How Much Does a Cinnabon Franchise Make (Average Revenues/Profits)?

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

Section I – Background information on the Cinnabon franchise opportunity, including relevant news updates

Section II – Estimated initial investment for a Cinnabon franchise, based on Item 7 of the company’s 2021 FDD

Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Cinnabon franchise, based on Items 5 and 6 of the company’s 2021 FDD

Section IV – Number of franchised and company-owned Cinnabon outlets at the start of the year and the end of the year for 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD

Section V – Presentation and analysis of Cinnabon’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

fiscal year 2019 and fiscal year 2020 average, median, lowest, and highest net sales and weeks open for enclosed mall Cinnabon franchises that were active franchises throughout the applicable fiscal year (an “active franchise” is a franchise that has opened a Bakery and has not permanently closed such Bakery)

Section I – Background Information

18 Things You Need to Know About the Cinnabon Franchise

Launches New Mobile App, Rewards Program, Online Ordering

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1. In late September 2021, Cinnabon announced the launch of the first-ever Cinnabon app and Cinnabon Rewards program, along with online ordering with delivery – giving fans easy access to the irresistible treats they know and love, right at their fingertips.

2. The new Cinnabon app allows users to order their Cinnabon favorites with just the touch of a button. Once ordered, fans can receive their ooey gooey cinnamon rolls, refreshing beverages, or delicious baked goods via contactless delivery straight to their door – or pick up at a bakery without waiting in line. Contactless delivery and skip-the-line bakery pickup options are also now available for Cinnabon.com orders on desktops, laptops, or tablets.

3. Kendall Ware, chief brand officer of Cinnabon, said, “We’ve already been extending our reach beyond traditional mall bakeries through food delivery and e-commerce partnerships, streetside bakeries and grocery products. The new Cinnabon app, Cinnabon Rewards program and online ordering is just the latest way we’re meeting fans where they are – making their favorite treats more accessible than ever.”

4. The Cinnabon app also includes access to the new Cinnabon Rewards program. Cinnabon Rewards offers exclusive benefits that allow members to earn points toward delectable rewards. With Cinnabon Rewards, fans can:

Earn 10 points for each dollar spent, excluding catering orders and gift card purchases. Once members earn 250 points, they can redeem for a Classic Roll, MiniBon, or BonBites;
Enjoy surprise and delight offers just for being a loyal customer.

5. Fans who download the app and sign up for Cinnabon Rewards will automatically be eligible to redeem an offer for a 4-count of BonBites, the bite-sized version of Cinnabon’s craveable cinnamon roll treat. Members are also eligible to receive a small Cold Brew on their birthday. Rewards are redeemable at participating bakery locations.

6. You can download the new Cinnabon app via the App Store or Google Play, or register for Rewards and order online via Cinnabon.com.

Parent Company Reorganizes Into Two Categories, Bolsters Leadership Team

7. In early September 2020, Focus Brands, parent company of Cinnabon, Auntie Anne’s, Carvel, Jamba, McAlister’s Deli, Moe’s Southwest Grill, and Schlotzsky’s, announced several leadership promotions and hires. Jim Holthouser, CEO of Focus Brands, said, “As we continue to move our company and brands into the future, we must invest in key talent necessary to propel our brands forward and enhance services provided to our guests and franchisees. I’m thrilled we have such highly regarded tenured industry executives within our four walls and that we continue to attract exceptional leaders to grow our teams.”

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8. To power enhanced capabilities, Focus Brands organized its brands into categories. In two newly-created roles, Kristen Hartman was promoted to president, Specialty Brands (Auntie Anne’s, Carvel, Cinnabon, and Jamba), and Erik Hess was promoted to president, Restaurant Brands (McAlister’s Deli, Moe’s Southwest Grill, Schlotzsky’s).

9. Hartman, president of Cinnabon and Carvel at the time of the announcement, joined Focus in 2012. With more than 20 years in the quick-service restaurant industry, she has held several prominent leadership roles within Focus spanning marketing strategy, innovation, consumer insights, concept development, and licensing for the entire Focus portfolio of brands.

10. Hess, former president of Moe’s, came to the company in 2019 with more than 25 years of experience in the food and beverage industry, including key executive roles at McDonald’s domestically and internationally. Over the course of his career, he has led menu management and new product development, strategy and insights, customer experience innovation, and restaurant development.

Focuses on Non-Traditional Venues to Aid Pandemic Sales Recovery

11. In early October 2021, Cinnabon announced new delivery and e-commerce sales channels in a bid to expand its footprint beyond its traditional shopping center locations. The Atlanta-based coffee and bakery chain also launched an app and rewards program in September 2021, as part of efforts to retain customers and adapt to a new digitally focused trading environment following the pandemic.

12. According to Kendall Ware, chief brand officer of Cinnabon, “It’s a huge focus point for us to take Cinnabon street side. We know we’re strong in malls and there are plenty more malls we can get into and continue to grow in, but we want to grow in non-traditional venues, food trucks, ghost kitchens, and whatever we can get our hands on. We want to open the doors to experience the brand in a way that has not been done before.”

13. Cinnabon has sought to embrace technology to mitigate disruption to store sales during pandemic trading restrictions. It follows similar moves by many US food and beverage brands to target new customers through delivery, drive-thru, pick-up formats, and subscription services over the last 12 months.

Company History

14. Cinnabon was founded in 1985 by Rich Komen and his son Greg Komen in Seattle, Washington. Rich Komen was the CEO and majority owner of Seattle-based Restaurants Unlimited and was looking for a new food concept to develop. Komen settled on cinnamon rolls when he saw a small stand selling the treats that had a long line. Additionally, the low start-up costs of starting a cinnamon roll stand business was appealing.

15. Komen wanted to develop the perfect cinnamon roll and enlisted the help of Jerilyn Brusseau, a baker from Montana who had been featured in The New York Times. After a lot of trial and error, Brusseau and Greg Komen came up with a cinnamon roll recipe that Rich Komen loved.

16. From the beginning, Cinnabon was created to be a national franchise. Since the first location was a hit, more stands were opened in malls across the United States. Over the next few decades, Cinnabon continued to grow and locations were opened in airports, gas stations, universities, amusement parks, casinos, and other non-traditional locations.

17. In 1998, Cinnabon was acquired by AFC Enterprises, Inc. for $65 million. In 2004, Cinnabon was sold to Focus Brands, Inc., which is owned by the Atlanta-based private equity firm Roark Capital Group. Today, Cinnabon has grown into one of the most recognized food brands in the United States and has locations in more than 48 countries.

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18. Cinnabon ranked No. 35 on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

Detailed estimates of Cinnabon franchise costs, based on Item 7 of the company’s 2021 FDD.

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

Detailed information on Cinnabon’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2021 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2018

Outlets at the Start of the Year: 880
Outlets at the End of the Year: 923
Net Change: +43

2019

Outlets at the Start of the Year: 923
Outlets at the End of the Year: 937
Net Change: +14

2020

Outlets at the Start of the Year: 937
Outlets at the End of the Year: 940
Net Change: +3

Company-Owned

2018

Outlets at the Start of the Year: 2
Outlets at the End of the Year: 1
Net Change: -1

2019

Outlets at the Start of the Year: 1
Outlets at the End of the Year: 1
Net Change: 0

2020

Outlets at the Start of the Year: 1
Outlets at the End of the Year: 2
Net Change: +1

Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis

This Item 19 presents information about the financial performance of Enclosed Mall Franchises during the fiscal year ended December 29, 2019 (“Fiscal Year 2019”) and the fiscal year ended December 27, 2020 (“Fiscal Year 2020”).

Cinnabon has not made permanent, material changes to its concept as a result of the COVID-19 pandemic.

An “Enclosed Mall Franchise” is a franchised Bakery that is located in an enclosed mall, excluding co-branded Bakeries.

This Item 19 includes data related to Enclosed Mall Franchises that were active franchises throughout the applicable fiscal year. An “active franchise” is a franchise that has opened a Bakery and has not permanently closed such Bakery.

Thus, this Item 19 includes data from Bakeries that were temporarily closed for periods of the applicable fiscal year for any reason, which could include, for example, temporary closures for renovations, repairs, or personal reasons, as well as temporary closures due to the COVID-19 pandemic and related government restrictions on the operation of restaurants or host facilities.

This Item 19 does not include data related to:

(i) franchised Bakeries that are located in Traditional Locations (except Enclosed Mall Franchises) or Non-Traditional Locations;
(ii) Express Bakeries;
(iii) co-branded Bakeries;
(iv) affiliate-owned Bakeries; and
(v) Bakeries that were not active franchises throughout the applicable fiscal year.

The financial performance of Express Bakeries, co-branded Bakeries, or Bakeries located in other venues can vary significantly from the performance of Enclosed Mall Franchises.

In this Item 19, Cinnabon has presented information regarding Net Sales. “Net Sales” includes all revenues generated by a Shop or conducted from or with respect to a Shop, whether the sales are evidenced by cash, check, credit, charge, account, barter, or exchange, but does not include:

(a) the initial sales or reloading of gift cards;
(b) discounts;
(c) the sale of food or merchandise for which refunds have been made in good faith to customers;
(d) the discounted portion of employee meals;
(e) sales, meals, use, or excise tax imposed by a governmental authority directly on sales and collected from customers, provided that the amount for the tax is added to the selling price or absorbed therein and is actually paid by you to a governmental authority;
(f) the sale of equipment used in the operation of the Shop; or
(g) tips.

In addition, Cinnabon has presented the average, median, low, and high number of weeks that the Bakeries within each data set were open during each quarter or fiscal year. For a Bakery to be counted as open during a week, it needed to report more than $0 in Net Sales during such week.

In addition, Cinnabon has included a column showing the number of Bakeries that were open for all of the weeks in the applicable quarter or fiscal year.

Average Net Sales by Quarter for Enclosed Mall Franchises for Fiscal Year 2019 and Fiscal Year 2020

Fiscal Year 2020 – Enclosed Mall Franchises (190 Locations)

Quarter 1

Average Net Sales: $112,998
Percent Change from 2019: -17%
Number and Percent at or Above Average Net Sales: 80 / 42%
Median Net Sales: $105,129
Lowest Net Sales: $22,166
Highest Net Sales: $414,740

Average Weeks Open: 12.12
Median Weeks Open: 12
Lowest Weeks Open: 9
Highest Weeks Open: 13
Number Open All Weeks: 28

Quarter 2

Average Net Sales: $28,079
Percent Change from 2019: -77%
Number and Percent at or Above Average Net Sales: 81 / 43%
Median Net Sales: $21,367
Lowest Net Sales: $0
Highest Net Sales: $115,480

Average Weeks Open: 3.92
Median Weeks Open: 4
Lowest Weeks Open: 0
Highest Weeks Open: 13
Number Open All Weeks: 1

Quarter 3

Average Net Sales: $86,469
Percent Change from 2019: -31%
Number and Percent at or Above Average Net Sales: 82 / 43%
Median Net Sales: $78,561
Lowest Net Sales: $0
Highest Net Sales: $404,606

Average Weeks Open: 10.37
Median Weeks Open: 13
Lowest Weeks Open: 0
Highest Weeks Open: 13
Number Open All Weeks: 121

Quarter 4

Average Net Sales: $144,705
Percent Change from 2019: -10%
Number and Percent at or Above Average Net Sales: 86 / 45%
Median Net Sales: $132,159
Lowest Net Sales: $0
Highest Net Sales: $498,078

Average Weeks Open: 12.45
Median Weeks Open: 13
Lowest Weeks Open: 0
Highest Weeks Open: 13
Number Open All Weeks: 169

Full Year

Average Net Sales: $372,252
Percent Change from 2019: -32%
Number and Percent at or Above Average Net Sales: 89 / 47%
Median Net Sales: $347,303
Lowest Net Sales: $43,912
Highest Net Sales: $1,362,947

Average Weeks Open: 38.85
Median Weeks Open: 40
Lowest Weeks Open: 12
Highest Weeks Open: 52
Number Open All Weeks: 1

Fiscal Year 2019 – Enclosed Mall Franchises (184 Locations)