In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Crumbl Cookies franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Crumbl Cookies 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 Crumbl Cookies franchise, based on Items 5 and 6 of the company’s 2021 FDD
- Section IV – Number of franchised and company-owned Crumbl Cookies 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 Crumbl Cookies’ financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:
- 2020 average, median, highest, and lowest total revenue, gross profit, and net profit for the 53 franchised Crumbl Cookies locations that existed at the beginning of 2020 and operated continuously through 2020
- 2020 vs. 2019 average total revenue, gross profit, and net profit, by month, for the 14 franchised Crumbl Cookies locations that existed at the beginning of 2019 and operated continuously through 2020
Section I – Background Information
12 Things You Need to Know About the Crumbl Cookies Franchise
Opened More Than 180 Units Since the Pandemic Began
1. In late September 2021, Crumbl Cookies reported that, in just four short years, it had 254 stores open in more than 30 states. More than 180 units have come to market since the pandemic began, and eight to 10 are opening per week. Co-founder and CEO Jason McGowan said there is no specific target in terms of unit count. McGowan anticipates Crumbl will have more than 300 outlets by the end of 2021, and anywhere from 600-750 by the end of 2022.
2. From the beginning, the company backed its growth trajectory with a heavy investment in technology. When a store onboards, it has a list of success metrics to measure itself by, including cook times, availability, delivery times, reviews, customer service, cleanliness, and more. To gain further feedback, Crumbl – through its custom-built mobile app – sends a text message to customers that asks about their experience and gives them an opportunity to upload a photo of their order.
3. The chain takes that data and puts it inside an application for all of its franchise partners. Through these metrics, operators can see how they are performing compared to others, and share good practices across the system. From the company perspective, it provides a detailed scope of which stores are succeeding and those that aren’t, and options for a targeted solution. On a weekly basis, the brand pores over the information to determine each location’s path to success, and how the model can be fixed or adjusted.
4. It typically takes eight to nine months to open a unit, which ranges from 1,400 to 1,600 square feet, according to the CEO. Much of that timeframe is due to permitting hurdles with local government. If that were stripped away, McGowan says the process would be as short as three months.
5. No store has failed in four years. The brand has sold territory only after pre-plotting the entire U.S. map and selecting the best markets and hotspots. By the end of 2021, Crumbl will have sold 1,000 franchises, and this time next year, the chain will likely have reached the 500-unit mark. Currently, Crumbl is the second-largest cookie brand in the U.S. behind Great American Cookies, which has more than 360 outlets.
Uses Social Media to Fuel Growth
6. Crumbl began with one perfected chocolate chip cookie and has since exploded to more than 170 flavors, including themed lineups, like breakfast cookies. The company rotates its cookie lineup every week as part of a schedule that’s planned six months out based on previous sales, how the cookies look in a box, flavor profiles, cost, and other proprietary measures. All cookies are baked fresh and onsite.
7. The variety and innovation has translated well to social media, where Crumbl has built a highly engaged audience. The chain created its TikTok in February 2021 and gained 2 million followers in six weeks. As of mid-September, the account has nearly 26 million likes. Crumbl found that customers enjoyed sharing reviews of certain cookies on the social media platform, a trend that gained a large following. The TikTok trend #crumblreview began organically in March and has since received 180 million views.
8. Crumbl also implemented what it calls “hype cycle marketing,” in which it announces the weekly cookie lineup across its social media channels through a big reveal event every Sunday. The unveilings gain more than 1 million views on Instagram and 1.5 million views on TikTok per week.
Company History
9. Crumbl Cookies was founded in 2017 by cousins Jason McGowan and Sawyer Hemsley in Logan, Utah. At the time, Hemsley was still in college and Crumbl started out as a side business for him and McGowan. Neither of them had experience in baking but they set out to develop the best chocolate chip cookie recipe. After lots of recipe testing, McGowan and Hemsley developed what they believe is the best chocolate chip cookie ever.
10. Initially, Crumbl only sold the chocolate chip cookies through local takeout and delivery. When demand for the cookies grew, Crumbl began offering nationwide shipping. As Crumbl grew, Hemsley and McGowan expanded the menu and introduced the idea of a rotating menu. Eventually, Crumbl settled on a four flavor weekly rotation in 2018.
11. That same year, Crumbl started franchising. Crumbl Cookies has grown quickly and there are now locations across 36 states and counting.
Entrepreneur’s Franchise 500
12. Crumbl Cookies did not rank on Entrepreneur’s 2021 Franchise 500 list.
Section II – Estimated Costs
- Detailed estimates of Crumbl Cookies 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 Crumbl Cookies’ 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: 0
- Outlets at the End of the Year: 15
- Net Change: +15
2019
- Outlets at the Start of the Year: 15
- Outlets at the End of the Year: 54
- Net Change: +39
2020
- Outlets at the Start of the Year: 54
- Outlets at the End of the Year: 138
- Net Change: +84
Company-Owned
2018
- Outlets at the Start of the Year: 1
- Outlets at the End of the Year: 1
- Net Change: 0
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: 1
- Net Change: 0
Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis
Part 1 – Average, High, Median, and Low Total Revenue, Gross Profit, and Net Profit for Franchised Locations That Operated Continuously Through 2020
- The representation made below is an historic financial performance representation of a subset of Crumbl locations that operated continuously through all of 2020. The total number of franchised outlets that existed at the beginning of 2020 and operated continuously through 2020 was 53, which equates to approximately 37.59% of the total franchised locations that were operating at the end of 2020.
- The following data represents the average, high, median, and low 2020 calendar year financial data for such 53 Crumbl locations. The first chart shows the Total Revenue, Gross Profit, Gross Margin, Net Profit, and Net Margin (defined below) for the 2020 calendar year, and the second chart shows such metrics distilled down to the average monthly (defined below) figures compiled from such locations.
- These locations operated in several states across the United States. These locations serve the same type of goods that you will be serving. These locations are each within territories of approximately 40,000 to 100,000 people. Your location will likely face different competition, costs, customer preferences, population numbers, and other factors.
A. 2020 Calendar Year
Total Revenue
- Average: $1,274,047 (100.0%)
- High: $2,336,578
- Median: $1,176,995
- Low: $378,990
Total Gross Profit
- Average: $626,772 (49.2%)
- High: $1,231,107
- Median: $611,729
- Low: $168,901
Total Net Profit
- Average: $319,958 (25.1%)
- High: $761,123
- Median: $302,075
- Low: $41,100
B. Average Month
Total Revenue
- Average: $106,170 (100.0%)
- High: $194,714
- Median: $98,082
- Low: $31,582
Total Gross Profit
- Average: $52,230 (49.2%)
- High: $102,592
- Median: $50,977
- Low: $14,075
Total Net Profit
- Average: $26,663 (25.1%)
- High: $63,426
- Median: $25,172
- Low: $3,425
- Out of the pool of such 53 Crumbl locations that operated continuously for the 2020 calendar year, (a) 24 locations met or surpassed the average Total Revenue, (b) 25 locations met or surpassed the average Gross Profit, and (c) 24 locations met or surpassed the average Net Profit.
- The data for the Gross Profit and Net Profit above are based on the Total Revenue for a particular column. If there are an even number of stores in the data set, the Median is the average of the two median values of Total Revenue.
- The Net Profit may include operating costs that may not be applicable for all users of these statements. These costs include officer wages, guaranteed payments, corporate benefits and perks, and other indirect costs.
- “Average Month” or “Average Monthly” refers to the respective average monthly Total Revenue, Gross Profit, Gross Margin, Net Profit, and Net Margin of all 53 Crumbl locations that operated continuously for the 2020 calendar year.
- “Gross Margin” means Gross Profit divided by Total Revenue.
- “Gross Profit” means Gross Sales minus cost of goods sold, including food goods, labor, and payroll taxes.
- “Net Profit” means Gross Profit minus all ordinary and recurring operating expenses, interest, income taxes, depreciation, and amortization.
- “Net Margin” means Net Profit divided by Total Revenue.
- “Total Revenue” means total revenue derived from the sale of goods or services less sales tax, discounts, allowances, and returns.
Part 2 – 2020 vs. 2019 Average Total Revenue, Gross Profit, and Net Profit by Month
- In light of the worldwide COVID-19 pandemic, Crumbl has recommended or required changes to the system, such as social distancing; curbside pickup, allowing only one customer in the store at a time; reducing store hours; greater sanitization procedures; adherence to governmental orders or recommended closures or self-quarantine procedures; and other modifications to its operations. Crumbl may change other aspects of its system in order to adapt to the longer-term impacts of the pandemic.
- Of all currently-operating Crumbl franchise locations, certain individual locations have temporarily closed due to the pandemic or government-mandated or recommended closure and have been negatively affected thereby, but none of the 14 Crumbl locations that operated continuously for the 2019 calendar year have permanently closed, nor had significant decreases in monthly revenue as measured from January 2019 through July 2019, as compared to the same period from 2020.
- Note that the total number of franchised outlets that existed at the beginning of 2019 and operated continuously through 2019 was 14, which equated to approximately 25.93% of the total franchised locations that were operating at the end of 2019. These locations operated in the following states: Utah, Nevada, and Idaho. This comparison is demonstrated below.
January
- 2020 Average Total Revenue: $101,176
- 2020 Average Gross Profit: $46,704
- 2020 Average Net Profit: $21,523
- 2019 Average Total Revenue: $82,325
- 2019 Average Gross Profit: $42,449
- 2019 Average Net Profit: $18,967
February
- 2020 Average Total Revenue: $111,763
- 2020 Average Gross Profit: $53,459
- 2020 Average Net Profit: $30,633
- 2019 Average Total Revenue: $102,843
- 2019 Average Gross Profit: $52,972
- 2019 Average Net Profit: $29,600
March
- 2020 Average Total Revenue: $116,859
- 2020 Average Gross Profit: $58,324
- 2020 Average Net Profit: $34,870
- 2019 Average Total Revenue: $115,382
- 2019 Average Gross Profit: $54,678
- 2019 Average Net Profit: $26,924
April
- 2020 Average Total Revenue: $159,937
- 2020 Average Gross Profit: $77,299
- 2020 Average Net Profit: $48,328
- 2019 Average Total Revenue: $112,691
- 2019 Average Gross Profit: $57,440
- 2019 Average Net Profit: $30,199
May
- 2020 Average Total Revenue: $163,860
- 2020 Average Gross Profit: $75,511
- 2020 Average Net Profit: $36,221
- 2019 Average Total Revenue: $137,802
- 2019 Average Gross Profit: $66,617
- 2019 Average Net Profit: $35,017
June
- 2020 Average Total Revenue: $139,296
- 2020 Average Gross Profit: $68,207
- 2020 Average Net Profit: $36,678
- 2019 Average Total Revenue: $111,992
- 2019 Average Gross Profit: $54,628
- 2019 Average Net Profit: $27,500
July
- 2020 Average Total Revenue: $136,626
- 2020 Average Gross Profit: $69,074
- 2020 Average Net Profit: $33,886
- 2019 Average Total Revenue: $107,159
- 2019 Average Gross Profit: $46,819
- 2019 Average Net Profit: $19,474
August
- 2020 Average Total Revenue: $125,469
- 2020 Average Gross Profit: $51,990
- 2020 Average Net Profit: $22,822
- 2019 Average Total Revenue: $118,704
- 2019 Average Gross Profit: $56,775
- 2019 Average Net Profit: $27,609
September
- 2020 Average Total Revenue: $126,580
- 2020 Average Gross Profit: $66,557
- 2020 Average Net Profit: $37,267
- 2019 Average Total Revenue: $113,952
- 2019 Average Gross Profit: $53,319
- 2019 Average Net Profit: $25,516
October
- 2020 Average Total Revenue: $126,148
- 2020 Average Gross Profit: $61,644
- 2020 Average Net Profit: $31,923
- 2019 Average Total Revenue: $119,670
- 2019 Average Gross Profit: $56,103
- 2019 Average Net Profit: $22,187
November
- 2020 Average Total Revenue: $108,830
- 2020 Average Gross Profit: $47,952
- 2020 Average Net Profit: $22,703
- 2019 Average Total Revenue: $96,142
- 2019 Average Gross Profit: $42,681
- 2019 Average Net Profit: $19,381
December
- 2020 Average Total Revenue: $130,858
- 2020 Average Gross Profit: $58,604
- 2020 Average Net Profit: $27,247
- 2019 Average Total Revenue: $103,303
- 2019 Average Gross Profit: $47,700
- 2019 Average Net Profit: $17,636
2020 Calendar Year
- 2020 Average Total Revenue: $1,547,402 (100.0%)
- 2020 Average Gross Profit: $735,325 (47.5%)
- 2020 Average Net Profit: $384,101 (24.8%)
- 2019 Average Total Revenue: $1,321,965 (100.0%)
- 2019 Average Gross Profit: $632,181 (47.8%)
- 2019 Average Net Profit: $300,010 (22.7%)
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