FDD Talk 2019: Pinkberry 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 Pinkberry franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Pinkberry franchise, based on Item 7 of the company’s 2019 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Pinkberry franchise, based on Items 5 and 6 of the company’s 2019 FDD

• Section IV – Number of franchised and company-owned Pinkberry outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD

• Section V – Presentation and analysis of Pinkberry’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:

• 2018 average and median gross sales for the top 20%, bottom 20%, and all 93 franchised and corporate Pinkberry stores located in the United States that were open for at least 12 consecutive months

• number and percentage of Pinkberry stores in the respective samples that met or exceeded the average and median gross sales

Section I – Background Information

14 Things You Need to Know About the Pinkberry Franchise

Launches New Flavors

1.  Pinkberry consistently releases new flavors of frozen yogurt to keep customers coming back for more. One of the brand’s latest limited-time flavors was a dairy-free Cold Brew frozen yogurt flavor available from March 1, 2019 through April 18. The trendy new flavor was made with a coconut milk base and was featured in a special combination made with a house-made mocha sauce and chocolate chips.

2.  Melissa Hubbell, director of marketing for Pinkberry, said, “Smooth and creamy, this flavor is the perfect blend for Cold Brew fans. Whether you are in search of a dairy-free option or simply a delightful pick-me-up, our new dairy-free Cold Brew is for you!”

3.  Near the end of April 2019, Pinkberry partnered with STX Entertainment for the release of UglyDolls. To celebrate the film, which was released on May 3, Pinkberry created Moxy’s Kiwi Strawberry Swirl, inspired by the movie’s main character, Moxy. The movie-inspired flavor features Kiwi Strawberry frozen yogurt topped with fresh, hand-cut kiwis, strawberries, and a sprinkle of candy hearts.

4.  In addition to new frozen yogurt flavors, Pinkberry also launched a new Pinkbee’s flavor – Pinkbee’s is the brand’s low-fat dairy milk ice cream option that was first added to the menu in 2016. To kick off the new year, Pinkberry introduced Pinkbee’s Cookie Butter Reduced-Fat, Milk Ice Cream. The new flavor featured a decadent cookie butter center and was topped with cookie crumbs.

5.  Hubbell said, “There is no better way to celebrate the New Year than enjoying our new Pinkbee’s Cookie Butter flavor. Paired with the decadent and gooey center, it is the perfect dessert to start the year with!”

Pinkberry and Baja Fresh Partner with NBC’s ‘The Good Place’

6.  At the end of September 2018, to celebrate the season three premiere of The Good Place, Pinkberry and Baja Fresh invited fans of the brands and show alike to get into the spirit with delicious frozen yogurt and BOGO burritos.

7.  To celebrate the season three premiere of the hit NBC show, Pinkberry served its frozen yogurt with forks on Thursday, September 27 – this is in reference to how the show often censors swear words with the word fork. During the special promotion, Pinkcard members (Pinkberry loyalty members) were able to win free rewards by posting photos of the forked swirl on their social accounts.

8.  Also during the season premiere, Baja Fresh offered Buy One, Get One Free burritos all day. Each brand’s product holds special roles in the show. Frozen yogurt is a constant theme throughout the series and Maya Rudolph’s Emmy-nominated guest appearance in the episode “The Burrito” is now a fan favorite.

Company History

9.  Pinkberry was founded in 2005 by Shelly Hwang and Young Lee in West Hollywood, California. Initially, Hwang and Lee wanted to open a formal English teahouse, but were denied a liquor license. The business partners decided to go with their second plan, opening a frozen yogurt shop and reviving the 1980s frozen yogurt craze.

10.  Their frozen yogurt idea was an instant hit and after word got out about Pinkberry, people were standing in line for 20 to 30 minutes. With the success of the first location, Hwang and Lee decided to franchise the Pinkberry concept and opened the second location in 2006.

11.  To support the company’s growth, Pinkberry received a $27.5 million investment from Maveron, the venture fund founded by Starbucks founder Howard Schultz. Following the investment, additional Pinkberry locations opened all over Southern California and also in New York. In 2009, Pinkberry opened its first international store in the State of Kuwait.

12.  For the first years after opening, Pinkberry enjoyed immense success and was opening new locations at a rapid pace. However, Pinkberry’s success and popularity ended up inspiring numerous other frozen yogurt brands, both domestic and foreign, to open locations across the country. After declining sales due to the oversaturated market and several store closures from overexpansion, Pinkberry was acquired by Kahala Brands in 2015.

13.  Following the sale of the company, Hwang has remained as chief product officer and board director of Pinkberry. Lee had already left the company in 2010.

Entrepreneur’s Franchise 500

14.  Pinkberry did not rank on Entrepreneur’s 2019 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Pinkberry franchise costs, based on Item 7 of the company’s 2019 FDD.

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

• Please click here for detailed information on Pinkberry’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2016

• Outlets at the Start of the Year:  110
• Outlets at the End of the Year:  101
• Net Change:  -9

2017

• Outlets at the Start of the Year:  101
• Outlets at the End of the Year:  96
• Net Change:  -5

2018

• Outlets at the Start of the Year:  96
• Outlets at the End of the Year:  91
• Net Change:  -5

Company-Owned

2016

• Outlets at the Start of the Year:  29
• Outlets at the End of the Year:  21
• Net Change:  -8

2017

• Outlets at the Start of the Year:  21
• Outlets at the End of the Year:  16
• Net Change:  -5

2018

• Outlets at the Start of the Year:  16
• Outlets at the End of the Year:  2
• Net Change:  -14

Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis

• The average gross sales amounts contained in the table below pertain to the historic performance of all Pinkberry franchised and corporate stores located in the United States that were open for at least 12 consecutive months. The time period measured was December 1, 2017 through November 30, 2018.

• As of November 30, 2018, there were 93 stores open in the United States.

• All of the stores measured share the following characteristics: (i) all are located in the United States; (ii) all use the same recipes; (iii) all were open for a minimum of 12 months; and (iv) all operate under the same trademarks.

• The information in the table is based upon gross sales of franchised stores. Some stores had gross sales that exceeded the average gross sales. Pinkberry is not representing that your franchised store will meet or exceed the average gross sales of the franchised stores.

• The figures in the table below should not be considered a representation of the probable gross sales you should expect or a forecast of future performance. Pinkberry is not representing that your franchised store will meet or exceed the average gross sales in the table below. Your sales may differ from those in the table below. There is no assurance that you will earn as much as the stores listed in the table.

• The table below and information were prepared from sales reports provided to Pinkberry by franchisees. Pinkberry has not audited the information provided by the franchisees.

All Stores – Franchised and Corporate