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FDD Talk 2016: The Nothing Bundt Cakes Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on July 19, 2016

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

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Nothing Bundt Cakes Photo by felsull

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

  • Section I – Background information on the Nothing Bundt Cakes franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Nothing Bundt Cakes franchise, based on Item 7 of the company’s 2016 FDD
  • Section III – Presentation and analysis of Nothing Bundt Cakes’ financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:
  • 2014 and 2015 annual net revenues for two Bakeries operated by Nothing Bundt Cakes’ founders in Las Vegas, Nevada (the “Founders Bakeries”)
  • 2015 average net revenues for 80 franchisees who have been operating Bakeries for at least 24 months as of December 31, 2015 (the “Included Franchisees”)
  • 2015 average net revenues, average cost of goods sold, average gross margin, average occupancy costs, and average labor costs achieved by 65 of the 80 Included Franchisees that provided Nothing Bundt Cakes with financial statements for all quarters of the 2015 calendar year
  • average net revenues achieved during the first and second full 12 months of business by all 19 Bakeries that opened during the 2013 calendar year and have been open a minimum of 24 months as of December 31, 2015

Section I – Background Information

Back in 1997 Dena Tripp and Debbie Shwetz teamed up to make cakes for their family and friends around Las Vegas, and they were careful to use only the best, freshest ingredients. The bundt cakes they made seemed to impress everyone, and they soon had more business than they knew what to do with.

They stated franchising their concept – Nothing Bundt Cakes – in 2006 and have been steadily growing their chain of bakeries ever since. Scrolling through the listing of stores on the company’s website, we came up with a grand total of 168 locations, with another dozen listed as about to open.

Now headquartered in Addison, TX, here’s how Nothing Bundt Cakes keeps the batter fresh and customers coming back for more in the niche bakery segment:

Only the Good Stuff

The single most important ingredient to the chain’s success is, in fact, the ingredients they use in their cakes. What happens with most food concepts is that as you scale up the operation, you start needing to cut costs, and quality inputs are often the first thing on the chopping block.

Nothing Bundt Cakes has resisted the temptation to settle for anything but the best in their cake ingredients. That means using real eggs, real butter, and real cream cheese, in their cakes and frostings.

Cake Flavors

Typically there are nine base flavors available (red velvet, chocolate chocolate chip, lemon, marble, pecan praline, carrot, white white chocolate, cinnamon swirl, white chocolate raspberry) and at least one featured flavor being tried out, such as strawberries and cream.

One Size Doesn’t Fit All

The standard choice is between an eight-inch cake that serves 8-10 or a ten-inch cake that serves 18-20. You can also go the extra mile and stack a smaller cake on top of a larger one for a dramatic tiered effect that serves 26-30.

You can also opt for single-serving Bundtlets or bite-sized Bundtinis sold by the dozen.

The Non-Chain Chain

When you walk into a Nothing Bundt Cakes store, you’d be hard-pressed to get the impression that it’s a franchised chain. It feels much more like a mom-and-pop store. After all, you’ve got people hand mixing up cake batter right there and baking the cakes and making the frosting daily.

A Cake for Any Occasion

Nothing Bundt Cakes will also decorate your cake for just about any kind of special event on your agenda. The website displays more than 50 different occasion cakes covering all major holidays, birthdays, anniversaries, graduations, team victories, and much more.

Stores also offer a selection of related items for such occasions, including greeting cards, candles, cake utensils and serving platters, balloons, and more.

One Franchisee’s Perspective

Mara Fortin gave up her career in law to become the first franchisee of Nothing Bundt Cakes. She now operates seven locations and is clearly the chain’s star franchisee. She’s also an outspoken activist about franchisee rights, talking about how new overtime rules and NLRB regulations affect franchising. This is different from a lot of franchisee activism that tends to express itself as hostility towards the franchisor. Fortin has the bigger picture in mind.

Section II – Estimated Costs

  • Please click here for detailed estimates of Nothing Bundt Cakes 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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