Remember when frozen yogurt was all the rage in the 70s and 80s? Well, it’s back with more than a dozen frozen yogurt shops opening in NH since 2012.
While most came during an industry growth spurt in 2012, local shops report strong business. Frozen yogurt is mostly a franchise industry, with more than $2 billion in annual revenue and more than a 1,000 individual stores nationwide, according to IBISWorld market research and entrepreneur.com. Of the 2014 Franchise 500 list from entrepreneur.com there are 12 frozen yogurt franchises. Two frozen yogurt franchises were in the top 10 new franchises for 2012. Start-up costs for a yogurt franchise range from $87,000 to $360,000, which is in line with many other franchises. In comparison, the lowest cost franchises, like H&R Block, require $31,000 while McDonalds’ start-up costs approach $1 million, according to entrepreneur.com.
The latest trend in frozen yogurt shops is self-serve, where patrons mix and match flavors and choose toppings from fruit to chocolate and candy. Those toppings are the money maker, as franchises tend to charge by weight.
Not all frozen yogurt shops are franchises. In fact, one Granite State independent finding success is Yolo Frozen Yogurt in Keene. Chris Georgiadis started the business in July 2012 after developing his own recipe for frozen yogurt. Georgiadis took out a loan to get going and says he is ahead of schedule paying it back.
During the summer, Yolo gets 300 to 800 customers a day and employs six to nine part-time. During the off season, he cuts back to three. At Yolo, the staff makes the frozen yogurt for the customers. Georgiadis chose to bypass the self-serve route in order to have more flexibility. In addition to frozen yogurt, he also offers smoothies, milkshakes and cappuccino. He will soon be adding dessert crepes. “I’m always looking to add things to the menu to help bring in customers in the winter,” he says. Georgiadis can make 48 different flavors and is still introducing new ones. The original (plain yogurt) and Nutella are the most popular flavors.
Georgiadis decided against the franchise route both for flexibility and finances. If he had franchised, he could not have added smoothies or crepes if the franchise didn’t offer those, and he would owe the franchise a percentage of sales, something he didn’t want to do.
Others, though, are opting to buy into the froyo franchises in droves. Orange Leaf ranked 127 on the Entrepreneur Top 500 list and has more than 350 frozen yogurt locations throughout the United States, 10 of which are in NH. Hem Vora is the owner of the Epping and Salem shops. “It’s here to last. It’s what everybody’s doing,” says Vora who saved his money to get a loan. “I didn’t want to work in an office nine to five. I did that for four years. I didn’t want to for another 25 years.” After being open for a year, Vora expects to pay off his loans in two to three years. Vora employs 10 part-time students during the summer and six to seven through the winter per store.
While franchising can be successful, Jeff Johnson, founder of the Franchise Research Institute in Nebraska, says frozen yogurt franchises have likely passed their peak. The challenge, he says, is attracting enough customers in the colder months to keep up with lease and other payments. “We’ve seen this before. Remember TCBY?” Johnson says, adding that a food franchise in general is tough as rent is expensive for a high visibility strip mall with good parking. And those closures have begun: A Zinga! frozen yogurt franchise on North Main Street in Rochester next to a pizza chain closed recently after opening in late 2012.
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