Häagen-Dazs Franchise

So Häagen-Dazs is a dominant player in the ice cream franchise space. Again, they’ve been around for nearly 40 years. And, Häagen-Dazs is part of a larger group of Dreyer’s Grand Ice Cream, a company that’s located in Minnesota.

So, first off, what I don’t like about Häagen-Dazs franchise, not only are you paying marketing fees, royalty fees, but you’ve got to buy the ice cream from the parent company.

And, Häagen-Dazs, the franchisors, making nearly a million dollars on commissions from the franchisees in their system.

So I’m not a big fan of that. I like franchise systems where you’re buying the product at a below market rate or even at a cost. But, for this franchisor, they’re essentially selling to you, and you’re the biggest client of buying ice cream through the Häagen-Dazs brand.

Häagen-Dazs Franchise Cost

The initial fee to open up a Häagen-Dazs franchise is $30,000. And to open one up, it’s going to cost you anywhere from $164,000, all the way up to $540,000. So that puts us at a median in the $300,000 range. And it’s not a good business if you’re investing $300,000 to open up a Häagen-Dazs franchise. And I’ll tell you why. In 2019, median sales were $529,000. So imagine you’re making a 15% profit on that. By the time you find the location, sign the lease, build-out, break-even, stabilize the business, you know, say that’s two years just to stabilize the business, it can take you another four to five years to recuperate that initial capital investment.

So, say the average Häagen-Dazs is making $80,000, $100,000 tops, it’s going to take you 5 years to recuperate your $300,000 investment or more. I didn’t want to be depressing going into the 2020 numbers. Franchisees had a drop in sales of over 40%, nearly 50% drop in sales, you heard that right for Häagen-Dazs franchisees. To say it was a bad year is an understatement. It devastated many of the Häagen-Dazs franchisees, and there were closures, and we expect more closures in 2021 for this brand and other ice cream franchises that were not well-positioned, especially for doing delivery and take out.

Food and Beverage Industry

Now, remember, food and beverage, dessert, ice cream, it’s location, location, location. That’s why I’m hesitant to invest in an ice cream concept or food concept for any manner. I don’t really understand real estate. And if I was going to open up a food and beverage franchise, I’d want to really understand real estate or have at least a partner that’s very well versed in real estate.

So, for a Häagen-Dazs, they have locations that are making $1.5 million, however, some franchises are doing less than $200,000 in sales. Why is that a big variation?

Yes, the operator is important, but even more important is the location.

And, sadly, you never know how a retail business is going to perform until you actually open up the doors. But, definitely, do your homework, and real estate is a huge component for opening up a Häagen-Dazs franchise.

This has been Patrick Findaro, co-founder at Vetted Biz. If you found this article helpful, like us. Follow us on various podcast formats, like Google Podcast, Apple Podcast, Spotify. And, also, email me at patrick@vettedbiz.com, if you have suggestions for future franchise analysis from me and my team. Thanks.