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FDD Talk: The Nestlé Toll House Café by Chip Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on February 22, 2016

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



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Nestle Toll House Café by Chip Photo

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

  • Section I – Background information on the Nestlé Toll House Café by Chip franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Nestlé Toll House Café by Chip franchise, based on Item 7 of the company’s 2015 FDD
  • Section III – Presentation and analysis of Nestlé Toll House Café by Chip’s financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:
  • 2014 high and low gross sales, by quartile, for all Nestlé Toll House Café by Chip units in mall, non-mall, and co-branded locations in the United States operating for at least 12 months as of the end of fiscal year 2014

Section I – Background Information

Everyone knows Nestlé – it’s the biggest food company in the world as measured by revenues, ranking #70 on the Fortune Global 500 in 2015. The company dates back to 1905 when two different Swiss companies merged to form Nestlé. It is known the world over for such brands as Nespresso, Nescafé, Kit Kat, Smarties, Nesquik, Stouffer’s, and many others, including its now famous Toll House Cookies.

Although it’s widely recognized that Ruth Graves Wakefield invented the chocolate chip cookie back in the 1930s when she owned the Toll House Inn in Whitman, MA, the details of how the cookie was born vary widely.

Fast forward to the dawn of the new millennium, which is when Ziad S. Dalal and Doyle P. Liesenfelt started Crest Foods, the franchisor arm of Nestlé. They wanted to build on the company’s expertise in confections and came up with the concept of the Nestlé Toll House Café by Chip, a small dessert restaurant that is most frequently found in shopping centers and malls.

After opening the first location in Frisco, TX, in August of 2000, they immediately started franchising the concept, featuring a menu with muffins, croissants, scones, rolls, cookies, cakes, biscotti, ice cream, milk shakes, smoothies, iced and hot coffees, and other chocolate treats. Some locations even offer sandwiches, crepes, and salads.

The number of U.S. locations reached its peak in 2008 and 2009. In 2010, the number of U.S. locations dropped by 10 to 97. In the ensuing years, that number has been volatile but currently stands at 98. Meanwhile, 2010 also saw the opening of the first location outside the U.S., and international expansion has proceeded since then at a healthy clip and now stands at 52. With the addition of five company-owned locations, the total number of cafés stands at 155.

Here’s how Nestlé Toll House Café by Chip keeps the proverbial sweet tooth satisfied in the bakery café segment:

Passion

Chocolate chip cookies took the country by storm back in the 1930s and 40s, and the American obsession for the classic cookie has never abated. People are passionate about their desserts, and Nestlé Toll House Café by Chip is passionate about making them, as well as creating a customer experience that hearkens back to good childhood memories while creating adventures in the present and future.

The company aims at nothing less than the ultimate dessert experience, which it delivers with fine Nestlé branded ingredients, indulgent creations, and distinct flavors, all in a luxurious dining space.

Backed by Nestlé

How can a concept go wrong when it’s backed by a global powerhouse like Nestlé? The power of iconic brand recognition may very well be the key for the company to unseat the current leader in fresh-baked cookie franchising – Mrs. Fields Cookies.

Flexible Models

The company touts its multiple models for maximum flexibility with real estate requirements. Options include the sit down café (800 to 1700 sq. ft. with 25-ft. minimum frontage); mall in-line (400 to 900 sq. ft. with 20-ft. minimum frontage) for premium spots in malls; the mall kiosk (250 to 400 sq. ft. with utility hook ups) to capture impulse buyers in high-foot-traffic areas; and the non-baking mall cart/kiosk for on-the-go sales.

Section II – Estimated Costs

  • Please click here for detailed estimates of Nestlé Toll House Café by Chip 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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