Whether you’re just getting started or have an established business, the key to making more money with a frozen yogurt business lies in increasing sales revenues and decreasing costs. While this might sound like familiar advice, much of what it takes to achieve these goals requires industry-specific information.
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Independent Business Versus a Franchise
A franchise costs much more to open and run than an independent business. For example, Zinga Frozen Yogurt charges a franchise fee of $25,000, a 6-percent annual royalty and a 1-percent annual advertising fee. The company says you can open a new franchise from start to finish for as little as $267,000. For annual gross sales of $900,000, you’ll return $63,000 to the franchise owner. In contrast, the Frozen Yogurt Store Developer, a consulting business that advises independent yogurt store operators, says startup costs average about $119,000 for an independent business, and you keep all the profits. However, if you have no business or industry experience, the support and training a franchise provides might mean your business will make more money over the long term.
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Transition to Self-Service
Start with or transition from a full-service to a self-service business to optimize pricing strategies and reduce payroll expenses. Unlike a full-service model, where the customer orders from a menu, receives a predetermined portion and pays a set price, a self-service model allows for portion and a la carte pricing options. With a self-service model, customers typically choose a small, medium or large serving cup and then create their own frozen yogurt concoctions. You stand to make more money because you can function with fewer employees and charge by flavor, weight and choice of toppings.
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Equipment and Supplies
Cost-effective purchases can reduce both startup and ongoing expenses. FrozenYogurtMachines.com recommends you rent one or more machines before making a purchase decision and suggests you consider buying used units, which range in price from $3,000 to $7,000 and reflect a 60 percent to 80 percent savings over new equipment. A digital scale costs more upfront than a manual scale, but its more accurate weight measurements mean you’ll make more money in the long run.
Evaluate Your Location
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While a good location is important to any company, a large percentage of impulse purchasing makes the right site critical to a frozen yogurt business. Make foot traffic rather than the monthly rental the prime factor in choosing a location. High traffic provides a large customer base, and you may be able to charge more per ounce for your product. A low-traffic location provides a small customer base; you’ll most likely need to spend more on marketing and advertising and may need to charge less per ounce to attract customers.