FDD Talk: The Haagen-Dazs 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 Haagen-Dazs franchise opportunity, including relevant news updates

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

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

• 2015 average gross sales for the 173 traditional Haagen-Dazs Shops that:  (1) were in operation during all of the 2015 calendar year; and (2) with respect to which the franchisor received sales information for all of the 2015 calendar year

• number and percentage of traditional Haagen-Dazs Shops in the sample that generated 2015 sales of over $1 million; from $900,001 to $1 million; from $800,001 to $900,000; from $700,001 to $800,000; from $600,001 to $700,000; from $500,001 to $600,000; from $400,001 to $500,000; from $300,001 to $400,000; from $200,001 to $300,000; and less than $200,000, respectively

Section I – Background Information

Transforming Ice Cream Into a Premium Treat

Haagen-Dazs ice cream was started in 1961 by Reuben Mattus in New York City. Mattus wanted to produce an ice cream that had less air than other brands and a richer taste. He set out to form a company that would sell his “super-premium” ice cream made from only the finest ingredients.

Initially, Haagen-Dazs offered only three flavors: vanilla, chocolate, and coffee. The ice cream was sold exclusively in New York City gourmet shops.

As the ice cream grew in popularity, they decided to open their first branded shop. Mattus’s daughter Doris opened the first Haagen-Dazs ice cream shop in 1976 in Brooklyn Heights, NY. Franchising soon followed.

By the mid-80s, Haagen-Dazs had launched its products internationally. Around this time, they also introduced their chocolate-covered ice cream bars. Frozen yogurt and sorbet were introduced in the 90s. Their most recent offering is gelato.

Today, Haagen-Dazs has more than 850 locations across 50 countries.

Celebrating the Grand Reopening of the Original Haagen-Dazs Shop

In July 2016, Haagen-Dazs celebrated the grand reopening of the original Brooklyn Heights shop. Today the shop is franchised by Michael Schuster. The shop received a complete renovation, with a new design that has a modern feel with old-world touches.

On the day of the reopening, July 16, Haagen-Dazs celebrated by offering customers coupons and prizes. From 11 a.m. until 3 p.m. every customer received a free scoop of ice cream. One lucky person won free ice cream for a year. They were also giving away Haagen-Dazs ice cream shop gift cards worth $10, $15, and $25. In addition to the bigger giveaways, they were handing out $1 off coupons to customers to use on a future visit. The Haagen-Dazs mascot Coneman joined the festivities and was available for pictures.

New Haagen-Dazs Shop Design

In early 2015, Haagen-Dazs revealed a new shop design at their Bronxville, NY location. They announced that the shop re-design would be the blueprint for all future shops and U.S. location remodels. The new design was a collaboration with Interbrand Design Forum.

Haagen-Dazs wanted to marry classic design with modern touches. They designed the new shops with three objectives in mind:  “simplify the ordering process; create a tasting station to sample new flavors; and, lastly, minimize the ‘ordering pressure’ so the experience is more enjoyable.”

All re-designed shops will continue to serve 24 flavors of ice cream, gelato, sorbet, and frozen yogurt. Their hand dipped ice cream bars will also be available.

The new shop features a digital menu board, marble counter tops, dark wood seating, and leather booth seating. After customers order, they can watch their treat being made from a “dessert theater” viewing area.

In 2015, Haagen-Dazs opened 12 new locations featuring the new design and an additional 10 existing shops were remodeled.

Celebrating Its Customers with Free Cone Day

Every year Haagen-Dazs has a national Free Cone Day celebration. On Free Cone Day, customers that come into a participating Haagen-Dazs shop location between 4 p.m. and 8 p.m. receive a free scoop of ice cream in a cone.

This year, Haagen-Dazs Free Cone Day was on May 10; the date for Free Cone Day 2017 has yet to be announced. In 2015, Haagen-Dazs served more than 315,000 free scoops of ice cream.

In addition to offering free ice cream cones, Haagen-Dazs invited customers to participate in their Twitter ice cream social. Participating customers were eligible to win American Express gift cards, a year of free ice cream at participating shops, and Haagen-Dazs shop gift cards.

Bottom Half of Entrepreneur’s Annual Franchise 500 List

The Haagen-Dazs ice cream shop franchise tends to hold a spot on the bottom half of Entrepreneur Magazine’s annual Franchise 500 list. This year, the ice cream franchise landed at No. 459, which was also their ranking for 2015 and the lowest spot they have received. Some years, Haagen-Dazs does not even rank at all on the list.

Of the years they have ranked, they earned their highest spot at No. 223 in 2009.

Section II – Estimated Costs

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

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