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FDD Talk 2016: 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 November 3, 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 2016 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 2016 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 2016 FDD, including information on the:
  • 2015 average, median, high, and low gross sales for the 80 franchised Nestlé Toll House Café by Chip units, by Café type (43 full menu in-line Cafés, 24 kiosk Cafés, and 13 limited menu co-branded Cafés), in the United States operating for at least 12 months as of the end of fiscal year 2015

Section I – Background Information

How One Man’s Love for Nestlé Toll House Chocolate Chip Cookies Led to Franchise Success

Nestlé Toll House Café by Chip started with a single location in 2000. The concept for the café started a few years earlier when founder Ziad Dalal wanted to offer consumers a more premium mall cookie. In 1998, he approached Nestlé with his idea to use their signature chocolate chip cookie recipe to open a dessert café. After a lot of pleading, Nestlé finally relented and granted Dalal a 30-day trial period to open his café. The café turned out to be a success and franchising began soon after the first location opened.

Initially, the Nestlé Toll House Café offered only cookies. Dalal soon realized that Nestlé’s coffee brand Nescafé would pair well with the sweet treats. The coffee joined the menu along with other treats like brownies, Dryer’s ice cream, smoothies, and savory foods like flatbreads, paninis, and wraps.

Nestlé Toll House Café is a part of Crest Foods Inc., which is a premiere food franchisor based out of Richardson, Texas. Today, Nestlé Toll House Café has more than 150 locations throughout the U.S., Canada, and the Middle East.

International Locations

In the past few years, Nestlé Toll House Café has pushed international expansion. They opened their first foreign location in 2011 in Surrey, Canada. At the time of this first opening, the company said that they had plans to open at least 25 more locations in Canada over the next 5 years.

A few years later, in 2013, the company expanded into the Middle East, particularly Dubai because of the people’s interest in U.S. brands. For the Middle East market, Nestlé Toll House Café had to change their concept up a bit. The Middle East locations have table service instead of the takeaway service used in the U.S. and Canada. The interiors of these Nestlé Toll House Cafés also have a more luxurious feel to go along with the upscale malls they are located in.

The company already has a few locations in Lebanon and they opened two additional locations there in September of 2016.

Plans for Future Expansion

Nestlé Toll House Café continues to have strong growth. Their plans for 2016 include opening 50 new locations, 20 of them being in the Middle East.

The company attributes some of its recent success to their co-branded locations. In late 2015, Nestlé Toll House Café partnered with Dallas-based frozen yogurt franchise Red Mango. The new partnership gives franchisees the opportunity to sell products from both companies. They opened two co-branded locations in Texas last year, have 6 more in development, and 5 locations ready to be opened.

The Café continues to branch out of mall locations. In March of 2016, they opened their first location at the San Diego Zoo.

Seasonal Offerings and Specials

To kick off the holiday season, Nestlé Toll House Café is joining the annual pumpkin spice craze. In early October, they brought back two seasonal favorites, their Pumpkin Spice Latte and Pumpkin Spice Cookie. This promotion will run until November 20.

Over the summer, the cafés offered custom-made ice cream sandwiches. Customers were allowed to choose two of their favorite cookies and the flavor of their ice cream. They also had the opportunity to put toppings like sprinkles, gummi bears, and chocolate syrup on the sandwiches.

On National Ice Cream Sandwich day, which was August 2nd, the cafés sold the ice cream sandwiches for $2.

Falling Off Entrepreneur’s Franchise 500

Previously, Nestlé Toll House Café by Chip had maintained a steady position on the annual Entrepreneur Franchise 500 list. In 2015, the chain ranked at No. 277. Their lowest spot on the list was No. 460 in 2012, while their highest position was No. 213 achieved in 2008.

Unfortunately, Nestlé Toll House Café by Chip did not rank on Entrepreneur’s Franchise 500 list for this year.

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 2016 FDD (updated).

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

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