FDD Talk 2016: The Pinot’s Palette 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 Pinot’s Palette franchise opportunity, including relevant news updates

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

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

• 2015 average, high, and low gross sales achieved by the 52 franchisee-owned and 4 affiliate-owned Pinot’s Palette Studios open the entire year of 2015

• 2015 average, median, high, and low gross sales achieved by the 52 franchisee-owned and 4 affiliate-owned Pinot’s Palette Studios open the entire year of 2015, separated by the indicated range of performance (top 25%, top 50%, top 75%, and all)

• 2015 average, high, and low gross sales achieved by the 52 franchisee-owned and 4 affiliate-owned Pinot’s Palette Studios open the entire year of 2015, separated by the indicated regions (Midwest, Northeast, South, and West)

• average, high, and low gross sales for the first 12 months of operation and the second 12 months of operation achieved by the 24 franchisee-owned and 4 affiliate-owned Pinot’s Palette Studios open the entire year of 2014 and 2015

• projected labor cost and cost of goods sold for a 2-hour and a 3-hour painting class, with 20, 35, and 50 painters

Section I – Background Information

When this chain first got its start, it was called Pinot & Picasso. It was 2009 and started small, in a cozy studio in the Montrose area of Houston, by three friends – Craig Ceccanti, Charles Willis, and Beth Willis. The idea was to start small since the concept was new to Houston at that time.

Instead of hosting classes a few nights a week, by 2010 the company was re-naming itself and selling franchises like hotcakes. They’ve already created more than a million paintings with customers. They have yet to count the corks from all the wine consumed.

The number of locations has been growing steadily since franchising began in 2010 and currently stands at 170, four of which are company-owned, and one of which is located outside the U.S.

Here’s how Pinot’s Palette keeps the brushes swiping in the rapidly growing paint-and-sip industry:

A Smashing 2015

Pinot’s Palette couldn’t be more pleased with how things went in 2015. Its place on Entrepreneur Magazine’s Franchise 500 list improved by a whopping 200 places, appearing in the #247 slot in early 2016.

It added 59 locations during 2015 and saw system-wide gross sales increase by a stunning 70%. The chain hopes to keep the momentum going in 2016 by adding another 75 studios.

Riding the Paint-and-Sip Wave

The first known instance of a studio doing the whole drink and paint idea was called Sips n Strokes back in 2004 in Alabama of all places. She licenses her concept but doesn’t franchise per se, but others soon started franchising, which is a popular approach in the industry.

Fully 78% of the clientele in the paint-and-sip industry is female.

Rebranding Effort

Pinot’s Palette is just now launching a branding overhaul effort, which was announced in a 30-minute webinar.

A new logo has already been revealed in the form of a mosaic containing all the elements that make the brand what it is: the wine glass and bottle with the paint and palette. The new design came from Seattle-based Heckler Associates, known for its work with such brands as Starbucks, New Balance, and Panera Bread.

It’s a bit on the abstract side, perhaps Picasso-esque, which hearkens back to the chain’s original name.

Pinot Perks

Just a few months back, the chain launched its first rewards program. The high-tech program was developed by the chain’s in-house technology team. Guests can sign up in the studio or online to start collecting “corks” that can be applied towards free classes, priority seating, swag, and more.

Depending on how many corks are accumulated, participants can reach different levels, including Club Level, Collector Level, and Connoisseur Level. There’s even an online shopping tie-in, which is a first for the industry.

The chain spent more than two years developing Pinot Perks and has a lot riding on the new program, expecting it to boost system-wide sales by 5-8%.

Section II – Estimated Costs

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

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