FDD Talk 2020: Baskin-Robbins 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 Baskin-Robbins franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Baskin-Robbins franchise, based on Item 7 of the company’s 2020 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Baskin-Robbins franchise, based on Items 5 and 6 of the company’s 2020 FDD

• Section IV – Number of franchised and company-owned Baskin-Robbins outlets at the start of the year and the end of the year for 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD

• Section V – Presentation and analysis of Baskin-Robbins’ financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:

• average sales by geographic region for continental U.S. Baskin-Robbins single brand restaurants that have been open for business to the public for at least one year during a one-year measuring period from November 1, 2018 to October 31, 2019

• average sales by geographic region for continental U.S. combo restaurants in freestanding and shopping center/storefront locations (separately stated) that have been open for business to the public for at least one year during a one-year measuring period from October 28, 2018 to October 26, 2019

• average cost of goods sold and labor costs by region for continental U.S. Baskin-Robbins restaurants (and separately, for combo restaurants) for the period from November 1, 2018 to October 31, 2019

Section I – Background Information

19 Things You Need to Know About the Baskin-Robbins Franchise

Launches Non-Dairy Ice Cream for the First Time

1.  At the beginning of August 2019, Baskin-Robbins stepped into the plant-based dessert category with the launch of two new non-dairy flavors. Both Non-Dairy Chocolate Chip Cookie Dough and Non-Dairy Chocolate Extreme were available for ice cream customers in-store beginning August 1.

2.  The two non-dairy menu items are vegan takes on classic fan-favorites. Made with a base blend of coconut oil and almond butter, Non-Dairy Chocolate Chip Cookie Dough is made with cookie dough pieces, chocolate chunks, and a chocolate ribbon, while Non-Dairy Chocolate Extreme contains chocolate chunks and a chocolate ribbon, and is also gluten conscious.

3.  Both flavors contain no artificial dyes, which have been absent from all Baskin-Robbins ice cream since 2017 as part of Baskin-Robbins’ and Dunkin’ Brands’ commitment to serving high-quality menu items. The non-dairy flavors are also free from preservatives, artificial flavors, high-fructose corn syrup, and are Kosher.

4.  Jeanne Bolger, director of research and development for Baskin-Robbins, said, “The Baskin-Robbins culinary team has been hard at work on our non-dairy flavors for over two years. It was important for us to take the time to get it right. Both flavors are so smooth and indulgent, and the final product delivers the incredible quality that our customers have come to expect from any Baskin-Robbins ice cream. We’re very proud of the result.”

5.  With plant-based food sales increasing in double-digits across the country, Baskin-Robbins embraced the opportunity to expand their ice cream portfolio to non-dairy indulgences. “We’re excited to expand our ice cream portfolio into the vegan space and offer our guests increased options, especially with such high consumer demand for a product like this,” said Carol Austin, vice president of marketing for Baskin-Robbins.

Signs Multi-Unit Deal to Develop 10 Shops in Upstate New York

6.  In mid-August 2019, Baskin-Robbins announced the signing of a multi-unit agreement to develop 10 new locations across Upstate New York, including in Syracuse and the Southern Tier, in addition to Wilkes-Barre/Scranton, Pennsylvania. With a portfolio of 40 Dunkin’ restaurants and one multi-brand location, the deal was signed with franchisees Manish Patel, Sarika Patel, Krunal Patel, and Tarak Patel of Bapa Chambers Rd Ice Cream, LLC.

7.  The first store of the 10-unit deal celebrated its grand opening in Horseheads, New York in mid-July. The Horseheads Baskin-Robbins marks the brand’s first stand-alone “Moments” store location to open east of the Mississippi and overall third “Moments” design location to open. The new “Moments” store brings contemporary décor with bright colors paired with menu innovations to spark joy and happiness in customers.

8.  According to Manish Patel, Dunkin’ Brands franchisee, “I’ve been fortunate enough to grow up alongside Dunkin’ with my father being the franchise owner of the first Dunkin’ in Rochester, New York. Following in my father’s footsteps, I began my journey with the brand back in 2005 and have grown my network to over 40 Dunkin’ locations. With this 10-unit deal, I’m honored to expand my efforts with Baskin-Robbins and look forward to bringing joy to customers in my hometown of Horseheads, New York and its surrounding communities.”

9.  Looking ahead, the team plans to develop two additional Baskin-Robbins shops slated to open late summer in Painted Post, New York and Bradford, Pennsylvania, as part of their 10-unit deal. In addition to the Baskin-Robbins deals, the team will be growing their portfolio with Dunkin’ locations in key markets across New York.

10.  Grant Benson, CFE, senior vice president of franchising and business development for Dunkin’ Brands, said, “Dunkin’ Brands’ growth would not be possible without our existing franchisees like Manish and his team who continue to demonstrate their high confidence in our brands and world-class support team. Thanks to their vision for Baskin-Robbins, we’ve been able to tackle another major milestone for the brand, bringing the new ‘Moments’ store design to the east coast.”

Launches New ‘Pint-Sized Heroes’ Program

11.  In mid-May 2020, Baskin-Robbins launched its new “Pint-Sized Heroes” charitable program, which celebrates the extraordinary, passionate, creative, and thoughtful young people who are giving back to their communities during the ongoing COVID-19 pandemic. As a place where kids of all ages gather to celebrate, Baskin-Robbins is committed to shining a bright light on the incredible acts of kindness of “Pint-Sized Heroes” nationwide, in hopes that their stories inspire others to do the same.

12.  The Baskin-Robbins Joy in Childhood Foundation is making a $5,000 donation in each hero’s name to a charity of their choice and, in true Baskin-Robbins fashion, the brand is treating them to a year of free ice cream as a sweet “thank you.”

13.  The first “Pint-Sized Heroes” include four elementary and middle school students who are helping those in need during COVID-19 and beyond:

• Liv Khoury of Berkley, MI: This fourth-grade student has taken her love for art and photography and turned it into a way to help those who need it most. Inspired by her daily family walks and recognizing how many people long to be outside, Liv began photographing nature and hosting virtual art shows, selling her prints to raise money for charity. Liv’s fans – located all over the world, from her neighborhood in Michigan to France – have helped her raise over $2,000 in donations for local food banks and nonprofits.

• Joshua Runde of Pompano Beach, FL: This year, Joshua should have been competing in the 2020 VEX Robotics World Championship; instead, the seventh grader is using his engineering talents to give back. With the help of his robotics coach and the money from his own piggybank, Joshua has created 3D-printed face shields and donated hundreds of them to frontline workers from his hometown to the Florida Keys.

• Jahkil Jackson of Chicago, IL: Jahkil, now in the seventh grade, has been giving back to his community since he was eight years old and has already founded his own nonprofit. As the creator of “Project I AM,” Jahkil distributes “Blessing Bags” of essential toiletries to the homeless and senior centers in his neighborhood. Despite having asthma, the Chicago native has safely doubled down on his cause during COVID-19 and enlisted his family to help him deliver “Blessing Bags.”

• Brayden Pape of San Diego, CA: When eighth grader Brayden realized some of his classmates would miss meals because of school closures, he started collecting thousands of dollars in gift cards and donated groceries to supplement the meals his school has already started distributing to the community. After weeks of reaching out to as many local businesses as he could, Brayden has donated over $5,000 worth of food and gift cards to help support local San Diego community children.

14.  Shannon Blakely, vice president of marketing for Baskin-Robbins, said, “We’re happy to recognize these young philanthropists and their entrepreneurial spirit. Liv, Joshua, Jahkil and Brayden have been using their incredible talents to creatively and selflessly give back to those in need. Acknowledging these Pint-Sized Heroes is our way of saying ‘thank you’ to these amazing kids, inspiring us all to step up in our communities whether our contribution is big, small, or pint-sized.”

Company History

15.  Baskin-Robbins was founded in 1945 by Jewish brothers-in-law Burt Baskin and Irv Robbins from the merging of their respective ice cream parlors in Glendale, California. Robbins had worked in his father’s ice cream shop as a teen and ended up opening his own ice cream parlor after World War II. His shop had 21 flavors, which was a novel concept at the time. Robbins eventually convinced Baskin to combine their ice cream shops and the number of flavors they offered increased to 31. Since then, Baskin-Robbins has always been known for its rotation of 31 flavors.

16.  Within a few years, Baskin and Robbins had opened six stores and in 1948, they started franchising the concept. As Baskin-Robbins kept growing around the U.S., the company hired Carson-Roberts Advertising who recommended adoption of the number 31 as well as the pink (cherry) and brown (chocolate) polka dots and typeface that were reminiscent of the circus. This was Baskin-Robbins’ signature color scheme for several decades until its logo was updated in more recent years.

17.  In the 1970s, Baskin-Robbins opened its first international stores in Japan, Saudi Arabia, South Korea, and Australia. Around this same time, Baskin-Robbins was sold to J. Lyons and Co. which later merged with Allied Breweries. In the early 1990s, Allied Breweries became Allied Domecq, which owned Dunkin’ Brands, the parent company of both Baskin-Robbins and Dunkin’ Donuts (which is now just Dunkin’). In August 2012, Dunkin’ Brands became completely independent of the private equity firms.

18.  Many Baskin-Robbins and Dunkin’ shops are operated in co-branded stores. Today, Baskin-Robbins has shops in over 50 countries around the world.

Entrepreneur’s Franchise 500

19.  Baskin-Robbins ranked No. 13 on Entrepreneur’s 2020 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Baskin-Robbins franchise costs, based on Item 7 of the company’s 2020 FDD.

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

• Please click here for detailed information on Baskin-Robbins’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2020 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2017

• Outlets at the Start of the Year:  1,092
• Outlets at the End of the Year:  1,072
• Net Change:  -20

2018

• Outlets at the Start of the Year:  1,072
• Outlets at the End of the Year:  993
• Net Change:  -79

2019

• Outlets at the Start of the Year:  993
• Outlets at the End of the Year:  949
• Net Change:  -44

Company-Owned

2017

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

2018

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

2019

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

Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis

• Tables 1 and 2 and notes provide financial performance representations that are historical, and that are based on information from existing Baskin-Robbins Restaurants (exclusive of Combo Restaurants, Special Development Opportunity Restaurants, Baskin-Robbins Express, and Restaurants operating under Territorial Franchise Agreements) that have been open for business to the public for at least one year during a one-year measuring period from November 1, 2018 to October 31, 2019.

• Tables 3 to 5 and notes provide financial performance representations that are historical, and that are based on information from existing Combo Restaurants that have been open for business to the public for at least one year during a one-year measuring period from October 28, 2018 to October 26, 2019.

Part 1 – Sales Data (Tables 1, 3, and 4)

• The sales figures are compiled by using historical sales that are reported to Baskin-Robbins by franchisees. Baskin-Robbins has not audited or verified the reports.

• This sales data does not include sales tax.

• Sales in regions with a higher concentration of Restaurants that have been in operation for a substantial period of time tend to have higher sales than regions with a lower concentration of Restaurants that have been in operation for a lesser time period.

• Many of the Restaurants included in this data have been open and operating for several years. These franchisees have achieved their level of sales after spending many years building customer goodwill at a particular location.

• Your sales will be affected by your own operational ability, which may include your experience with managing a business, your capital and financing (including working capital), continual training of you and your employees, customer service orientation, product quality, your business plan, and the use of experts (for example, an accountant) to assist in your business plan.

• Your sales may also be negatively affected if you do not adhere to Baskin-Robbins’ standards and system, including proper equipment layout, design and construction criteria, customer queuing and flow, and local Restaurant marketing.

• Your sales may be affected by Restaurant location and site criteria, including traffic count and which side of the street your Restaurant is located, local household income, residential and/or daytime populations, ease of ingress and egress, seating, parking, the physical condition of your Restaurant, the size of your site, and the visibility of your exterior sign(s).

• Additionally, many of the Restaurants included in the sales figures are freestanding Restaurants or located at the end of a strip center, and if your Restaurant is not, your sales could be substantially lower than the figures in the chart.

• Individual locations may have layouts and seating capacities that vary from the typical location.

• Other factors that could have an effect upon your sales may include consumer preferences, competition (national and local), inflation, local construction and its impact on traffic patterns, and reports on the health effects of consuming food similar to that served in the Restaurants, as well as the impact of federal, state, and local government regulations.

• Your sales may be affected by consumer preferences for certain menu items over others, changes in the menu, and regional differences in products or product demand, including whether there are products not available to you or your region but sold in other regions. Menus are continually being revised, both adding and discontinuing products and product line extensions.

• Sales may be affected by fluctuations due to seasonality (particularly in colder climates), weather, and periodic marketing and advertising programs. Inclement weather may cause temporary Restaurant closings in some areas.

• The data below reflects historical sales. There is no assurance future sales will correspond to historical sales.

• If you own a Combo Restaurant, you should be aware that many Baskin-Robbins franchisees actively pursue cake sales opportunities. If you do not, your sales may be negatively affected. Additionally, seasonality and weather may significantly affect sales of ice cream and related products.

• Some individual Restaurants’ sales may include wholesale accounts and other distribution outlets, which may not be available to you. Not all of these opportunities have been successful for all participating franchisees.

Part 2 – COGS and Labor Data (Tables 2 and 5)

• “COGS” means the cost of goods sold, including food, beverages, and items served or associated with the food or beverage, such as cups, napkins, straws, bags, plastic utensils, and wrapping paper.

• COGS is stated as a percentage of gross sales excluding sales tax and discounts.

• The cost figures from franchised Restaurants are compiled from individual Restaurants by using cost data that are reported to Baskin-Robbins by franchisees for the monthly periods November 1, 2018 through October 31, 2019. Baskin-Robbins has not audited or verified the reports, nor have franchisees confirmed that the reports are prepared in accordance with generally accepted accounting principles or in accordance with Baskin-Robbins’ definition of COGS.

• Your costs will be affected by your own operational ability, which may include your experience with managing quick service restaurant operations, your experience building and managing an organization, continual training of you and your staff, your business plan, and using experts (e.g., an accountant) to assist in your business plan. Your costs may be negatively affected by not adhering to Baskin-Robbins’ standards and system.

• Many of the Restaurants included in this data have been open and operating for several years. Those franchises may have lower cost percentages due to years of experience managing costs. For new franchisees, COGS percentages may initially exceed those of experienced operators.

• There is no assurance that future costs will correspond to historical costs because of factors such as inflation, changes in menu, and other variables.

• Factors affecting your COGS include, but are not limited to, the price of raw materials; your ability to manage and implement proper controls of waste, ruin, loss, theft, and the portion sizes served to the public; regional differences; temporary shortages; seasonal and weather fluctuations; and fluctuations due to periodic marketing and advertising programs. Additionally, freight charges may be higher in some areas. If the cost of gasoline increases in the U.S., the cost of freight will rise as well.

• The COGS data reflects average Restaurant aggregate costs. Different food and beverage items have different cost percentages. Customer demand for products varies among Restaurants and regions and if your Restaurant sells a high percentage of high cost items, your food cost percentage will be higher than if you have a lower percentage of higher cost items.

• Some franchisees purchase finished products manufactured at another location. The cost of this finished product will vary depending upon the number of Restaurants being serviced by the manufacturing location and other factors. These franchisees may pay more for food costs but may pay less for other items such as labor, equipment, distribution, and rent.

• COGS may be particularly affected by the fluctuations in the price of coffee and certain other items and ingredients.

• Restaurants with lower sales may have higher COGS percentages because of reduced efficiencies and economies of scale, and more waste.

• The retail sales price that you establish will also affect the COGS percentages.

• If you are in a geographic area with fewer Restaurants, you may have higher COGS as a percentage of sales due to less distribution efficiencies.

• “Labor” means crew, management, training, payroll tax, and workers’ compensation.

• Labor is stated as a percentage of gross sales excluding sales tax and discounts.

• The cost figures from franchised Restaurants are compiled from individual Restaurants by using cost data that are reported to Baskin-Robbins by franchisees for the monthly periods November 1, 2018 through October 31, 2019.

• Baskin-Robbins has not audited or verified the reports, nor have franchisees confirmed that the reports are prepared in accordance with generally accepted accounting principles or in accordance with Baskin-Robbins’ definition of Labor.

• Your costs will be affected by your own operational ability, which may include your experience with managing quick service restaurant operations, your experience building and managing an organization, continual training of you and your staff, your business plan, and using experts (e.g., an accountant) to assist in your business plan. Your costs may be negatively affected by not adhering to Baskin-Robbins’ standards and system.

• Many of the Restaurants included in this data have been open and operating for several years. Those franchisees may have lower cost percentages due to years of experience managing costs. For new franchisees, labor cost percentages may initially exceed those of experienced operators.

• There is no assurance that future costs will correspond to historical costs because of factors such as inflation, changes in menu, and other variables.

• Factors affecting your labor include, among other things, the local labor market and any applicable federal or state minimum wage law; pending healthcare legislation, employee turnover, and your operational abilities, including your ability to train and retain employees; your compensation that may be included in labor, which varies among franchisees; menu, product mix, Restaurant layout, your salary and benefits programs, and scheduling. Restaurants must be staffed in accordance with Baskin-Robbins’ standards.

• Restaurants with lower sales may have higher labor cost percentages because of reduced efficiencies and economies of scale, and more waste.

• The retail sales price that you establish will also affect the labor percentages.

• The “Total Number of Restaurants/Combo Restaurants in Sample” in Tables 2 and 5 is a subset of the “Total Number of Restaurants/Combo Restaurants in Sample” in Tables 1, 3, and 4 because not all Restaurants or Combo Restaurants reported COGS and Labor data for the twelve month reporting period.

• All of the Restaurants or Combo Restaurants in Tables 2 and 5 reported at least one month of COGS and Labor data for the twelve month reporting period.

Table 1 – Continental U.S. Baskin-Robbins Single Brand Restaurants, Average Restaurant Sales (for the Period November 1, 2018 to October 31, 2019)

Total

Total Continental U.S.