In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Great Harvest Bread Co. franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Great Harvest Bread Co. 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 Great Harvest Bread Co. franchise, based on Items 5 and 6 of the company’s 2018 FDD
- Section IV – Number of franchised and company-owned Great Harvest Bread Co. 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 Great Harvest Bread Co.’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:
- 2017 average and median annual gross sales for the (a) 19 single-site new bakery cafes; (b) 5 sets of hub and spoke bakery cafes (11 total); and (c) 3 sets of new concept hub and spoke bakery cafes (6 total) that were open and operating for the full 24-month period ended December 31, 2017
- 2017 average and median annual gross sales for the (a) 5 bread-baking (hub) locations that have 1 or 2 related non-bread-baking (spoke) locations; (b) 6 non-bread-baking (spoke) locations by themselves; (c) 3 bread-baking (hub) new concept locations that have 1 or 2 related non-bread-baking (spoke) locations; (d) 3 non-bread-baking (spoke) new concept locations by themselves that were open and operating for the full 12-month period ended December 31, 2017
- 2016 average gross sales, variable costs, fixed costs, total operating expenses, and net operating income for the (a) 19 reporting single-site, new concept bakery cafes and (b) the 3 reporting new concept hub and spoke bakery cafe combinations (3 bread-baking hub locations with each having 1 related non-bread-baking (spoke) location for a total of 6 bakery cafes) that were open and operating for the full 24-month period ended December 31, 2017 and submitted their income statements for the 2016 calendar year
Section I – Background Information
15 Things You Need to Know About the Great Harvest Bread Co. Franchise
Great Harvest Challenge Returns for Second Year in a Row
1. At the end of October 2017, Great Harvest Bread Co. announced the return of its National Bread Challenge for the second straight year. The brand created the challenge to help consumers make better choices when it comes to bread, which is a staple food in the average American’s daily diet. Great Harvest said that Americans eat more than 53 pounds of bread per person per year, but the bread they’re eating is typically heavily processed.
2. From the 3rd to 11th of November (which is National Bread Month), Great Harvest invited customers to bring in an unopened loaf of the processed, store-bought bread they have at home and receive a free, hand-made loaf of any Great Harvest bread. Customers were also encouraged to share their National Bread Challenge experiences on social media using the hashtag #BreadSwap.
3. According to Mike Ferretti, CEO of Great Harvest Bread Co., the National Bread Challenge is a way for new customers to experience what the company stands for: Bread. The Way it Ought To Be™. Ferretti said, “We had tremendous turnouts and responses for the National Bread Challenge last year  and we knew we had to bring it back again this year. Our milling process is what sets our bread apart from the processed food that people have unfortunately gotten used to. We mill flour from fresh wheat berry every day and use pure, simple ingredients without nitrates or preservatives. Our breads not only taste better but they are also better for you.”
Released Special Treats for Easter
3. Great Harvest Bread Co. likes to keep things fresh and often releases special holiday items. The brand’s seasonal menu for Easter last year featured special Easter-themed treats that were available from mid-March until April.
4. Great Harvest brought back one of its most popular seasonal treats, Honey Bunnies, after experiencing an enormous amount of success with the item in recent years. Honey Bunnies are a handcrafted, bunny-shaped bread creation made with Great Harvest’s signature Honey Whole Wheat Bread, baked from five simple ingredients: honey, yeast, water, salt, and fresh whole grain flour. Like all of Great Harvest’s products, Honey Bunnies contain zero additives, preservatives, or conditioners.
5. Eric Keshin, president of Great Harvest Bread Co., said, “Easter is a traditional, heartwarming holiday celebrated by many across America, and we want to help our communities celebrate it in a fun, delicious way. Our artisan bakers take great care in crafting every Honey Bunny to perfection, and we’re always ecstatic when our guests include Great Harvest in their Easter gatherings.”
6. In addition to Honey Bunnies, Great Harvest offered an assortment of rolls for the holiday season. Select locations sold Hot Cross Buns, a traditional sweet roll eaten on Lent and Good Friday, which is filled with dried cranberries and golden raisins, and decorated with a sweet icing. Virginia Rolls, a savory, buttery Easter favorite, were also available at select stores.
7. Great Harvest also rolled out a few seasonal desserts, including Lemon Ohs, sponge cakes rolled up with tangy lemon and a sweet cream filling. Easter-themed iced sugar cookies were also available. Additionally, every Great Harvest bakery cafe is unique, owned by local community members, and offered additional items for the holiday.
Encouraging Customers to Eat Better
8. Great Harvest Bread Co. takes pride in producing food that is a healthier alternative to traditional fast food. To help spread the company’s better food philosophy, Great Harvest Bread Co. consistently challenges customers to make better food choices through different promotions. One of the brand’s challenges occurred during September’s Better Breakfast Month (2017).
9. Great Harvest’s #BetterBreakfast Campaign introduced people to the company’s nutritious, delicious, never-processed breakfasts. The challenge took place during store hours at participating Great Harvest bakery cafes throughout the month of September.
10. Customers were able to order their better breakfast, which included a custom-built breakfast sandwich, made to order with any bread or biscuit, bacon or ham, any cheese, and topped with a tomato and garlic herb spread.
11. As part of the promotion, any customer that felt that they weren’t eating the best-tasting healthy breakfast sandwich around, received their money back. Customers were also asked to post photos of their experience with Great Harvest on Facebook, Twitter, and Instagram with the #BetterBreakfast hashtag to be entered to win one of five $100 gift cards.
12. Great Harvest Bread Co. was founded in 1976 by Pete and Laura Wakeman in Great Falls, Montana. The Wakemans met in college and baked scratch-made whole grain bread to pay for their education. They got married in 1975 and spent months hiking through Montana and fell in love with the state.
13. The Wakemans decided to settle in Montana and open their first Great Harvest Bread Co. bakery. This first location was successful and the Wakemans established the Freedom Franchise in 1978. That same year, the second Great Harvest Bread Co. location opened in Kalispell, Montana.
14. Over the next few decades, the company continued to grow and the Wakemans sold the business in 2001. Today, Great Harvest Bread Co. is owned by its employees and officers, including Mike Ferretti (chairman and CEO) and Eric Keshin (president and chief marketing officer). There are currently over 200 Great Harvest Bread Co. bakeries across the United States.
Entrepreneur’s Franchise 500
15. Great Harvest Bread Co. did not rank on Entrepreneur’s 2019 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Great Harvest Bread Co. 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 Great Harvest Bread Co.’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
- Outlets at the Start of the Year: 192
- Outlets at the End of the Year: 184
- Net Change: -8
- Outlets at the Start of the Year: 184
- Outlets at the End of the Year: 180
- Net Change: -4
- Outlets at the Start of the Year: 180
- Outlets at the End of the Year: 181
- Net Change: +1
- Outlets at the Start of the Year: 0
- Outlets at the End of the Year: 0
- Net Change: 0
- Outlets at the Start of the Year: 0
- Outlets at the End of the Year: 3
- Net Change: +3
- Outlets at the Start of the Year: 3
- Outlets at the End of the Year: 2
- Net Change: -1
Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis
- There historically have been 6 principal types of Great Harvest bread companies:
- (1) a traditional bread company baking bread and other products for retail sale;
- (2) a traditional bread company that has added sandwiches to its menu but no seating;
- (3) a single-site, bread-baking “bakery cafe” with some seating and a menu that includes sandwiches and salads;
- (4) a “hub and spoke” operation where 2 or more “bakery cafes” described in (3) above owned by the same franchisee work together, with the primary “hub” location baking bread and then supplying it to the “spoke” locations, but where the spoke locations still bake mostly non-bread products;
- (5) a “new concept” bakery cafe distinguished by permanent seating for 35 or more people; 2 customer restrooms; a menu that includes breakfast sandwiches, cold and hot sandwiches, baked goods, salads and/or grain bowls, and coffee; and using certain electronic customer experience systems, including loyalty programs and an order-ahead app; and
- (6) a “new concept” hub and spoke that is identical to the hub and spoke described in (4) except that the bakery cafes meet the “new concept” definition outlined in (5).
- Great Harvest currently offers franchises only for Great Harvest bread companies operating as single-site, new concept bread-baking bakery cafes (described in (5) above) or, if the franchisee intends to have a “hub and spoke” operation (described in (6) above), Great Harvest bread companies that are bread-baking (“hub”) locations and non-bread-baking (“spoke”) locations.
- Great Harvest no longer grants new franchises for the type of “traditional” bread company described in (1) and (2) above or the “limited” bakery cafe concept described in (3) above.
- Depending on local market conditions, however, Great Harvest may offer franchises for new concept bakery cafes even if they cannot have 35 permanent seats or all the standard features of the new concept bakery cafe.
Part 1 – Average and Median Annual Gross Sales System-Wide by Category of Bread Company
- Part 1 shows average and median annual Gross Sales for the 12 months ended December 31, 2017 for Great Harvest bread companies falling into the following categories:
- (a) a single-site, new concept bakery;
- (b) a hub and spoke described in (4) above; and
- (c) a new concept hub and spoke described in (6) above.
- The 19 single-site, new concept bakery cafes whose results appear in Part 1 are the same 19 bakery cafes that submitted their 2016 income statements for purposes of Part 3.
- The 6 new concept hub and spoke bakery cafes whose results appear in Part 1 are the same 6 hub and spoke bakery cafes that submitted their income statements for purposes of Part 3.
- The 19 single-site, new concept bakery cafes do not include any new concept bakery cafes that are part of a hub and spoke combination. Similarly, the sections showing hub and spoke combinations do not include any of the 19 single-site, new concept bakery cafes.
- Excluded from this Item 19 are three new concept bakery cafes that opened during 2017 and 1 new concept bakery cafe that opened during 2016 and therefore could not submit a 2016 income statement for purposes of Part 3.
Single-Site Bakery Cafe (New Concept)