FDD Talk 2018: Marble Slab Creamery 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 Marble Slab Creamery franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Marble Slab Creamery 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 Marble Slab Creamery franchise, based on Items 5 and 6 of the company’s 2018 FDD

• Section IV – Number of franchised and company-owned Marble Slab Creamery 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 Marble Slab Creamery’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:

• 2017 average net sales, same store sales growth, cost of goods sold, labor costs, rent, owner count, and store count for the 133 traditional Marble Slab Creamery Stores that were open for all of 2017 and were not co-branded

• 2017 average net sales, same store sales growth, owner count, and store count for the 110 Marble Slab Creamery Stores owned by franchisees with 1 to 2 traditional Stores each, that were open for all of 2017 and were not co-branded

• 2017 average net sales, same store sales growth, owner count, and store count for the 15 Marble Slab Creamery Stores owned by franchisees with 3 to 5 traditional Stores each, that were open for all of 2017 and were not co-branded

• 2017 average net sales, same store sales growth, owner count, and store count for the 8 Marble Slab Creamery Stores owned by franchisees with more than 5 traditional Stores each, that were open for all of 2017 and were not co-branded

• 2017 average net sales, owner count, store count, and number above average net sales for the 27 franchised Great American Cookies-Marble Slab Creamery Co-Brand Stores that had been continuously in operation for the entire 2016 and 2017 calendar years, that were not supplemented with a Satellite, and that provided the franchisor with the presented financial information for the full calendar year 2017

• 2017 average net sales broken down by brand for the 22 Stores that initially commenced operating as either a Great American Cookies or Marble Slab Creamery Store and then added on the other brand to become a Co-Brand Store, and the 5 Stores that initially commenced operating as a Co-Brand Store (separately stated). All Stores in the respective samples have been continuously in operation for the 2017 calendar year as a Co-Brand Store.

Section I – Background Information

14 Things You Need to Know About the Marble Slab Creamery Franchise

Introduces Cereal Milk Ice Cream and Treats

1.  To kick off the summer of 2018, Marble Slab Creamery and sister brand, MaggieMoo’s Ice Cream and Treatery, introduced a new Cereal Milk Ice Cream flavor and Cereal Milk Shake. To complement the new flavor, Birthday Confetti Waffle Cones were also introduced and were free with any ice cream purchase when the items first launched. Dipped Confetti Waffle Cones with chocolate and candy are available for an additional cost. Cereal Milk treats are available in stores nationwide through September 2.

2.  The Cereal Milk Ice Cream is a combination of yellow cake batter and marshmallow flavors. The Cereal Milk Shake blends the new ice cream with Froot Loops cereal and features a swirl of marshmallow cream and is topped with whipped cream and a garnish of more Froot Loops.

3.  Sarina Lindsey, director of marketing for Marble Slab Creamery and MaggieMoo’s, said, “Everyone knows the best part of enjoying cereal is the milk! These treats are inspired by the childhood nostalgia of putting down the spoon and drinking every last drop of sweet cereal milk right from the bowl. With this new flavor, Marble Slab Creamery and MaggieMoo’s is giving everyone permission to eat ice cream for breakfast this summer – you’re going to want to take a trip down memory lane with us!”

Launches Brand in Bangladesh

4.  At the end of September 2017, Marble Slab Creamery announced the opening of its newest international location in Bangladesh. Through a Master Franchise Agreement with Shanta Holdings, Marble Slab Creamery treats are now available in the capital city of Dhaka. Shanta Holdings plans to open additional Marble Slab Creamery locations throughout Bangladesh.

5.  Chris Dull, president and CEO of Global Franchise Group (Marble Slab Creamery’s parent company), said, “The opening of Marble Slab Creamery in Bangladesh represents our interest in the burgeoning ice cream market in Southeast Asia. With the opening of this store, GFG now has 216 international locations and we look forward to working with Shanta Holdings to expand the Marble Slab Creamery brand across Bangladesh.”

6.  The Marble Slab Creamery in Dhaka received positive reviews on local online food forums and people were excited that the concept had come to their area. Mayesha Khondoker, managing director of Shanta Multiverse, the subsidiary of Shanta Holdings that owns and runs Marble Slab Creamery in Bangladesh, said, “Marble Slab Creamery’s fresh ice cream and gourmet mix-ins made me fall in love with ice cream again – so much so that I knew we needed to bring the brand to Bangladesh. There is nothing that compares to Marble Slab Creamery in our country and the rave reviews of our customers prove just how special Marble Slab Creamery is to our community. From a quick ice cream treat with friends or family, to ice cream cakes for all occasions, Marble Slab Creamery in Bangladesh is the place to go.”

Offering Customers Rewards and Daily Deals

7.  Marble Slab Creamery and MaggieMoo’s Ice Cream & Treatery have a customer rewards app called Slab Happy. The app launched in 2014 and rewards customers with a free ice cream just for signing up. Every dollar spent at Marble Slab Creamery or MaggieMoo’s earns rewards members one point. When members reach 50 points, they receive a $5 off reward. Rewards members also get a $5 off reward on their birthday and Slab Happy anniversary.

8.  In addition to the Slab Happy app, Marble Slab Creamery offers daily deals, which help customers save even more money. The daily deals include:

• Slab Happy Hour – Customers can enjoy $1 off all shakes Monday through Friday from noon to 2 p.m.
• Marble Mondays – Slab Happy rewards members enjoy double points with any purchase.
• Tasty Tuesdays – Customers receive $2 off any purchase of $10 every Tuesday.
• Take the Cake Wednesdays – Customers can get 20 percent off any medium 8” round or large ¼ sheet cake. There is also a code for online orders: CAKEWEDNESDAYS.
• Thirsty Thursdays – Every Thursday, customers can enjoy a regular shake with any mix-ins for only $5.

Company History

9.  Marble Slab Creamery started out as a single ice cream store called Cones ‘n Cream in 1983 in Houston, Texas. The concept was developed by Sigmund Penn and Tom LePage. Penn had experience in the food industry, having helped expand his family’s New York bakery business into a 55-store operation before moving to Houston where he started a variety of fast-food restaurant chains.

10.  When Penn moved to Houston, he became friends with his neighbor, LePage, who had a long career in marketing and sales. The friends decided to test recipes for ice cream featuring “mix-ins” as well as cones. Two months later, Penn and LePage opened their first ice cream shop, offering rich, all-natural super premium ice cream, made daily right on the premises, with “mix-ins” to order folded into the ice cream on a frozen marble slab in front of the customer.

11.  Penn and LePage had to change the store’s name from Cones ‘n Cream to Marble Slab Creamery after their trademark on the original name was rejected for being too generic. Although there were a few other ice cream shops using the same mixed-in toppings technique, Marble Slab Creamery was the first to start using granite slabs instead of marble. The change happened after Penn discovered that marble slabs eventually begin to break when they are exposed to a repeated process of being chilled and then warmed up.

12.  The success of the first store led Penn and LePage to start franchising the Marble Slab Creamery concept in 1984. In 1986, Penn and LePage decided to sell Marble Slab Creamery to Ronald J. Hankamer, who was one of their first franchisees. Hankamer refined the franchise system and helped the brand expand across the country over the next few decades. The first international locations opened in Canada and the Middle East in the early 2000s.

13.  Around early 2007, Hankamer sold Marble Slab Creamery to Global Franchise Group (previously called NexCen Brands) for $21 million. Global Franchise Group also owns Pretzel Time, Pretzelmaker, Great American Cookies, and MaggieMoo’s – which is often co-branded with Marble Slab Creamery. Today, there are Marble Slab Creamery locations around the world in countries such as the U.S., Bahrain, Canada, Guam, St. Lucia, Saudi Arabia, Kuwait, Guyana, United Arab Emirates, Qatar, Singapore, and Pakistan.

Entrepreneur’s Franchise 500

14.  Marble Slab Creamery ranked No. 401 on Entrepreneur’s 2018 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Marble Slab Creamery 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 Marble Slab Creamery’s 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:  223
• Outlets at the End of the Year:  217
• Net Change:  -6

2016

• Outlets at the Start of the Year:  217
• Outlets at the End of the Year:  222
• Net Change:  +5

2017

• Outlets at the Start of the Year:  222
• Outlets at the End of the Year:  224
• Net Change:  +2

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 was taken from financial reports submitted by franchisees. The franchisor has not audited or verified these financial reports, although it has no information or other reason to believe that they are unreliable. The franchisor did not use any reports that were incomplete or for which the information was presented in a manner that prohibited it from applying the information to one of the stated categories.

• There are other expenses in operating a Store that are not identified in the table below.

• A new franchisee’s sales results are likely to be lower than the results shown below and expenses are likely to be higher than the results shown below.

Part 1 – Financial Information for Single-Brand Stores

• The data below presents historical revenue and limited expense information for calendar year 2017 for certain Marble Slab Creamery Stores.

• In the chart below in this Part I, the franchisor discloses the average and median Net Sales generated over the 2017 calendar year (the “Measurement Period”) for the 133 Traditional Stores that (a) continuously operated over the entire Measurement Period, and (b) are not co-branded with another concept or supplemented with a Satellite.

• In addition to this Net Sales data, the table below in this Part I discloses the average and median of certain costs incurred over the Measurement Period by the 40 Traditional Stores that: (i) met the conditions discussed in subparts (a) and (b) of the prior paragraph; and (ii) reported their respective cost information to the franchisor in time for such information to be included in this Item.

• There were 224 franchise Stores open and operating as of December 31, 2017. Of these, 133 are Traditional Stores that were open the entire calendar year 2017 and were included in the computation. Of the 91 stores that were not included in the computation, 28 were Non-Traditional Stores, 56 were Co-Branded Stores, and 7 Stores were not open for the entire 2017 calendar year.

• The computation for same unit sales includes locations that were open for the entire calendar years 2016 and 2017.

• Cost of Goods Sold includes costs such as the cost of food ingredients used to make finished products, shipping charges, etc. Cost calculations are for the period ending December 31, 2017.

• Labor Costs may include costs such as salaries and wages for full-time and part-time employees, employer contributions for F.I.C.A taxes, federal unemployment taxes, state unemployment taxes, workers’ compensation, group health insurance (if any), 401(k) (if any), wages for contracted labor, expense of “help wanted” ads, employee training expenses, etc. Cost calculations are for the period ending December 31, 2017.

• Rent may include costs such as flat rent, percentage rent, common area maintenance, depreciation of leasehold improvements, depreciation of fixtures and equipment, real estate commissions, real estate taxes, real estate insurance, utilities, etc. Cost calculations are for the period ending December 31, 2017.

• A franchisee may be a multi-store operator but counted in the 1-2 Store category because of all his or her Stores, only 1 or 2 satisfied all required criteria (applicable to larger Store categories also under the same rationale).

Overall Sample