Rita’s is a brand that serves assorted flavors of Italian ice and custard. For over 30 years they’ve been in the business of selling these frozen desserts to a loyal base of customers in more than 500 locations in the United States and around the world. But is Rita’s still a sound business to invest in?
You should know that more Rita’s Italian Ice shops have been closing than opening. Between 2016 and 2018 alone, the franchise had 159 total units close for business permanently.
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Rita’s Franchise Wiki
Rita’s Italian Ice started in 1984 in Philadelphia. Bob Tumolo, a former firefighter, opened the business on his front porch and named the shop after his wife Rita. By 1987, Bob, along with his brother John, branched out and expanded their locations across Philadelphia. The demand for their Italian ice was high that by 1989, they started to franchise Rita’s.
Rita’s Italian Ice is known to have so many different flavors. There are over 95 flavors you can choose from and Rita’s assures you that they’re all made fresh. In fact, batches of flavored ice must be sold within 36 hours.
Rita’s menu consists of Italian ice, frozen custard, Gelati (layered Italian ice and custard), Blendini (Italian ice and custard blended together), Concrete (creamy thick custard), Misto shakes (Italian ice shakes with custard), milkshakes, and frozen drinks. For food, Rita’s also sells frozen custard cakes, custard cookie sandwiches and custard by the pint.
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Rita’s Franchise Benefits
There are many advantages in owning a Rita’s Italian Ice franchise. Here are a few:
Rita’s caters to the young and old. It’s been operating for 30 years serving frozen desserts to everyone. No alcoholic beverages are included although Rita’s had a mocktail line once. But all in all, it’s a family friendly place with treats everyone can enjoy.
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Rita’s may only be known for their Italian ice and frozen custard. But the varieties they offer are plenty. There are also many flavors to choose from. And aside from drinks and custard, you can also get snacks.
All in all, Rita’s Italian Ice seems like a no-frills kind of business. The product line is simple and the target customers are everyone who enjoys frozen desserts. Even the franchise reviews are positive. One review claims that Rita’s has even provided them with stability.
Rita’s Franchise Facts
|Total Units||Over 500|
|Incorporated Name||Rita’s Franchise Company, LLC|
|Subsector||Food and Beverage|
Rita’s Franchise Cost
The initial franchise fee for a Pump It Up is $30,000. Pump It Up offers a 25% discounted initial franchisee fee for the first location to any honorably discharged United States military veteran. This fee grants exclusive rights to a defined territory and access to all of Pump It Up’s proprietary knowledge, systems and trademarks. The total investment ranges from $371,250 to $784,500
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|Fees / Expenses||Financial Amount|
|Total Investment||$194,863 to $528,061|
In addition to these fees, Rita’s also charge a royalty fee of 6.5% and an ad royalty fee of 3%. This means you’ll be handing over 9.5% of total revenue to corporate. This is an above average franchise fee where the industry average is only 5%. This would be a point worth negotiating with the company before signing an agreement.
Rita’s Franchise Requirements
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This is highly confidential information. Because this company had not disclosed it. You can only know about this after applying for the franchise. All this will be discussed when the basic criteria are met and fulfilled. You can know the procedure as follows.
Rita’s Franchise Profit
Franchise revenue depends on a wide range of factors, as does profit. How much money you can make from any franchise depends on a number of specific factors such as franchise location, labor costs, commercial lease rates and a number of other factors.
It isn’t known officially how much Rita’s Italian Ice makes annually but a Rita’s location in Adamsdale, Pennsylvania saw gross revenue of $173,866. After expenses this business had an annual cashflow of $38,729.
This revenue assumed you were managing the unit yourself and not hiring a full-time manager. If you did hire a manager, the business would be operating at a break-even point at best. It would be up to you to improve the marketing and sales of the unit to increase revenue.
Jim Hagan, a former Rita’s franchise operator in Virginia, said there wasn’t enough business to keep the business operating in his market. While sales started strong the first few months, traffic volume couldn’t be sustained and the unit went out of business back in 2013.
Challenges of a Rita’s Franchise
To prepare for a Rita’s Italian Ice franchise, you need to know what the challenges are. Here are some to expect:
Units are Closing
Here are the number of unit closures for Rita’s according to Franchise Disclosure Documents:
- 2016: 65
- 2017: 51
- 2018: 43
Considering these closures occurred before the health crisis this is not a strong indicator for health of the business. Successful operators don’t just go out of business.
To make matters worse, as of January 15th, 2022, the company closed their operations in the Philippines. This included shuttering the doors of seven units operating in Manilla.
As mentioned above, Rita’s operates on a seasonal schedule. There will be months that the business will be closed. This seems like a big disadvantage and a challenge because you could have more sales if you were open all year round. If you’re not open year round, you won’t generate as much revenue.
This would be no problem if you’re in a location with a warmer climate throughout the year or you’re in a shopping mall location. So be sure to plan out your future Rita’s location carefully.
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One poster on Quora said that most of the problems his friend had while running Rita’s Italian Ice were employee issues. Some would not show up for shifts while others would not be able to clean the surroundings properly. The poster cited this might have been because the business could only offer minimum wage.
We only hope these issues were studied and resolved such as making sure employees were trained properly and wages were increased even a bit. Unfortunately, for many units the revenues don’t appear to support a higher wage.
How to Apply For
To get the franchise first you have to fill the form. Then the company officials will contact you for further details. After that you you can open this franchise.
Is the Rita’s Franchise Right For You?
Unlike other companies, Rita’s has not made their most recent financial reports open to the public so it’s hard to study whether or not Rita’s is profitable. But if you’re still interested, you can discuss your concerns directly with Rita’s team by messaging them on the details provided above.
But as you can see from the examples I’ve listed, you should be careful and conduct due diligence before investing in this franchise. This is a concept that has seen more closures than grand openings that past 5 years. This is never a good sign for a franchise business.
What is an alternative Rita’s Italian Ice franchise?
A frozen dessert business you can open near you is Pelican’s SnoBalls. They’re well known for their flavored snow balls and have over 500 locations around the United States.
To franchise Pelican’s SnoBalls, expect the investment to be $61,150 to $195,300. You can check out our full guide on Pelican’s SnoBalls here.
And there you have it! With this guide, I hope you better understand the opportunities and risks of a Rita’s Italian Ice franchise.