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FDD Talk 2016: The Hot Dog on a Stick Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on July 8, 2016

in FDD Talk 2017: Food Franchises, Franchise Earnings, Hot Dog Franchise



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Hot Dog on a Stick 3

In this FDD Talk 2016 post, you’ll learn the following:

  • Section I – Background information on the Hot Dog on a Stick franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Hot Dog on a Stick franchise, based on Item 7 of the company’s 2016 FDD
  • Section III – Presentation and analysis of Hot Dog on a Stick’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:
  • 2013 average gross sales for the Top 25%, Middle 50%, and Bottom 25% (based upon total annual sales) of company-owned Hot Dog on a Stick Stores that were open on December 31, 2015
  • 2014 average gross sales for the Top 25%, Middle 50%, and Bottom 25% (based upon total annual sales) of company-owned Hot Dog on a Stick Stores that were open on December 31, 2015
  • 2015 average gross sales for the Top 25%, Middle 50%, and Bottom 25% (based upon total annual sales) of company-owned Hot Dog on a Stick Stores that were open on December 31, 2015

Section I – Background Information

Hot Dog on a Stick

Everyone’s seen a hot dog on a stick, right? If it has been reheated after being frozen, you might call it a corn dog. If it’s made fresh upon ordering, then it’s an authentic hot dog on a stick!

Dave Barham opened the first Hot Dog on a Stick food stand on the original Muscle Beach near the Santa Monica pier in 1946. He adapted his mother’s cornbread recipe into the Party Batter used to create each Hot Dog on a Stick.

He took his concept on the road to lots of county fairs, and eventually set up shops in malls as well. That original Muscle Beach location, by the way, is still going strong. The exact number of locations isn’t known, but is typically described as more than 70 or as “nearly 100.”



Here’s how Hot Dog on a Stick continues to offer up an iconic product in the quick-serve segment:

Iconic Uniforms

Hot Dog on a Stick employees have always had to dress in very bright, colorful uniforms. In the early days the uniforms featured polka dots, but somewhere along the way they turned into vertical stripes of red, white, blue, and yellow, including striped hats. They evoke the sense of a fun, carnival-esque atmosphere.

And yes, employees are referred to as Hotdoggers.

The Menu

The batter stays the same, but what’s inside can vary by such choices as a turkey dog, veggie dog, or Nathan’s Famous all-beef dog. The menu also includes Cheese on a Stick, which is the same concept but instead of dogs, the choices are American Cheese, slightly spicy Jack Cheese with mild jalapeno peppers, or Mozzarella Cheese.

The menu is rounded out with French fries, sweet potato fries, a wide selection of “Hand-Stomped” lemonades, and Funnel Cake Sticks for dessert.

Bankruptcy and Sale

In 2014 the company filed for Chapter 11 bankruptcy protection, citing lease costs as a major factor. The chain was purchased by Global Franchise Group for $12.2 million. The GFG family of QSR brands includes Great American Cookies, Marble Slab Creamery, MaggieMoo’s Ice Cream & Treatery, and Pretzelmaker. GFG is itself a portfolio company of Levine Leichtman Capital Partners, an independent investment firm.

70th Anniversary

Seventy years is a long time for any brand, and this one celebrated by hosting a Celebrity Stomp-A-Thon to raise money for the charity the chain supports – The Leukemia and Lymphoma Society. The April 21, 2016 event took place at the first Muscle Beach location and was attended by television actor and host Mario Lopez, who has also appeared on Broadway and is author of several fitness and nutrition books.

Expansion

On June 1, 2016, the company issued a press release detailing new stores opening in Las Vegas NV, San Jose CA, Beaumont TX, Katy TX, Sandy UT, Atlanta GA, Roseville GA, Houston TX, and Las Cruses NM. The Houston deal includes an additional 9 units to be opened in that metro area.

Section II – Estimated Costs

  • Please click here for detailed estimates of Hot Dog on a Stick franchise costs, based on Item 7 of the company’s 2016 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis



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