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 2019 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 2019 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 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD

• Section V – Presentation and analysis of Xpresso Delight’s financial performance representations, based on Item 19 of the company’s 2019 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 65 Xpresso Delight units operated by the franchisor’s affiliate in New York City, New York during the time period of January 1, 2018 to December 31, 2018

Section I – Background Information

18 Things You Need to Know About the Xpresso Delight Franchise

Plans to Expand to 50 Major Metro Areas in the United States

1.  At the end of July 2019, Xpresso Delight announced that it was targeting the top metro areas throughout the United States and plans for 200 machines in each of the 50 major metro areas, totaling 10,000 machines nationwide. In the same press release, Xpresso Delight noted that it had five territories in the U.S. at the time, operating in New York City and Buffalo, New York; Washington, D.C.; and Charlotte, North Carolina.

2.  The expansion plans come at a time when 50 percent of working Americans spend approximately $1,000 a year on coffee, according to a Workonomix survey. This breaks down to spending more than $20 a week on coffee. Trends also point toward consumers seeking out high-quality, milk-based espresso coffee drinks rather than settling for convenience. Xpresso Delight serves this demand by offering premium café-quality coffee available right in the office kitchen.

3.  Nigell Lee, Xpresso Delight’s chief operating officer, said, “Our number one mission is to bring the best coffee experience to each and every office. We believe that by bringing in a high-quality product and machine while making it affordable, we can be a big part of building office culture and a positive community. Coffee is an integral part to any routine, and we believe it can bring people together to encourage an office culture based on human connection and great coffee.”

4.  Lee added, “When we were creating Xpresso Delight, we wanted to keep an eye on the sustainability of our machine and maintaining our standard of fresh ingredients. By directly adding the beans and other fresh ingredients to the machine, we are able to significantly bring down the amount of waste each cup produces.”

5.  To further the company’s growth, Xpresso Delight is seeking experienced, multi-unit franchisees looking to partner with a forward-thinking coffee brand. Metro area-wide territories are available. Including a franchise fee of $37,500 plus $5,000 per machine, the estimated initial investment range to open a franchise with Xpresso Delight is $84,500 to $107,000 to reach a five-machine minimum.

6.  The brand has also exclusively partnered with Oakscale, a New York-based franchise development company, for development efforts.

Signs Multi-Unit Deal with Professional Athlete

7.  In late April 2019, Xpresso Delight announced that another new multi-unit franchisee had joined the brand’s aggressive expansion in New York City. The new multi-unit franchisee is Stu Mills, a former professional athlete turned successful corporate executive. Being a professional cricket player in New Zealand for nearly a decade taught Mills the skills and instilled the values often tied to successful business owners: discipline, competitive drive, teamwork, and leadership.

8.  Mills utilized those skills, along with an MBA in Finance, to earn a myriad of roles at major retail brands over the last decade including both the buyer and seller side of transactions, as well as management. The father of two plans to utilize his education, experience as a professional athlete, and real world business experience to create a successful trio of Xpresso Delight franchises in New York City.

9.  According to Mills, “I’d been looking at franchises for years, primarily in the fitness and children’s activity categories, but I just couldn’t take on the risk of leaving the security of my job to go build a retail business full time. I started looking at franchises that I could grow more passively at the start, and build over time to a point where I could either transition full time to running the business or simply hire someone to manage the operation while I continue building my career. I found Xpresso Delight and it checked all the boxes: Inexpensive initial investment with a huge growth opportunity, it’s not a fad, and it’s good for the environment.”

10.  Nigell Lee, COO and president of operations for Xpresso Delight Group, also shared his excitement about adding a new franchise in New York City. Lee said, “When someone approaches you to become a franchisee in your flagship market, you take extra care to make sure that they’re a good fit, not just for the franchise system, but for the culture you’ve built in your local market. But it was a no-brainer to bring Stu on from the start and I feel he’ll be a tremendous help to furthering Xpresso Delight’s growth in the New York City office coffee market.”

Expanding to South Florida

11.  As Xpresso Delight continues to grow across the United States, it has recently set its sights on South Florida. Tom Dowd, a former Wall Street equities trader who moved to Florida in 2006 to pursue his entrepreneurial aspirations, has signed an agreement with Xpresso Delight to place up to 50 premium coffee machines in various businesses and offices throughout Broward County, specifically Fort Lauderdale.

12.  Dowd said, “I’m looking forward to sharing Xpresso Delight’s fresh and delicious coffee with the local business community. Aside from the exceptional coffee, Xpresso Delight helps connect workers and employees to create a better office culture, and I’m excited to see how it can help bolster office culture in the Greater Fort Lauderdale area.”

13.  Nigell Lee, Xpresso Delight’s chief operating officer, added, “Xpresso Delight’s main focus is providing a café-quality coffee experience in an office setting. We aren’t like capsule coffee or a traditional drip pot because our beans are fresh ground and we use fresh milk to make options such as coffee, espresso, lattes and cappuccinos all at the press of a button. We know Fort Lauderdale will embrace our fresh coffee and espresso products and we are excited to add Tom to our Xpresso Delight family.”

Company History

14.  Xpresso Delight was founded in 2003 by Paul Crabtree and Stephen Spitz in Australia. Crabtree and Spitz recognized that there was an untapped market opportunity to provide an easy, affordable espresso coffee solution to the modern workplace.

15.  The Xpresso Delight concept is a little different from traditional franchises as franchisees do not own branded stores; instead they own a number of fully-automated gourmet espresso coffee systems and place them in various workplaces.

16.  The coffee systems are given free to businesses who want the service and franchisees are responsible for servicing the coffee systems weekly and providing all the consumables, everything from the coffee to the cappuccino sprinkle. Franchisees earn money by simply charging their clients an incredibly small fee, starting at about 79 cents per cup of coffee.

17.  A year after Xpresso Delight was founded, the company joined Franchise Council of Australia (FCA) and began franchising the concept throughout Australia and New Zealand. Xpresso Delight entered the U.S. market in 2014, and while the majority of the brand’s franchises are still located in Australia and New Zealand, Xpresso Delight plans to focus on its growth in the U.S.

Entrepreneur’s Franchise 500

18.  Xpresso Delight did not rank on Entrepreneur’s Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Xpresso Delight 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 Xpresso Delight’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:  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

2018

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  4
• Net Change:  +2

Company-Owned

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

2018

• 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, 2019 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, 2018 to December 31, 2018 (the “Operational Period”).

• This Item 19 does not include any information for the 2 Franchise Businesses that were in operation during the Operational Period because these Franchise 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 65 Xpresso Delight Beverage Systems and the data below presents the average results of all 65 of those Xpresso Delight Beverage Systems.

• 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”). Units, as discussed in the table below, refer to each individual Xpresso Delight Beverage System machine at various locations in New York City, New York operated by the franchisor’s affiliate. The XD Affiliated Xpresso Delight Beverage Systems Units are substantially similar to those operated by a franchisee. 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 the 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. No franchisee-specific expenses (i.e., Royalty Fee payments) were included in the calculation.

Annual Sales and Revenues Achieved by XD Affiliated Xpresso Delight Beverage Systems Units for the Operational Period (January 1, 2018 to December 31, 2018)