🍟 4/2/2024 – New Franchise Data (Plus: Are Malls Dead?)

1) Are Malls Dead?

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Auntie Anne’s new FDD just came out, which gives us a look into their financial performance from 2023. 

Here’s the average revenue breakdown by location type:

🥨 Malls: $768,870

🥨 Airports: $1,641,195

🥨 Strip malls: $913,209

For their mall locations specifically, their average revenue increased 9% year over year.

Not only that, but they expanded into 37 more mall locations, for a total of 530 nationwide as of the beginning of this year.

This begs the question…are malls dead?

Well, Auntie Anne’s revenue is going up each year, and they’re expanding into even more malls.

This brand is owned by Roark Capital – and let me tell ya – they have some smart people there, so I doubt they’d continue investing in a brand that had half of their restaurants in a “dying” sector.

In fact – recent data suggests that foot traffic in malls was higher in 2022 than it was pre-covid in 2019. Additionally, top malls around the country are 95% leased, while lower tier malls (i.e. malls in less affluent areas) were still 89% leased.

Occupancy rates is the biggest indicator of health for a mall, and according to CEO’s in the space, anything above 92% is considered good. 

The biggest commercial real estate players that operate malls, from CBRE to Simon Property, to Brookfield Properties….the word on the street is: traffic is up, sales are up, and many malls have a waiting list of tenants to get in”.

So to answer my own question….it appears malls are not dead!

2) Culver’s Continues Their Rise 🚀

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FDD season is in full swing, creating more madness in March beyond college basketball. 

Culver’s data is hot off the press, and the regional burger giant has once again put up a higher AUV than the year before.

Founded in Wisconsin, this brand is a regional behemoth that has grown slowly since the 1980’s, never looking to expand quickly, and only opening locations in areas that already had Culver’s.

Consider location #1 the nucleus of Culver’s country, and they’ve slowly been expanding outward since – meaning many of you (if you don’t live in Culver’s country AKA the midwest) may not truly know what this brand is even all about.

Meanwhile, they now have 944 locations that did on average $3.5M in revenue per location in 2023. For context, only McDonald’s, Raising Canes, Whataburger, Shake Shack, and Chick-Fil-A perform better on a per unit basis.

While a Culver’s is far from cheap to develop (the initial investment is listed at $2.8M – $6.8M), the average location will yield roughly ~$420,000 in profit, making it a cash cow once you clear those debt hurdles!

3) Seller Financing Warning 🚨

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My twitter friend Heather Endresen of Viso Cap shared some important information for any acquisition entrepreneurs out there:

If you’re acquiring an existing business via a seller note, do NOT sign a “confession of judgment”. This clause allows the seller to take control of your business bank account and all accounts receivable, without prior notice, if you are so much as late on a single note payment.

She mentioned she’s seen it play out once before, and has seen the terms pop up now and again.

So be warned – if a seller has this in the deal terms – you need to unequivocally ask for it to be removed, or it is a dealbreaker!


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