FDD Talk 2016: The Cinnabon Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

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

• Section I – Background information on the Cinnabon franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Cinnabon franchise, based on Item 7 of the company’s 2016 FDD

• Section III – Presentation and analysis of Cinnabon’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:

• 2015 average, median, high, and low net sales for franchised Cinnabon bakeries (full and express) in enclosed malls, convenience stores, travel plazas, and airports (respectively), which were in operation continuously throughout Cinnabon’s fiscal year 2015 and were not co-branded

• 2015 average, median, high, and low net sales by quartile for franchised Cinnabon bakeries (full bakeries only) in enclosed malls, which were in operation continuously throughout Cinnabon’s fiscal year 2015 and were not co-branded

• average and median net sales by fiscal year (2011 to 2015) for franchised Cinnabon bakeries in enclosed malls, which were in operation continuously throughout the applicable fiscal year and were not co-branded

• 2015 average net sales, cost of goods sold, gross profit, labor, rent, other expenses, total expenses, and net operating income by region for franchised Cinnabon bakeries in enclosed malls, which were in operation continuously throughout Cinnabon’s fiscal year 2015 and were not co-branded

Section I – Background Information

With nearly 30 years of exposure on the international franchise scene, Cinnabon has a presence in more than 55 countries around the world, and the chain isn’t showing any signs of slowing its expansion.

The chain has prioritized select markets where it has strong interest in developing, as well as secondary markets that have potential in the future. Those markets are in more than 20 countries.

Cinnabon is seeking franchisees who have experience in multi-unit food service, hospitality or retail operations for United States and international operations. For potential franchisees who wish to start right away, numerous opportunities are available in malls in a number of U.S. states.

Chain No. 55 on Franchise 500

Cinnabon ranked No. 55, a high for the chain, in Entrepreneur’s Franchise 500 list for 2016. The chain broke into the top 100 in 2012 at the No. 70 position. At the end of 2015, Cinnabon had 747 U.S. units, 593 franchises outside the U.S., and two corporate locations.

The brand has locations in many international areas, from Canada to Cyprus.

Cinnabon Starts With Cinnamon from Indonesia

Quality ingredients are an important staple at Cinnabon, starting with the cinnamon. The Cinnabon Makara Cinnamon, a brand of Korintje cinnamon used in the company’s baked goods, is harvested from the bark of cassia trees in Indonesian tropical forests.

The dough and the cream-cheese frosting are prepared fresh daily.

Classic Cinnamon Roll is Menu Anchor

Anchored by the rich, 880-calorie Cinnabon Classic Roll, the menu’s treats also include the smaller cinnamon taste in the MiniBon and Cinnabon Bites, as well as the Caramel Pecanbon, Cinnabon Stix, Center of the Roll, CinnaSweeties, and a CinnaPack containing half a dozen of the Classic Roll, Caramel Pecanbon or MiniBon.

If you want a delicious drink with your pastry, but Cinnabon’s Mochalatte Chill is a bit too much for you, you might want to try the new Mini Chillattas for a smaller treat. The Chillattas are creamy and fruity blended beverages in Oreo, Chocolate Mocha, Cinnamon Roll, Strawberry, Strawberry Banana and Tropical Blast.

Also on the beverage menu are lemonades, hot coffees and iced coffees.

Stores are Located in Malls, Airports

Cinnabon stores and kiosks are typically located in high-pedestrian-traffic areas such as shopping malls, airports and travel centers, giving large numbers of customers opportunities to pick up a cinnamon roll or try something else from the menu.

Founded by majority owner Rich Komen and minority partner and CEO Ray Lindstrom, the first Cinnabon opened Dec. 4, 1985, in a shopping mall in Federal Way, Washington, serving only the Cinnabon Classic Cinnamon Roll.

Headquartered in Sandy Springs, Georgia, Cinnabon is owned by FOCUS Brands, which is an affiliate of the private equity firm Roark Capital Group.

Cinnabon, Other FOCUS Brands Companies Adding Delivery Service

FOCUS Brands announced in August 2015 that it would roll out its on-demand delivery service for all six of its brands: Cinnabon, Auntie Anne’s, Carvel, Moe’s Southwest Grill, Schlotzsky’s and McAlister’s Deli.

For this service, FOCUS Brands has teamed up with Postmates, a San Francisco delivery service that also has signed with big brands like McDonald’s, Chipotle and Starbucks.

Delivery will kick off at 34 select locations in Atlanta, Georgia; Austin and Dallas, Texas; Los Angeles and San Francisco, California; New York, New York; and Portland, Oregon.

Customers can order delivery online or via a mobile app.

Cinnabon in the Cupboard

Cinnabon is even more of a household name these days, as customers can have many Cinnabon-branded and flavored products in their homes. A few of these products are Pillsbury Toaster Strudel, New York Style Sweet Swirls baked snack crisps, Cream of Wheat, and Cinnabon Cinnamon Bread and Bakery-Inspired Cinnamon Rolls.

You can even buy an Air Wick Cinnabon-scent air freshener for your home and Pinnacle Cinnabon Vodka for when you can’t decide between a drink and a cinnamon roll.

Section II – Estimated Costs

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

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