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

• Section I – Background information on the Xpresso Delight franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for an Xpresso Delight franchise, based on Item 7 of the company’s 2018 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for an Xpresso Delight franchise, based on Items 5 and 6 of the company’s 2018 FDD

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

• total number of cups sold; average, median, high, and low cups sold per unit per week; average, median, high, and low revenue per cup; and cost of goods sold per cup for the 53 Xpresso Delight units operated by the franchisor’s affiliate in New York City, New York during the time period of January 1, 2017 to December 31, 2017

Section I – Background Information

14 Things You Need to Know About the Xpresso Delight Franchise

Looking to Grow in the United States

1.  At the end of February 2017, Xpresso Delight was featured in Franchising USA magazine. The story said that Xpresso Delight was looking to establish a stronger presence in the United States. At the time of the article, Xpresso Delight had about 200 franchises in Australia and New Zealand and only two locations in New York and Philadelphia, Pennsylvania.

2.  Nigell Lee, COO of Xpresso Delight, went to New York in 2013 to test the market and install Xpresso Delight’s coffee machines. According to Lee, “We had such an astounding response. In one of our early surveys for a company, we got 9.7 out of 10 for taste, 9.8 out of 10 for how easy the machine is to use and that was an accounting firm with over 300 employees. It was a really good survey. So in early 2014 we started selling franchises in the U.S.”

3.  Lee added that Xpresso Delight had just sold their second U.S. franchise in Philadelphia and that Xpresso Delight is currently seeking franchisees in Pennsylvania, New Jersey, New York City, Long Island, and Connecticut.

4.  Lee said that while coffee culture in the United States is mature, espresso drinking is not and there is a lot of potential for growth in the country. He added, “Where we are in the U.S., is where Australia was in 2003 to 2004. There is a big coffee market but most people don’t understand that they can have fresh bean, fresh milk, lattes, cappuccinos and espressos all in the office. We believe we are unique and it is an educational process but once they taste our coffee and see how easy it is to use, then bundle it up with a complete package, people get it straight away.”

Signs Multi-Unit Franchise Deal for Washington, D.C.

5.  In early October 2018, Xpresso Delight announced that it had entered into a multi-unit franchise deal for Washington, D.C. The awarding of the D.C. territory reflects the popularity of the Australia-based brand’s products and services among commercial customers.

6.  The company’s new D.C. franchisees are husband and wife team Ram and Shirisha Dasari. The couple will install two units to start, with plans to open eight additional units before the end of the year, as operations ramp up.

7.  Mr. Dasari was primarily drawn to the brand’s attractive economics, coupled with the low start-up costs. However, it was the attention to detail of the Xpresso Delight business model and the premium quality of the products that drew the new franchisees to want to invest.

8.  Dasari said, “After months of considering various business opportunities, I decided to become an Xpresso Delight franchisee because of the high quality of the franchise products and the organizational strength and support offered by the franchisor. In my view, Xpresso Delight is an innovative and cutting-edge business to be part of. As an owner of an IT company based in Richmond, VA, I see coffee services such as Xpresso Delight becoming a highly sought-after amenity for employees across America. We are thrilled to join this franchise system. The opportunity to bring such a strong business like Xpresso Delight to Washington D.C. is very exciting for all.”

9.   Nigell Lee, COO and president of operations for Xpresso Delight Group, said, “The expansion to D.C. is an absolutely huge accomplishment for Xpresso Delight. We’re delighted to welcome the Dasaris to the Xpresso Delight family. We feel they will represent the brand’s passion for the coffee-as-a-service industry perfectly in the Nation’s Capital. Further, Xpresso Delight intends to expand even faster throughout North America in late 2018 and beyond.”

Company History

10.  Xpresso Delight was founded in 2003 by Paul Crabtree and Stephen Spitz in Australia. Crabtree and Spitz, who are avid coffee lovers, created Xpresso Delight because they saw an untapped market opportunity to provide an easy, affordable espresso coffee solution to the modern workplace. The business partners created a business model that ensures all participants in the network, from franchisees through to Master Agents, generate an attractive return on their invested capital and time.

11.  Xpresso Delight has been a member of the Franchise Council of Australia (FCA) since 2004, the same year that Crabtree and Spitz started franchising the concept. After opening a number of franchises in Australia, Xpresso Delight expanded into New Zealand and then to the United States in 2013.

12.  Nigell Lee, COO of Xpresso Delight, brought the concept to the U.S. and started selling franchises in 2014. Today, Xpresso Delight locations are still primarily located in Australia and New Zealand but the company wants to expand further into the United States market.

13.  Xpresso Delight has recently partnered with Oakscale, a full-service franchise development company that partners with select emerging franchise concepts to drive exceptional system growth.

Entrepreneur’s Franchise 500

14.  As a franchise based primarily outside of the United States, Xpresso Delight has not yet ranked on Entrepreneur’s Franchise 500 list. However, Xpresso Delight does have a long history of ranking on Australia’s BRW (formerly Business Review Weekly) Magazine’s Fastest Growing Franchises list (in 2008, 2009, 2010, 2011, and 2012). Xpresso Delight also ranked No. 1 Franchise System in the Lifestyle category in 2009.

Section II – Estimated Costs

• Please click here for detailed estimates of Xpresso Delight 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 Xpresso Delight’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:  2
• Outlets at the End of the Year:  1
• Net Change:  -1

2016

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

2017

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  2
• Net Change:  +1

Company-Owned

2015

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

2016

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

2017

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

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

• The following table presents the unaudited historical operating results of the revenues and certain expenses experienced by the franchisor’s affiliate, XD Unit Franchise, LLC’s operation of its Xpresso Delight Business in New York City, New York (the “XD Affiliated Business”) during the time period of January 1, 2017 to December 31, 2017 (the “Operational Period”).

• This Item 19 does not include any information for the 2 Franchised Businesses that opened during the Operational Period because these Franchised Businesses did not operate during the entire Operational Period.

• The numbers below are collected from the city of Manhattan in the State of New York, a market population with characteristics that will likely be different than the market you will operate.

• The franchisor’s affiliate operates 55 Xpresso Delight Beverage Systems and the data below presents the average results of 53 of those Xpresso Delight Beverage Systems. The two excluded Xpresso Delight Beverage Systems did not operate during the entire Operational Period.

• Total Number of Cups Sold. This information represents the total number of cups of coffee sold during the Operational Period by the XD Affiliated Xpresso Delight Beverage Systems Units.

• Xpresso Delight Beverage Systems Units (“Units”). The information below is based upon Xpresso Delight Beverage Systems that were in operation for the entire Operational Period and that are owned by XD Unit Franchise. All Units included in the table were located in Manhattan, New York.

• Average Cups Per Unit. Coffees sold are based on the amount of times a client presses the button to make a cup of coffee from the Xpresso Delight Beverage System located in their office. Each Xpresso Delight Beverage System records this information automatically and it is retrieved by the service technician during their periodic inspection of the Xpresso Delight Beverage System (i.e. weekly on average). A “Week” is defined as the seven-day period commencing Sunday and ending on the following Saturday.

• Average Revenue Per Cup. Pricing is negotiated with each client individually based on numerous factors, including but not limited to number of Xpresso Delight Beverage Systems installed, anticipated volumes (e.g. cups per week), competition, and demand. The Average Revenue Per Cup is based on the total revenues generated from the Xpresso Delight Beverage Systems during the Operational Period divided by the total number of cups sold.

• Cost of Goods Sold. Cost of goods sold was calculated based on the cost per cup of coffee beans, stirrers, and other supplies allocated to each client. No labor expense was included in the calculation. On average, a service technician visited each client once per week to inspect the Xpresso Delight Beverage Systems, provide any required servicing, and to record sales data. No costs incurred to install the Xpresso Delight Beverage Systems were included in the calculation.

Annual Sales and Revenues Achieved by XD Affiliated Xpresso Delight Beverage Systems Units for the Operational Period (January 1, 2017 to December 31, 2017)