varieties of soup, including low-fat and vegetarian options, fresh salads, sandwiches and baked goods.

In Entrepreneur’s 2016 Franchise 500 list of top franchisors, Zoup! ranks at #314. For 13 years in a row, Detroit HOUR Magazine readers have given Zoup! the best “Best Soup” in Detroit nod. Restaurant Business magazine put Zoup! at #35 in its 2015 ranking of the fastest-growing small chains in the U.S.

Customer Samples

Customer soup favorites include Chicken Potpie, Lobster Bisque, Vegetarian Split Pea, Corn and Crab Chowder, Chicken with Roasted Garlic, Twice-Baked Stuffed Potato with Bacon, Lentil with Sweet Onion & Barley, and Zesty 3 Pepper with Chicken. Customers are encouraged to sample flavors before they order.

The company began selling its “Good, Really Good Chicken Broth” to 104 grocery stores in 2013. Several months later, it launched a vegetarian broth for grocery stores.

Throughout January 2016, Zoup! locations participated in National Soup Month to help fight hunger. Customers who donated $3 to Feeding America or Breakfast Club of Canada received a voucher for a free cup of soup on a future visit.

Company founder Eric Ersher had a spice business and then a wholesale soup business before launching Zoup! He told an interviewer that he discovered in his previous jobs that good soup is hard to find and that people connect soup with the idea of comfort.

100 Different Flavors

Each Zoup! restaurant has 12 soup wells with 100 different soups rotating through the stores. All soups are cooked in small batches at a central location using Zoup!’s special cook-chill process. The soups are then delivered to the stores where they are brought back to serving temperature.

Zoup! soup is available in 8-ounce cups, 12-ounce bowls, quarts or gallon, and prices range from about $3.95 a cup to about $6.95 a bowl and to about $45 a gallon. About 50 percent of each restaurant’s sales are takeout orders, and Zoup! also offers catering service for parties of 10 or more.

Zoup’s “Try Two!” promotion offers customers the option of selecting two of three offerings—a cup of soup, a half salad, or half sandwich – for about $7. (Prices may vary)

All soups are served with a “hunk” of sourdough, French or multigrain bread, all of which are baked on site.

Grilled sandwich selections include the Classic Grilled Cheese, a Turkey Club with Swiss and Tuna Salad with Lemon and Capers. Salads include Caprese Green, Cobb, and Loco Burrito—a Tex-Mex creation with grilled chicken, tomatoes, mozzarella cheese, roasted corn, red onion, black bean salsa, guacamole and tortilla strips on a bed of lettuce.

A typical Zoup! location is about 2,000 square feet with seating for 45–50 people. Most restaurants are located in in-line strip-center locations, with a few smaller stores located inside malls or office buildings.

Zoup! made a promotional video with Larry Thomas, the actor who played the enduring “Soup Nazi” character on the classic Jerry Seinfeld TV series, “Seinfeld.” The two-minute video shows Thomas pointing at the camera saying, “Zoup! For you!”

Section II – Estimated Costs

  • Please click here for detailed estimates of Zoup! 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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