In this FDD Talk 2016 post, you’ll learn the following:
- Section I – Background information on the Carvel franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Carvel franchise, based on Item 7 of the company’s 2016 FDD
- Section III – Presentation and analysis of Carvel’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:
- 2014 and 2015 average, median, minimum, and maximum gallons of Mix purchased by the 240 franchised Carvel Full Shoppes that were open continuously during both fiscal years and purchased Mix on an individual basis (the “Mature Shoppes”)
- 2014 and 2015 average gallons of Mix purchased, net sales, cost of goods sold, cost of labor, imputed royalty fee, and imputed advertising contribution for the 9 franchised Carvel Full Shoppes that responded to a survey and bought an average of 5,575 gallons of Mix during 2015 (the “Covered Shoppes”) (to ensure that the 2015 Mix purchases from the sample set used to prepare this financial performance representation were representative of the 2015 Mix purchases from all Mature Shoppes)
Section I – Background Information
Carvel Expanding in New Jersey
The Carvel ice cream company, which is credited with being the first company to develop and market soft-serve ice cream and opening the first ice-cream franchise, is targeting New Jersey for expansion.
Of the brand’s more than 400 locations, 51 were in New Jersey at the time of the announcement in September 2016. That’s second only to New York, which has nearly half of the locations. Carvel already has a significant presence in New Jersey and expects to bring as many as 20 more stores. It’s seeking qualified franchisees to place in those new locations.
Carvel is owned by FOCUS Brands, which also franchises Cinnabon (which houses some Carvel locations), Auntie Anne’s, McAlister’s Deli, Moe’s Southwest Grill and Schlotzsky’s, all of which are food businesses. Carvel stores vary in size from 800 to 1,600 square feet.
Serendipity in a Flat Tire
Carvel was founded by Tom Carvel in 1929 as an ice-cream truck business. But when Carvel’s truck had a flat tire on a busy Memorial Day weekend in 1934 near a pottery store, people were excited for his melting frozen treats as he sold them from the parking lot.
Two years later, he bought the pottery store and started selling soft ice cream from the roadside store as he and his wife, Agnes, expanded their business. Also in 1936, Carvel established the Carvel Brand Corporation and created a secret soft-serve ice cream formula. Franchising began after World War II.
Carvel led the company for 60 years before retiring in 1989.
It’s All About the Ice Cream
The stores sell soft-serve ice cream, hand-dipped ice cream products, and ice cream cakes. Treats are made daily at local shops using the brand’s soft-serve product.
The cakes have unique shapes and themes, such as the signature Fudgie the Whale cake, often used to celebrate Dad for Father’s Day (“A Whale of a Dad”) and the bug-eyed Cookie Puss cake, a design featuring the face of a space alien, including an ice-cream cone for a nose. The character was once called Celestial Person, but the C.P. abbreviation came to be known as Cookie Puss.
Carvel Teams Up With Ghirardelli, Oreo
A summer 2016 selection of soft-serve sweet treats at Carvel featured Ghirardelli chocolate and other ingredients. The choices included Hand-Scooped Ice Cream Made With Ghirardelli, Sundae Dasher Made With Ghirardelli, Shake Made With Ghirardelli, and Flying Saucer Made With Ghirardelli, which features ice cream between two chocolate crackers.
Carvel teamed up with Oreo in March 2016 to create soft-serve ice cream inspired by Oreo cookies. The flavor was available through May. In addition to the soft-serve treat, customers could also order sundaes, shakes and Oreo Lil’ Rounders, which sandwiched the soft serve between a pair of chocolate crackers.
Chain Sets Same-Store Sales Record
The brand had a record increase in same-store sales in 2015, finishing the year with $102 million in systemwide sales.
The company says this growth was sparked by continued excellence in the stores.
“Carvel has been serving handcrafted treats made with only authentic soft ice cream for more than 80 years, and today, our business is healthy and growing,” Carvel President Scott Colwell said in a news release. “The ever-changing ice cream industry demands creativity and we’re excited to continue this growth by keeping Carvel at the forefront of flavor innovation.”
Section II – Estimated Costs
- Please click here for detailed estimates of Carvel franchise costs, based on Item 7 of the company’s 2016 FDD (updated).