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

• Section I – Background information on the Corner Bakery Cafe franchise opportunity, including relevant news updates

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

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

• 2017 average, median, high, and low gross sales for the 68 franchised cafes, 93 company-owned cafes, and 161 franchised and company-owned cafes (combined) that have been operated continuously throughout the company’s 2017 fiscal year

• 2017 average, median, high, and low gross sales for the 48 mature franchised cafes, 91 mature company-owned cafes, and 139 mature franchised and company-owned cafes (combined) that have been operated continuously during the 36-month period from December 31, 2014 through December 31, 2017

• 2017 average gross sales, cost of goods sold, labor costs, other operating expenses, advertising expenses, occupancy expenses, imputed royalty fees, and restaurant adjusted EBITDA for the 93 company-owned cafes that have been operated continuously throughout the company’s 2017 fiscal year

• 2017 average check for breakfast, lunch, dinner, and catering for the 68 franchised cafes, 93 company-owned cafes, and 161 franchised and company-owned cafes (combined) that have been operated continuously throughout the company’s 2017 fiscal year

• 2017 average counter breakfast gross sales, counter lunch gross sales, counter dinner gross sales, and catering gross sales for the 68 franchised cafes, 93 company-owned cafes, and 161 franchised and company-owned cafes (combined) that have been operated continuously throughout the company’s 2017 fiscal year

Section I – Background Information

17 Things You Need to Know About the Corner Bakery Cafe Franchise

Partners with Rosnet, a Leader in Restaurant Technology

1.  At the end of July 2018, Corner Bakery Cafe announced that it had partnered with Rosnet in order to implement all functions associated with reporting, food management, and labor management. Rosnet is a respected leader in the restaurant technology marketplace that offers world-class support to large restaurant companies when it comes to things like food and labor management.

2.  Before implementing Rosnet technology system-wide, Corner Bakery studied the impact at one of its franchise locations that had implemented the technology in the first wave. The benefits were undeniable, and now Corner Bakery is excited to announce a system-wide partnership.

3.  Paul Hicks, SVP of operations services & brand development for Corner Bakery Cafe, said, “Because Rosnet is intuitive and streamlined, and because we had some experience using it with one of our franchise partners, we were able to rollout the full platform to over 190 company and franchise locations in nine weeks.”

4.  In 2014, when Rosnet was implemented in one of the Corner Bakery franchise locations, the company was able to see how Rosnet was working for the brand. The leadership team gathered insightful and real data that showed how Rosnet improved business processes at the store level and above-store level. The technology platform worked with Corner Bakery to tackle some of the toughest business and operational challenges they were facing at the time, with a fully customizable platform.

5.  Patrick Bobrukiewicz, director of business development for Rosnet, added, “Rosnet is excited about the partnership we have established with the Corner Bakery Cafe organization. We believe that our unique approach to partnership and our collaborative engineering team coupled with their brand strength and thought leadership will culminate in solutions that will enable Corner Bakery to simplify operations and increase profitability.”

6.  Some of the key factors in ultimately deciding to implement Rosnet technology system-wide include the fact that the technology was founded by people with restaurant technology and operations backgrounds, with founder and CEO Gene Peters spending the majority of his career with Houlihan’s as the director of restaurant systems. Rosnet also provides a Level 1 Helpdesk at the restaurant level that is highly responsive within the application to better help users navigate through the platform.

7.  According to Hicks, “With Rosnet implemented, we know that we will have improved visibility to the health and performance of the brand. We will have better processes at the unit level that provide better tools while relying less on administrative time. We look forward to improved decision making at both the unit and above-unit level.”

Moves Catering Operations to the Cloud

8.  In early March 2018, Corner Bakery Cafe announced that it had recently completed a system-wide update to its catering platform, with all cafes shifting from in-house managed software, to MONKEY, a top cloud platform for takeout, delivery, and catering.

9.  Frank Paci, CEO of Corner Bakery Cafe, said, “Catering is key to our business strategy, which is why the move to MONKEY was so necessary. We outgrew our previous systems and we needed a more modern, cloud-based platform that could scale, be inline with our operational requirements, and serve our customers in a digital world. We needed to better connect our operations to our customers.”

10.  With a growing network of over 8,000 restaurants in North America, MONKEY centralizes web and mobile ordering, allowing all cafe locations to access real time transaction data to expedite in-store and phone ordering, billing, payments, customer insights, production, and delivery.

11.  According to Paul Hicks, SVP of operations services & brand development for Corner Bakery Cafe, “We already had a substantial catering business that made up 25-30% of our sales revenue, so moving all our catering operations into the cloud was like working with a moving freight train. It was critical for us to maintain continuity of service for all our locations throughout the implementation for all our stores and franchise partners. Nobody understood the nature of the challenge more than the team at MonkeyMedia Software.”

12.  Following an initial pilot in August 2017, Corner Bakery Cafe brought 20-30 locations online weekly with MONKEY, through the end of the year, culminating in system-wide training. Erle Dardick, CEO of Monkey Group and founder of MonkeyMedia Software, The Catering Institute, and Catering Insights, said, “Corner Bakery brought key elements to this process – dedicated leadership, a differentiated menu, and full awareness of what was happening in the marketplace and at all their locations. Their catering sales were humming, and by investing in the right technology platform to optimize their catering operations, Corner Bakery is now the gold standard for catering operations for multi-unit restaurants in our industry.”

Seasonal Winter Menu

13.  Throughout the year, Corner Bakery Cafe releases seasonal menus with new flavors and some returning fan favorites. In early November 2018, Corner Bakery Cafe launched its winter menu, which included:

• Power Breakfast Egg Bowl – Fluffy scrambled eggs, farro, oven-roasted tomatoes, and a power greens blend of baby kale, arugula, and spinach. Finished with fresh mozzarella and a drizzle of pesto.

• BBLT & Egg Sandwich – Applewood smoked bacon, fluffy scrambled eggs, tomatoes, and lettuce with cracked black pepper balsamic mayo on Mom’s white toast. Customers can add avocado for an additional charge.

• Warm Bacon & Spinach Salad – Sliced chicken, Applewood smoked bacon, hard-boiled egg, diced tart apples, sliced red onion, and house-made croutons on baby spinach with warm bacon balsamic vinaigrette.

• Spicy Balsamic Pulled Pork Panini – Sautéed pulled pork shoulder tossed with warm bacon balsamic sauce and sweet caramelized onions with Calabrian chili spread on grilled focaccia served with a signature Calabrian chili ranch for dipping.

• Chicken Orzo Soup – A warm and comforting blend of chicken, vegetables, and orzo pasta in a creamy broth with a hint of lemon.

• White Chocolate Mint Cold Brew – A hand-roasted cold brew with a delicious twist of white chocolate and mint.

• Pistachio Cranberry Muffin – A rich muffin studded with chopped walnuts and plump dried cranberries topped with sugar. Available with or without icing.

14.  Along with these seasonal menu items, Corner Bakery also announced the launch of its holiday gift card program. Customers received a $5 bonus card with the purchase of a large Cinnamon Crème Cake or $25 gift card before December 28. Customers were able to redeem the $5 bonus card from January 1 to 31, 2019.

Company History

15.  Corner Bakery Cafe was founded in 1991 by Lettuce Entertain You Enterprises, a Chicago-based restaurant group. The first Corner Bakery Cafe was opened to bake bread for Maggiano’s Little Italy, but also sold fresh baked breads and coffee to the public. After customers kept asking for sandwiches made with its bread, Corner Bakery Cafe expanded its menu to include paninis, sandwiches, salads, soups, and specialty desserts. The company started to grow and by 1995, there were five Corner Bakery Cafe locations around Chicago.

16.  In 2005, Corner Bakery Cafe was sold to Il Fornaio (America) Corporation and franchising started the following year. Corner Bakery Cafe began to expand outside of Chicago and in 2011, Il Fornaio, along with Corner Bakery Cafe, was acquired by Roark Capital Group. Today, Corner Bakery Cafe has both company-owned and franchised stores across the United States.

Entrepreneur’s Franchise 500

17.  Corner Bakery Cafe did not rank on Entrepreneur’s 2019 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Corner Bakery Cafe 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 Corner Bakery Cafe’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:  70
• Outlets at the End of the Year:  83
• Net Change:  +13

2016

• Outlets at the Start of the Year:  83
• Outlets at the End of the Year:  84
• Net Change:  +1

2017

• Outlets at the Start of the Year:  84
• Outlets at the End of the Year:  71
• Net Change:  -13

Company-Owned

2015

• Outlets at the Start of the Year:  114
• Outlets at the End of the Year:  114
• Net Change:  0

2016

• Outlets at the Start of the Year:  114
• Outlets at the End of the Year:  112
• Net Change:  -2

2017

• Outlets at the Start of the Year:  112
• Outlets at the End of the Year:  116
• Net Change:  +4

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

• In this Item, the franchisor has included data concerning the average Gross Sales of its Franchised Cafes and the average Gross Sales and expenses of its Company-Owned Cafes during its 2017 fiscal year ranging from December 25, 2016 through December 31, 2017 (the “Measured Period”).

• Many of the Company-Owned Cafes located in urban locations are considered “limited hour cafes” in that they are open only during breakfast and lunch dayparts or they are open only five days a week (“Limited Hour Cafes”).

• As of December 31, 2017, there were 17 Limited Hour Cafes in operation, two of which are Franchised Cafes and 15 of which are Company-Owned Cafes. The franchisor has not included Limited Hour Cafes in any of the data presented in this Item 19, because their different operating hours produce revenue and expenses that are not comparable to what the franchisor anticipates a typical Franchised Cafe will achieve.

Part 1 – Annual Gross Sales in the Measured Period for Franchised Cafes Operating Throughout Measured Period (68 Cafes)