Nothing Bundt Cakes Franchise Cost Recoup Fast with a 20%+ Profit Margin
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Nothing Bundt Cakes franchise specializes in the sale and delivery of specialty bundt cakes and also sells other food items and retail merchandise. They offer a variety of cake flavors, with red velvet, “chocolate chocolate chip,” and white chocolate raspberry among their most popular. Nothing Bundt Cakes also makes cakes for holidays, birthdays, weddings, and other special occasions.
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Nothing Bundt Cakes Franchise
Nothing Bundt Cakes was started in 1997 when Dena Tripp and Debbie Shwetz joined forces to make cakes for their friends and family. Their friends and family kept asking for more and more cakes, and they soon realized that they could make a business out of it. In the years since Nothing Bundt Cakes has grown nationwide.
The current CEO is Kyle Smith, who has been in this role since 2017. Previously, he has served as President and as Chief Operating Officer for the company.
As of the end of 2020, Nothing Bundt Cakes operated 362 franchised units and 14 corporate units.
Competition
Nothing Bundt Cakes franchise competes primarily with grocery stores and local bakeries within the larger bakery industry. They also compete with other bakery franchises such as Gigi’s Cupcakes, Golden Krust, and Cold Stone Creamery but separate themselves by offering luxury products made from high-quality ingredients at a low price. They also pride themselves on their shops’ “mom and pop” feel, which allows them to compete particularly with local bakeries.
While it is at this point very mature, the bakery industry is still achieving modest growth.
Between 2016 and 2021, it grew at an annual rate of 2.9% to $11.2 billion in revenues and is projected to grow at an annual rate of 1.0% between 2021 and 2026.
Nothing Bundt Cakes Franchise Cost
The estimated total investment necessary to begin the operation of a Nothing Bundt Cakes Franchise ranges from $440,800 to $636,500. This is more expensive than the cost of opening a Gigi’s Cupcakes franchise ($227k-$432k) and can be more expensive than opening a Golden Krust franchise ($226k-$620k).
The following costs are part of the upfront costs included in the initial investment for a Nothing Bundt Cakes franchise.
Many of these are one-time fees that are needed to launch the franchise.
Review the chart below to see how much it costs to buy a Nothing Bundt Cakes franchise in 2021.
ESTIMATED INITIAL INVESTMENT
| Type of Expenditure | Amount | To Whom Payment Is to Be Made |
|---|---|---|
| Initial Franchise Fee | $35,000 | Nothing Bundt Cakes |
| Extension Fee | $0 to $10,000 | Nothing Bundt Cakes |
| Rent and Security Deposit | $6,500 to $8,500 | Landlord; Utility Companies |
| Bakery Improvements | $155,000 to $240,000 | Outside Suppliers |
| Architect – Design | $9,800 to $12,500 | Designated or Approved Suppliers |
| Fixtures and Equipment – Front of Bakery | $30,000 to $40,000 | Designated or Approved Suppliers |
| Fixtures and Equipment – Back of Bakery | $110,000 to $125,000 | Designated or Approved Suppliers |
| Exterior Signage | $8,000 to $12,000 | Designated or Approved Suppliers |
| Initial Inventory | $20,100 to $23,800 | Shipp Distribution and Approved Suppliers |
| Point of Sale System | $6,000 to $11,300 | Designated or Approved Suppliers |
| Insurance | $2,800 to $5,500 | Insurance Company |
| Business License and Permits | $1,500 to $4,500 | Government Agencies |
| Professional Fees | $3,900 to $11,200 | Attorney, Accountant |
| Opening Advertising Program | $5,000 to $7,000 | Nothing Bundt Cakes |
| Training Expenses | $4,000 to $7,000 | Third Parties |
| Delivery Vehicle-Monthly lease or loan payment | $13,200 to $33,200 | Third party vendors |
| Additional Funds-3 months | $30,000 to $50,000 | Employees and Suppliers |
| TOTAL ESTIMATED INITIAL INVESTMENT (including lease costs but not real estate purchase costs) | $440,800 to $636,500 |
Franchise Fee
The initial Nothing Bundt Cakes Franchise Fee is $35,000. You have to pay this upfront fee when opening a Nothing Bundt Cakes franchise.
Franchise Requirements
Franchise candidates and their partners must have combined liquid capital of at least $150,000 and a net worth of at least $600,000. Ideal franchise candidates also have business management, HR, or marketing experience, a strong belief in the Nothing Bundt Cakes product, and a passion for customer service.
Owning a Nothing Bundt Cakes Franchise Requires Ongoing Fees
Royalty: 5% of Bakery’s weekly Net Revenues
Marketing Production Fund: 1% of Bakery’s weekly Net Revenues
Local Advertising Fee: 3% of Bakery’s weekly Net Revenues
How Much Do Nothing Bundt Cakes Franchise Owners Make?
| Calendar Year | Number of Included Franchisee Bakeries | Average Net Revenues | % Growth in Average Net Revenues | No. of Bakeries Above/Below Average | Med ian | High Net Revenues | Low Net Revenues |
|---|---|---|---|---|---|---|---|
| 2019 | 270 | $1,168,968 | n/a | 117 / 153 | $1,127,873 | $2,791,568 | $414,269 |
| 2020 | 270 | $1,295,169 | 10.8% | 109 / 161 | $1,210,422 | $3,108,047 | $458,198 |
2019 Nothing Bundt Cakes Franchise Median Sales: $1,127,873
2020 Nothing Bundt Cakes Franchise Median Sales: $1,210,422
In 2020, Nothing Bundt Cakes reported the median Franchisee Principal’s Benefit as 23.8% of revenue for 236 bakeries (representing the bakeries that had provided the franchisor with complete 2020 financial statements by April 26, 2021).
| P&L Category | Average 236 Bakeries $ | Average 236 Bakeries % | No. of Bakeries Above / Below | Median % |
|---|---|---|---|---|
| Net Revenues | $ 1,307,280 | 96 / 140 | ||
| COGS | 304,103 | 23.3% | 111 / 125 | 23.1% |
| Average Gross Margin | $ 1,003,177 | 76.7% | 125 / 111 | 76.9% |
| Payroll | 415,900 | 31.8% | 112 / 124 | 31.4% |
| Occupancy | 75,801 | 5.8% | 122 / 114 | 5.9% |
| Marketing & Advertising | 51,185 | 3.9% | 113 / 123 | 3.8% |
| Other Expenses | 194,550 | 14.9% | 110 / 126 | 14.5% |
| Interest Expense | 6,310 | 0.5% | 85 / 151 | 0.1% |
| Depreciation & Amortization | 16,456 | 1.3% | 94 / 142 | 0.7% |
| Taxes | 7,073 | 0.5% | 60 / 176 | 0.2% |
| Total Expense | $ 767,277 | 58.7% | 130 / 106 | 59.7% |
| Net Income | $ 235,901 | 18.0% | 112 / 124 | 17.3% |
| Add Backs to Net Income Calculate EBITDA: | ||||
| Interest Expense | 6,310 | 0.5% | 85 / 151 | 0.1% |
| Depreciation & Amortization | 16,456 | 1.3% | 94 / 142 | 0.7% |
| Taxes | 7,073 | 0.5% | 60 / 176 | 0.2% |
| EBITDA | $ 265,741 | 20.3% | 112 / 124 | 19.7% |
| Reported Franchisee Principal Expenses | 46,154 | 3.5% | 90 / 146 | 1.7% |
| Total Franchisee Principal’s Benefit | $ 311,895 | 23.9% | 117 / 119 | 23.8% |
Based on a midpoint investment of $538,650 with estimated profits of $288,080 at a 23.8% profit margin, it would take about 2 years to recoup your investment.
Is the Nothing Bundt Cakes Franchise Profit Worth the Cost?
To assign a valuation multiple for Nothing Bundt Cakes franchises, we leverage estimates from the Business Reference Guide.
When you go to sell a Nothing Bundt Cakes franchise, based on the median valuation multiple for the Bakery industry of 0.70 and net sales averaging $1,169,148 between 2019 and 2020, it would sell for $818,403. This is significantly higher than the midpoint investment of $538,650.
Nothing Bundt Franchising Income Statement:
Nothing Bundt Franchising, LLC
Consolidated Statements of Income
| 52 weeks ended December 27, 2020 | 52 weeks ended December 29, 2019 | |
|---|---|---|
| Revenues | ||
| Franchise fees | $ 1,297,000 | $ 1,375,000 |
| Royalty fees | 21,173,775 | 17,130,272 |
| Advertising fund fees | 13,609,703 | 10,933,662 |
| Other revenue | 205,396 | 125,608 |
| 36,285,874 | 29,564,542 | |
| Expenses | ||
| General and administrative expenses | 11,058,624 | 8,871,492 |
| Advertising fund expenses | 13,609,703 | 10,933,662 |
| Depreciation | 337,472 | 232,470 |
| 25,005,799 | 20,037,624 | |
| Income before income taxes | 11,280,075 | 9,526,918 |
| Income taxes expenses | (357,387) | (257,029) |
| Net income | $ 10,922,688 | $9,269,889 |
See accompanying notes to consolidated financial statements.
Nothing Bundt Franchising Income Statement Key Insights:
Nothing Bundt Cakes’ franchising company has increased profits by about 17% from 2019 to 2020. The reason for this increase is because of the increase in total revenue in this period, as their profit margin has stayed roughly the same.
How Many Nothing Bundt Cakes Locations Have Opened and Closed?
| Outlet Type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2018 | 234 | 276 | +42 |
| 2019 | 276 | 318 | +42 | |
| 2020 | 318 | 362 | +44 | |
| Company- Owned | 2018 | 6 | 6 | 0 |
| 2019 | 6 | 13 | +7 | |
| 2020 | 13 | 14 | +1 | |
| Total Outlets | 2018 | 240 | 282 | +42 |
| 2019 | 282 | 331 | +49 | |
| 2020 | 331 | 376 | +45 |
Over the last three years, 136 new Nothing Bundt Cakes locations have opened for an average of around 45 new locations a year. This consistent growth suggests a favorable business environment for new franchises.
Conclusion
Nothing Bundt Cakes provides potential franchisees with high-profit margins and the opportunity to make a relatively quick return on investment.
Additionally, the profitability of the franchisor and the steady growth in new franchise locations suggest a strong business model. And a favorable environment for new franchises. However, one potential drawback is its relatively high initial investment amount relative to its competitors.
While this may be the business for you, make sure to also check out other businesses offered on Vetted Biz and in the Food and Beverage Industry.
