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

by Franchise Chatter on November 21, 2016

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

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Bruegger's Bagel Photo by Doogie51

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

  • Section I – Background information on the Bruegger’s Bagels franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Bruegger’s Bagels franchise, based on Item 7 of the company’s 2016 FDD
  • Section III – Presentation and analysis of Bruegger’s Bagels’ financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:
  • 2015 average, high, and low gross sales for the 174 company-owned and 88 franchised Bruegger’s Bagels Bakeries that were open throughout the entire fiscal year ending December 29, 2015
  • 2015 average cost of goods sold, payroll, operating expenses, marketing expenses, rent/occupancy, and EBITDA for the 174 company-owned and 88 franchised Bruegger’s Bagels Bakeries that were open throughout the entire fiscal year ending December 29, 2015

Section I – Background Information

Somewhere around 1980, Nord Brue and Mike Dressell decided they wanted to bring authentic New York-style bagels to all of America. The only problem was they had no idea how to make them. So they packed up and headed to the Big Apple and spent the next two-and-a-half years perfecting the art of making bagels the only right way to make them, which involves both kettle boiling and baking in a stone hearth oven.

They perfected their recipes and their techniques and then opened the first Bruegger’s Bagels location in Troy, NH in 1983 and established the company’s headquarters in Burlington. And of course they started using Vermont-made cream cheese as well.

In 1993, the company began franchising and now has more than 280 locations in 26 states, the District of Columbia, and Canada, although that number has been more or less flat for at least three years, and represents a decline from before that when there were more than 300 locations. A large percentage of the locations are company-owned, typically at least 65% of them.

Here’s how Bruegger’s Bagels keeps the bagel kettle boiling in the competitive bagel bakery-café segment of the restaurant industry:

The Menu

In addition to two dozen varieties of bagels baked fresh throughout the day, and at least a baker’s dozen of custom cream cheeses to go with them, Bruegger’s has 10 different breakfast sandwiches, 15 different lunch sandwiches and burgers, 9 different signature soups, 4 salads, 16 different dessert items, and a selection of custom-roasted hot and cold Arabica coffees to top it all off.

Heading Up or Down?

Back in 2012, the chain seemed to be doing quite well, and was even placed in QSR Magazine’s top 10 best franchise deals that year. Around that time it had also appeared on one of Franchise Business Review’s annual franchisee satisfaction surveys. I guess the big question is what happened?

The number of locations has dropped in recent years and the chain hasn’t received any accolades lately either. Scanning through a few pages from the news area of their website, the vast majority of the stories are menu-related, with the occasional new-location-opening story. It’s hard to tell what’s really happening behind the scenes.

Jamba Juice Partnership

In June of 2015, a partnership was forged between Bruegger’s and healthy beverage franchise Jamba Juice. In the fall of 2014, the companies tested a co-branded location in Storrs Center, near the University of Connecticut campus, and both parties decided it was worth pursuing.

The June announcement was for opening nine more co-branded locations in the Midwest, East Coast, and New England. Next to open was Melrose, MA in March 2016, then came Pittsburgh, PA; Bedford, MA; and Cedar Rapids, IA, bringing the chain to five of the planned nine co-branded locations.

World Record Bagel

In 2004, Bruegger’s set a Guinness World Record for making the largest bagel in the world. It weighed in at 886 pounds and was made out of 1,100 pounds of dough that took 10 hours to bake.

Section II – Estimated Costs

  • Please click here for detailed estimates of Bruegger’s Bagels franchise costs, based on Item 7 of the company’s 2016 FDD.

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

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