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Submit ReviewThinking about starting a frozen yogurt (AKA: froyo) business in the coming year, but aren't sure if it's right choice? This is the podcast episode for you. When you crunch the numbers into a spreadsheet selling frozen yogurt can be a very attractive business model. Low product cost, minimal staffing requirements, and national consumer demand [...]
The post Things to Consider Before Opening a Frozen Yogurt Business in 2020 appeared first on Food Truck Empire.
Thinking about starting a frozen yogurt (AKA: froyo) business in the coming year, but aren’t sure if it’s right choice? This is the podcast episode for you.
When you crunch the numbers into a spreadsheet selling frozen yogurt can be a very attractive business model. Low product cost, minimal staffing requirements, and national consumer demand for the product has aided growth. But is this dessert market oversaturated or a fad past its prime?
Today, we outline the pros and cons of the business model, the steps you’ll need to take to differentiate the product and give you a no BS instruction to approach the opportunity thank to today’s guest Evan Waldt of Slices Concession.
The initial wave of popularity for soft-serve frozen yogurt began back in the 1980s with TCBY. While the dessert never disappeared it didn’t begin a return to popularity until 2006 – 2013 when there was a massive resurgence of interest in the product. Part of this was due to innovative toppings being served with the treat.
Fast forward to today and there have been a lot of closings over the past 5 years. Many of the closings were the result of markets being over saturated or absentee ownership situations that resulted in poorly managed stores. But of the shops that remain open as of 2020, many are doing well financially.
Yogurt shops that stayed in business share similar characteristics according to Waldt. If you’re still in the consideration phase, think about ways you could build the four competitive advantages below into the business.
At the end of the day soft serve remains a great concept. It’s an affordable treat that families continue to enjoy. But this is not a set it and forget it business. You must be willing to put in the work and able to adapt with the market.
Here are some of the typical costs associated with starting a yogurt shop. Many of these are variable costs depending on the location of your business like labor and rent. For states like California you can expect the startup cost to be more expensive than middle America. However, the opportunity in these areas can also be higher.
All In Startup Cost: At the end of the day you can expect to invest $250,000 – $750,000 to open the doors to a frozen yogurt shop.
The profitability of the frozen dessert business remains strong… Mainly because the core product cost is low. Whether you decide to go the self-serve route and charge by weight or simply have a flat rate, you’ll can make a substantial profit.
Keep in mind that all frozen yogurt businesses will have a different profitability based on a variety of factors like location, product quality, management, and brand. With that being said here are a few examples that help demonstrate revenue potential:
As Evan points out during the interview, although the frozen yogurt is lucrative ongoing maintenance of machines is essential to maintaining high profitability.
If machines are not cared for and properly cleaned, the mix won’t be as efficient and food cost will rise. Simple ongoing care will also reduce the number of times you need to call a repair man.
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Southwest Traders Show Product Show – Show put on by the largest frozen dessert supplier in the West. This is an annual show worth attending if you’re in the industry.
Slices Concession – Big thanks to Evan Waldt for sharing his industry knowledge.
The International Frozen Yogurt Association (IFYA) – Source of information and support for individuals considering this business. Also, check out their classified section to find frozen yogurt businesses that are listed for sale.
In order to have a successful frozen yogurt shop, you’ll want to offer a unique experience and differentiated product. Here are some specific ideas you can implement in your business that are described in greater detail by Evan Waldt in today’s podcast:
These are the top 5 frozen yogurt chains by market share according to Guidant Financial. Evan Waldt suggests that if you’ve seen a lot of mom-and-pop frozen dessert establishments go out of business in your area it can be a good idea to look into a more established franchise with brand recognition. Here are a few of the most popular.
Other popular froyo chains include the following:
Before embarking on any type of business, you’ll want to complete some due diligence. Part of this process is to conduct in-depth market research in your market. This market research data should be included in the business plan for the store.
Google Maps and Search: Go to Google and make a list of the number of dessert shops that are in your area. Don’t just compare frozen yogurt shops, but other things that compete for the dessert or snack dollar. Take into account places like Dairy Queen, boba tea places, and Baskin Robins.
Visit Competitors During Peak Times: Spend time getting to know your competition. Visit these establishments at peak times like Friday night to see how many customers are at the store. Record your findings in the business plan to review later. You’ll also want to take note about the things you like and dislike about each business for later review.
Poll Potential Customers: Ask people in your area whether or not they would visit a dessert shop like the one you plan to open. Questions like this can be asked in person or online in forums or social media groups. People love providing their opinions and you’ll get a good sense if there’s any interest locally.
Here are some of the most popular flavors of frozen yogurt on the market. While innovation is key for longterm success in this business, make sure to offer at least a few of timeless flavors as well.
Keep tabs of new topping trends by monitoring social media, food television, competitors, and by attending industry events. Traveling internationally and domestically can also be a smart strategy as trends usually start on the coasts and are gradually discovered in other markets.
When you’re determining whether or not any type of business is the right fit, it’s important to be honest with your interests and skills. Here are a handful of questions you can ask yourself as a starting point to determine whether or not this is the right choice for your situation.
The most important step you can take is to be honest with yourself when answering these questions. A frozen yogurts shop is a viable and legit business opportunity that you can make a good living as an owner. But without a passion for the operations of the business, it’s going to be tough sledding to be a success.
The post Things to Consider Before Opening a Frozen Yogurt Business in 2020 appeared first on Food Truck Empire.
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