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Paciugo Franchise Review (2023)
Written by: Patrick Findaro
Last Updated by
Rocio Somoza: January 18, 2023
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Paciugo is an Italian gelato store that opened with the idea of brining silky smooth, irresistibly delicious gelato served in an environment that felt uniquely Italian. The founder Ugo Ginatta wanted to create something no one would be able to resist. And he wanted to do it better than anyone. Paciugo is the realization of his lifelong passion. In 1999 armed with a secret family gelato recipe, he moved to America and opened the first Paciugo store.
Their menu includes not only 300 gelato recipes that rotate seasonally, but also smoothies, shakes and specialty coffee.
Contents
Management Team
The company Paciugo was founded by Ugo Ginatta and his wife Cristiana in April 2000, in Dallas, TX. They have imported Italian ingredients, machinery and techniques from their native Italy to duplicate the fourth-generation recipes from their home cities of Turin and Milan, respectively. Ugo’s son, Vincent, joined the company at the end of 2000 upon graduating in mechanical engineering.
Since 2000, Paciugo cafes have been delighting guests with a tremendous variety of high-quality and unique menu items. Every morning, each Paciugo cafe freshly prepares its gelato, serving 30 to 38 flavors daily.
Currently, there are 35 Paciugo retail locations in the greater Dallas area, and many more cafes throughout the USA, for a total of 67 locations, including the US Virgin Islands.
Franchise Dessert Industry Analysis
Franchise Strengths
- Artisanal, high quality gelato
- Operationally simple, easy to learn
- Franchisor provides training and support with suppliers and opening the store
- Strong leadership team based in TX committed to helping franchisees grow their markets
Weaknesses
- Success of business is highly dependent on location of the store
- Sales impacted by weather (i.e. cloudy days)
- Americans are still unfamiliar with gelato
Dessert Industry Franchise Opportunities
- Ability to adapt and grow with an emerging franchisor in an under-penetrated market
- The gelato market is small (800 outlets) in the U.S. compared to Italy (~150,000 outlets)
- Gelato is a low-fat and low calorie dessert
- 90% of Americans eat ice cream regularly (CISION)
Threats in the Dessert Industry Market
- Profitability can be negatively impacted by close location of like competitors (frozen yogurt and ice cream)
- Potential for gelato to not catch on with the American masses
- Ingredients like Pistachio and Hazelnut could become more expensive over time
How Much is a Paciugo Franchise?
Paciugo Franchise cost ranges from $127,060 to $268,940 according to the 2020 FDD.
How Much does a Paciugo Franchise make?
Initial Investment – Gelato Caffé Unit
| Item | Estimated Amount (in USD) | To Whom Payment is to Be Made | |
| Low | High | ||
| Initial Franchise Fee | $15.000 | $20.000 | Franchisor |
| Initial Application and Document Preparation Fee | $250 | $750 | Franchisor |
| Site Selection Assistance | $0 | $1.000 | Franchisor |
| First Month’s Rent and Security Deposit | $2.000 | $10.000 | Lessor |
| Store Design Consulting Services | $500 | $1.500 | Approved Suppliers |
| Leasehold Improvements | $73.000 | $186.000 | Contractors |
| Furniture, Fixtures, Equipment, and Signage | $115.000 | $171.000 | Approved Suppliers |
| Initial Training Costs | $500 | $4.000 | Employees and Approved Suppliers |
| Pre-Opening Consultation | $0 | $1.000 | Franchisor |
| Initial Inventory and Supplies | $8.000 | $10.000 | Approved Suppliers |
| Computer Hardware and Software | $4.000 | $12.000 | Approved Suppliers |
| Professional Services | $1.200 | $4.000 | Accountants, lawyers, etc. |
| Opening Assistance Costs | $0 | $5.000 | Franchisor |
| Opening Advertising Expenses | $3.500 | $10.000 | Approved Suppliers |
| Insurance | $250 | $3.000 | Insurance Broker |
| Additional Funds for first 3 Months | $25.000 | $50.000 | |
| TOTAL | $248,200 | $489,250 | |
Gelato Caffé Kiosk Unit
| Item | Estimated Amount (in USD) | When Due | To Whom Payment is to Be Made | |
|---|---|---|---|---|
| Low | High | |||
| Initial Franchise Fee | $15.000 | $20.000 | Upon signing Franchise Agreement | Franchisor |
| Initial Application and Document Preparation Fee | $250 | $750 | As arranged | Franchisor |
| Site Selection Assistance | $0 | $1.000 | As arranged | Franchisor |
| First Month’s Rent and Security Deposit | $2.000 | $10.000 | As arranged | Lessor |
| Design Services, Leasehold Improvements; Furniture, Fixtures, Equipment; and Signage | $68.000 | $192.000 | As arranged | Approved Suppliers |
| Initial Inventory and Supplies | $5.000 | $5.500 | As incurred | Approved Suppliers |
| Initial Training Costs | $500 | $4.000 | As arranged | Employees and Approved Suppliers |
| Pre-Opening Consultation | $0 | $1.000 | As arranged | Franchisor |
| Opening Assistance Costs | $0 | $5.000 | As arranged | Franchisor |
| Computer Hardware and Software | $4.000 | $12.000 | As arranged | Approved Suppliers |
| Professional Services | $1.200 | $4.000 | As arranged | Accountants, Lawyers, etc. |
| Opening Advertising Expenses | $3.500 | $10.000 | As arranged | Approved Suppliers |
| Insurance | $250 | $3.000 | As arranged | Insurance Broker |
| Additional Funds for first 3 Months | $25.000 | $50.000 | ||
| TOTAL | $124,700 | $318,250 | ||
| Royalty | Ad-Fund |
|---|---|
| 6% | 2% |
| Store/ Location Type (# of Stores) | Average Annual Net Sales | Average Cost of Goods Sold | Average Labor Costs |
| Inline Stores (6) | $309,414 (3 of 6 Stores, or 50%, Above Average) Median: $321,485 | 23.5% (2 of 6, or 33%, Above Aerage) Median: 24.3% | 27.8% (3 of 6, or 50%, Above Aerage) Median: 27.8% |
| Mall Stores (8) | $426,568 (2 of 8 Stores, or 25%, Above Average) Median: $359,999 | 23.8% (2 of 7, or 29%, Above Aerage) Median: 24.0% | 22.5% (5 of 8, or 63%, Above Aerage) Median: 22.0% |
| Kiosks (3) | $281,746 (1 of 3 Stores, or 33%, Above Average) Median: $261,565 | 26.7% (1 of 3 or 33%, Above Aerage) Median: 30.3% | 25.7% (1 of 3 or 33%, Above Aerage) Median: 27.0% |
Historical Revenue for Paciugo Franchise FDD Disclaimer:
“There was one company-owned Store and 31 franchised Stores in operation as of December 31, 2018. The one company-owned Store is not included as part of this financial performance representation. The chart below reflects historical Gross Sales information for the 29 franchised Stores (“Reporting Stores”) that had been open and operating for at least the full 12-month period ending December 31, 2018 (“Reporting Period”). Kiosks are separate from Stores, and the information for Stores is categorized by the type of location.
The amounts below are annual amounts for the entire Reporting Period. This information has not been audited or otherwise verified by us. ”Notes: Inline Stores: Of the 16 Inline Stores, 7 or 43% met or exceeded the amount of average Gross Sales.Mall Stores: Of the 7 Mall Stores, 2 or 29% met or exceeded the amount of average Gross Sales.Kiosks: Of the 6 Kiosks, 2 or 33% met or exceeded the amount of average Gross Sales.
As provided by Paciugo item 19 2019 FDD
1- “The cost information below is provided by 17 of the Reporting Stores for the Reporting Period. We obtained this information from profit and loss statements submitted by franchisees and from point of sale and key vendor reports, where available. The Reporting Stores do not include the 12 Reporting Stores that did not submit data. This information has not been audited or otherwise verified by us.”Notes:
2- “Net Sales” is defined as Gross Sales minus complimentary meals, the face value of coupons or other promotional discounts, and voided sales. The high amount of Net Sales for Inline Category was $409,698, and the low amount was $171,695. The high amount of Net Sales for Mall Category was $911,379, and the low amount was $238,253. And the high amount of Net Sales for Kiosk Category was $364,004, and the low amount was $219,671.
3- The cost of goods sold amount includes the cost of all food, beverage, paper, and packaging used to sell products. It does not include the cost of items used to otherwise operate the Store, such as utilities, repair and maintenance, and cleaning and office supplies. The COGS is calculated as a percentage of the average weekly Net Sales amount for each corresponding category. The high amount of Cost of Goods Sold for Inline Category was 27.3%, and the low amount was 18.6%. The high amount of Cost of Goods Sold for Mall Category was 28.3%, and the low amount was 16.8%. And the high amount of Cost of Goods Sold for Kiosk Category was 33.0%, and the low amount was 16.6%.
4- The labor amount may include all labor costs for hourly and salaried Store employees, such as wages, taxes, benefits, workers’ compensation costs, and payroll processing expenses. The labor cost is calculated as a percentage of the average weekly Net Sales amount for each corresponding category. The high amount of Labor Costs for Inline Category was 32.0%, and the low amount was 21.9%. The high amount of Labor Costs for Mall Category was 28.0%, and the low amount was 19%. And the high amount of Labor Costs for Kiosk Category was 27.9%, and the low amount was 22.1%.
As provided by Paciugo item 19 2019 FDD
