Statistics/ Name: Nestlé® Toll House® Café by Chip®/Founded: 2000/ Franchise Fee: $30,000/ Royalty Fee: 6 % /Total Investment: $154,300 –$475,300/ Required Net Worth: $300,000/Liquid Capital:$100,000/
Nestlé® Toll House® Café by Chip® got started in 2000 when an immigrant entrepreneur from Lebanon named Ziad “Zack” Dalal, who had already launched and sold a successful bakery franchise, got an idea for extending Nestlé brands with a bakery and cafe franchise featuring the irresistible Toll House cookie. Only trouble was, Dalal had absolutely no connection to Nestlé. So why would Nestlé, a global giant in the food industry give permission to Dalal’s Crest Foods, Inc. to launch his idea? Probably, so he would stop calling them! For six months, Dalal called Nestlé’s 800 number, until he finally got a meeting, where he pitched his idea and reached an agreement to license the franchise concept.
The Keys to Nestlé Toll House Café’s Success
Dalal opened the first Nestlé® Toll House® Café by Chip® in Frisco, Texas in 2000, and today there are more than 150 locations around the world with another 30 in various stages of development. The key to the concept is its use of the powerful Nestlé brand, respected throughout the world, coupled with an ingenious sweet and savory menu. Although the smell of fresh-baked cookies is a powerful attraction, most cafés also offer premium ice cream, smoothies, coffee, expresso-based drinks, crepes, wraps, flat breads, Paninis, and more.
Industry Overview
The bakery café annual industry has exploded onto the scene with $7 billion in annual revenue and is outpacing the competition in the food services sector with a 5.8% annual growth. This exciting new niche is positioned for similarly strong growth in coming years. Unlike beverage-centric chains who specialize in breakfast, bakery cafés generate a larger percentage of their business from mid-day through the evening hours
People from all over the world know and love the Nestlé brand
A Natural Franchise for Immigrants
A high percentage of Nestlé Toll House Café by Chip franchisees are immigrants, and it’s easy to see why according to Patrick Hummel, vice president of development for Crest Foods. “People from all over the world know and love the Nestlé brand,” he says. “They’ve had fond experiences with the brand from childhood, no matter whether they grew up in Asia, Africa, India, Europe or the Middle East.”
Big Brands, Low Cost Entry
Crest Food, Inc. franchisees not only benefit from the familiarity of well-established brands such as Nestlé Toll House®, Butterfinger®, Crunch®, Nerds®, and Nesquik®, they can get started with a relatively small investment. Depending on whether the franchisee chooses a mall kiosk, or a full in-line café with seating in an outdoor shopping center, the initial investment ranges from$151,750 to $475,300. Even then, costs can be mitigated through negotiations with landlords, and using and/or previously occupied space for the build out. Crest Foods’ support team works closely with franchisees to provide real estate and other expertise throughout the site selection process.
Financing
While Crest Foods does not offer direct financing for prospective franchisees, the company goes out of its way to make the process as seamless as possible.Crest Foods works with several third-party lenders and brokers Because of the relatively low costs, many franchisees are able to finance the project themselves according to Patrick Hummel. “Some people come in and they don’t want any help, so they fund it themselves, or they have their own strong banking relationships. But when they ask for our help, we’re happy to provide it.”
Site Selection / Construction
The Crest Foods team helps the franchisee find the right real estate and provides design construction expertise to ensure a successful build out of the franchisee’s cafe. Crest Foods has a Director of Real Estate and a Design Construction Manger on staff that work very closely with each franchisee through each of these important stages of the process.
Training and Support
Franchisees go through 12 days of comprehensive training, during which they learn everything they need to know to operate a successful Café, from how to bake the cookies and prepare all the other menu items, to interacting with customers, managing the inventory, etc. Afterwards, the Crest Foods team helps the franchisee find the right real estate and provides design construction expertise to ensure a successful build out of the franchisee’s cafe.
During this process, each franchisee is assigned an operations expert called a Field Business Coach (FBC) who works with them from training all the way through grand opening and beyond. The FBC works on-site at the franchisee’s café for a full week for the opening to make sure that people are trained and the store is ready to go,” says Hummel. Afterwards the coach will make periodic visits and is never more than a phone call away.
What Makes a Successful Franchisee?
A high percentage of franchisees are owner/operators. Crest Foods encourages this because it means the franchisee will be on the premises paying close attention to detail. There are other models that work, too, such as hiring an experienced manager to manage the café, but the key to a successful operation is being engaged with the business. Absentee ownership is typically discouraged unless the franchisee has extensive experience in food services and already has n experienced team in place. To sum it up, Patrick Hummel says, “A qualified franchisee candidate doesn’t necessarily have to have food or franchise experience, but he or she must be fully engaged in the business and share our passion for the brand.”
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