FDD Talk 2018: Häagen-Dazs Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

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

• Section I – Background information on the Häagen-Dazs franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Häagen-Dazs franchise, based on Item 7 of the company’s 2018 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Häagen-Dazs franchise, based on Items 5 and 6 of the company’s 2018 FDD

• Section IV – Number of franchised and company-owned Häagen-Dazs outlets at the start of the year and the end of the year for 2015, 2016, and 2017, based on Item 20 of the company’s 2018 FDD

• Section V – Presentation and analysis of Häagen-Dazs’ financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:

• 2017 average gross sales for the 172 traditional Häagen-Dazs Shops that:  (1) were in operation during all of the 2017 calendar year; and (2) with respect to which the franchisor received sales information for all of the 2017 calendar year

• number and percentage of traditional Häagen-Dazs Shops in the sample that generated 2017 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

11 Things You Need to Know About the Häagen-Dazs Shops Franchise

Celebrated 10th Anniversary of Honey Bee Support on Free Cone Day

1.  Häagen-Dazs Shops celebrated the 10th anniversary of the brand’s honey bee support on this year’s Free Cone Day (May 8, 2018). Like every Free Cone Day, customers were invited to come into participating Häagen-Dazs locations for a free scoop of ice cream in a sugar cone, cake cone, or cup. While customers enjoyed their free ice cream, they could learn about honey bees’ needs and offer their support to the cause.

2.  At some of the brand’s shops, customers were able to see the world through the eyes of a bee with the help of VR technology. The Extraordinary Honey Bee, a new, award-winning immersive VR experience created by Häagen-Dazs, helped customers learn more about the plight of the honey bee and showed simple ways everyone can help.

3.  Over the past 10 years, Häagen-Dazs has supported honey bee research and education by donating more than $1 million and working with ingredient suppliers, the Xerces Society, and agronomists to create bee-friendly environments on farms where some of the brand’s most essential ice cream ingredients – such as almonds and strawberries – are grown. To date, more than 11,000 plants have been planted, impacting 840 acres of farmland. The brand is also working toward the Bee Better Certification by helping farms create pollinator habitats and eliminate harmful pesticides.

4.  Adam Hanson, The Häagen-Dazs Shoppe Company, Inc. president and general manager, said, “Free Cone Day is an opportunity to say thank you to our loyal fans, and we want to continue to recognize the pollinators that make our ice cream possible. Last year, we shared information about why the bees need our help and how everyone can play a role, which received great feedback from our customers. With this year marking the 10th anniversary of the brand’s honey bee support, we wanted to build on that information and encourage everyone to band together for this important cause.”

Newest Location

5.  Häagen-Dazs continues to open new shops around the country and one of its newest locations opened at the beginning of April 2018 in the Great Lakes Crossing outlet mall in Auburn Hills, Michigan. The grand opening celebration was held on April 7 and the first 500 customers were treated to a free scoop of ice cream. There was also a drawing for a chance to win free ice cream for a year. The Häagen-Dazs mascot Coneman attended the grand opening event to greet customers and pose for pictures.

Original Shop Temporarily Shut Down One Year After Grand Reopening

6.  The original Häagen-Dazs shop in Brooklyn Heights, New York was opened in 1976 and managed to stay open for several decades. Over the summer of 2016, the shop – which is now franchised by Michael Schuster – celebrated its grand reopening. It went through a complete renovation and features the Häagen-Dazs brand’s new, more modern footprint, which incorporates old-world tradition with modern touchpoints that create the ice cream café experience of the future.

7.  Unfortunately, about a year after the reopening, the original Häagen-Dazs shop was temporarily shut down after the Department of Health reported five major health code violations on September 6, 2017. Inspectors reported evidence of mice and the absence of a Food Protection Certificate. They also found no facilities for employees to wash food service utensils — such as ice cream scoops — or their hands. Although there was no official update of the shop’s situation, the store appears to be back in operation based on the Häagen-Dazs store locator.

Company History

8.  Häagen-Dazs ice cream was founded in 1961 by Reuben Mattus in the Bronx, New York. Mattus had been selling ice cream in New York since 1921 but wanted to create a better product using higher-quality ingredients. He launched the brand with three classic ice cream flavors: vanilla, chocolate, and coffee. A few years later, he added strawberry ice cream to the Häagen-Dazs lineup.

9.  In 1976, Mattus’ daughter Doris opened the first Häagen-Dazs shop in Brooklyn Heights, New York. Since Häagen-Dazs was already a popular ice cream brand in America, the shop was an immediate success. Franchising began the following year and Häagen-Dazs continued to open shops around the country in the late 1970s and early 1980s.

10.  Around 1986, the brand introduced its iconic ice cream bars and continued to add new varieties over the next few years. Also at this time, Häagen-Dazs began selling its products internationally. Häagen-Dazs has continued to grow through its grocery store presence as well as through its shops. Today, there are over 850 Häagen-Dazs shops in more than 50 countries.

Entrepreneur’s Franchise 500

11.  Häagen-Dazs Shops did not rank on Entrepreneur’s 2018 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Häagen-Dazs franchise costs, based on Item 7 of the company’s 2018 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Häagen-Dazs’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2018 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2015

• Outlets at the Start of the Year:  208
• Outlets at the End of the Year:  205
• Net Change:  -3

2016

• Outlets at the Start of the Year:  205
• Outlets at the End of the Year:  205
• Net Change:  0

2017

• Outlets at the Start of the Year:  205
• Outlets at the End of the Year:  209
• Net Change:  +4

Company-Owned

2015

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2016

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2017

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis

• The data below reflects historical top-line sales information, based on the performance of a subset of Häagen-Dazs Shops during the 2017 calendar year.

• The franchisor did not operate any corporate Häagen-Dazs Shops during 2017.

• The subset of Shops used to compile this information consists of traditional Häagen-Dazs Shops that:  (1) were in operation during all of the 2017 calendar year; and (2) with respect to which the franchisor received sales information for all of the 2017 calendar year.

• For most Shops, the franchisor received sales information from the Shops’ point-of-sale cash register system. If the franchisor did not receive the sales information from a Shop’s point-of-sale cash register system, then it relied on sales data the franchisee reported to it, and which it did not independently verify.

• The franchisor did not exclude Shops that were temporarily closed during the 2017 calendar year for remodeling.

• There were 209 Shops in operation at the end of 2017. The data below excludes any Shop that ceased operating during 2017.

• The data below excludes sales data for 37 of those 209 Shops, consisting of:  (1) any traditional Shop for which the franchisor does not have sales data for all of 2017 (including any new Shop that commenced operations during 2017, seasonal Shops, and other Shops that did not operate throughout the entire year); (2) any Shop operating under a Häagen-Dazs Select Agreement or a Häagen-Dazs Hospitality Agreement; and (3) one Shop that sells frozen yogurt, but no ice cream products.

• In the case of Shops operated on a management leveraged basis (where the Shop and one or more other businesses are under common ownership; and share significant operational elements, such as a common customer area, service counter, or back-of-house operational area), the franchisor only included sales data for the Häagen-Dazs Shop portion of the business, and has excluded any atypical product sales that would be inconsistent with sales it would likely permit from the Shop you might develop.

• In some cases, sales data includes catering and other off-site sales of a nature that the franchisor may or may not permit as part of the franchise for the Shop you might develop.