Frozen yogurt stores make twenty one Hundred dollars a day selling 500 cups At eight ounces each and it was the Business that I almost started instead Of starting my gym so I know a ton about It and I will tell you how it works and What you can use from psychology that I Learned from yogurt stores that you can Apply to your business today when I was 21 years old I wanted to be an Entrepreneur and I was deciding between Which business I should start either a Test prep business because I'd done Really well on my standardized tests Fitness because I was in shape I liked Fitness people always talk to me about It and the third was frozen yogurt I did An extensive amount of research on how To open a frozen yogurt store a couple Quick things that you may not know about Frozen your stores in general they on Average make between 750 and 800 000 a Year I thought eight hundred thousand a Year that means I make 800 000 a year I'm Gonna Be Rich doesn't really work That way the average store that we're Talking about does 2 000 plus dollars a Day means 328 dollars a day in owner pay They run margins between 10 and 15 Percent the average Menchie's owner for Contacts makes ninety three thousand Dollars a year take home not as sexy as You might think you've got strawberries That are going bad you've got machines
That are breaking in the back you've got Hard cost of yogurt you've got a retail Lease that's prominently located with Good signage Good Foot traffic ample Parking like there's lots of other Things that go into this business and on Top of that if you wanted to buy into a Franchise most franchises have six Percent ish of top line that goes Straight to them now that might not Sound like much but if you're running 10 Margins that's 60 percent of your take Home So they have figured out a way to take The majority of the profit from their Franchisees and what most people don't Know is that franchises will structure Their fees so you make just enough that You can keep going and maybe if you're a Good operator open another location but Not so much that you're going to get Rich on it so they're only looking to Optimize to beat the return on capital Of the stock market by a decent amount If the stock market gets you 10 they're Going to try and get 20 to 25 and They're going to squeeze off the top and Take the rest because of how good their Model is the flip side of that is that If you are into a franchise you should Be saving enough on bulk purchasing Because they're buying for 200 plus Locations that they can save you on hard Costs of things like yogurt fruit spoons
Cups machines Etc the converse of that Though is that many times when you're Starting the franchise they will up Charge you on all of those things Because they're trying to make money too There's the theory and then there's the Practicality because I went on a site Called rasmus.com it's a business Foreclosure site I got my first gym Equipment from that foreclosure site 13 Grand I sat there and I'd refresh every Week until eventually one came up and I Bought it all the gym equipment from a Gym that went under a franchise won't Let you do that because that's where They make their money but there are ways To open these things for cheaper I did a Cursory search on there before this Video and there were three frozen yogurt Stores that were franchises that went Under in terms of I could buy everything Inside the store the most expensive the Three was 20 grand you're trying to get Into this world you want to go open a Restaurant you want to open a gym go Find foreclosure sites now you may have Heard of some of these places Golden Spoon Yogurtland Menchie's Pinkberry if You search frozen yogurt store near you You probably have 30 locations that open Up because there's demand for it the Average cup size is eight ounces that People will buy the average split Between toppings and yogurt 25 of
People's weight is topping 75 is yogurt It's best for the store owner to have as Much yogurt as possible in the cup Because the toppings are more expensive So toppings cost between 10 and 40 cents Per ounce most places charge between 20 5 and 60 an ounce they can even break Even or lose money depending on which Toppings you're getting you get the Fruit it's costing them money but they Make up for it in the fact that yogurt Costs them about eight cents per ounce And they charge 50 even 60 sometimes That's where the margin of the business Exists when you're working on margins That are even like 70 that means that You have 70 left to cover everything out So if you want to run a 50 margin Business for example then you'd have to Take 20 of your top line and pay every Other Bill very hard to do for that Twenty one hundred dollars a day they're Selling roughly 500 cups a day of yogurt On average with an eight ounce cup of All those brands most of them are Commoditized meaning there's very little Difference between a Menchie's and a Yogurt land and a Golden Spoon it's been A poorly competed Marketplace solely Done by franchisors who are trying to Sell as many locations as they possibly Could rather than build a brand there is No Chick-fil-A of the yogurt world Because if there were they'd be
Dominating the underlying lesson is that If you look at any Indus history there Is the potential to have an amazing Business inside of it even if it is a Commodity today you can out-compete them All you have to do is walk into any Yogurt Land and see that the floors are Sticky the chairs are all over the place The cups are a mess sample cups are Strewn on the side the girl behind the Counter is on her iPhone when you walk In doesn't say hello one of the nozzles Is out it says out of order everywhere It doesn't take a lot to win most times Just to beat everybody you got to be Better than the bottom 25 and you make Money one of my favorite things that I Learned from one of the big Breakthroughs that I think they had was Actually how they priced ice cream is Usually sold by cup you get a small you Get a medium you get a large they flip That and made it wait the consumer gets To pick how much they spend someone Might fill up a cup get to the counter And see seven dollars and be like ah I'm Such a fat ass rather than when you buy One off itself and then you see the Seven dollars you're like wow this place Is so expensive because there's an Element of control on the consumer side They are the ones you to Bear some of The accountability or responsibility for That fact the second thing that they did
That I thought was brilliant they used To have small normal sized cups at Yogurtlands someone I will bet you a few Years ago ran out of small cups And then people only had the medium and Large cups left and they realized that At the end of the day their sales Probably went up by 20 or 30 percent and They wondered I wonder why our sales Went up when you give people a bigger Cup they will fill more of it they're Like oh I guess this is standard the Power of the default option when selling Anything that's why assumed closes and Things like that are so powerful when You say hey do you want this or this you Can even listen for this at fast food Places they're like hey do you want a Medium or a large coat they have a small Option but they want you to pick between The larger ones Yogurtland and those Ones went a step further just remove the Small option because it is self-serve But if you got a small amount of yogurt In a bucket-sized cup it just looks Weird they did that and by extension Were able to raise the amount of yogurt That people bought probably by a large Percentage every single time and not Take the blame for it because they're The one with the hand on the nozzle You'll also note that the order in which They present the items are reverse order Of the cost to them so they start you
With the cheapest option this is exactly How buffets work too they want you it Fill up on the salad and then they put The seafood all the way at the end Because they want people to fill their Plates before they get the most Expensive item they'll attract you with The expensive thing but they'll put it At the end of your self-service line you Have the yogurt which is the highest Margin first and then you'll have your Dry items that don't go bad crumpled Oreos things like that and then you have The fresh fruit that goes bad that costs More money by ounce and so they get People to fill up their cup in the Beginning with the highest margin then They sprinkle on a little bit of Slightly lower margin and then when you Have almost no room left then you put Your few fruit on top if you get a pound Of strawberries it's like 10 bucks You put that pound on the machine ounces There cost you 60 cents they'd be pretty Much breaking even on that corporate Noted that the number one way that they Are able to get more customers and the Highest performing stores did so with Better service cleaner stores more Selection and the most important one Word of mouth when you have an average Ticket that's so low like yogurt cups And you have margin even on that tiny Little cup the only profitable way to
Really acquire customers is either word Of mouth or Affiliates meaning other Businesses that send you business they Double down on that now when they Started years ago Google search was Cheap enough that they could actually Drive pay-per-click campaigns to get People to their locations but nowadays It's too expensive for most of them so They almost all have to rely on the Quality of the product and the Experience the way that I was going to Open my store was that I wanted to Create a better experience for somebody Walked in I wanted to have Floor-to-ceiling kind of candy See-through experiences and when someone Walked in they were overwhelmed and they Would just turn turn the nozzle on there Which by the way I would have it so They'd be really clunky so too much Would fall through so I get a little bit More water on it and I always felt like That you should have more selection People eat more the more options you Give them then my promotional effort my Plan was to go to the university so I Wanted to be close to colleges and then I was going to partner with all of the Fraternities and sororities and have Competitions between them to see who Could get the most yogurt and then give Some sort of Swag or something for the Fraternity or whatever that got the most
Yogurt during that period of time I Could rinse and repeat that process with Companies I could rinse and repeat that Process with affiliations and that is The cheapest form of advertising when You don't have a lot of money is going To find places where there's buckets of People that you can give them some sort Of promotion to bring them in I'd run The competitions to bring them in I'd Have a crazy incentive to get the text Number like hey do you want to save 50 Today by joining your text list I just Acquired a lead that I can get lifetime Value on for two dollars I'll take it because I know that I'm Going to be able to get them back or get Them to bring a friend and I want to be Able to remind them of my store on a Regular basis so if you're looking at Stuff that you can model from the yogurt Businesses and also not do that they're Doing poorly number one when you have The option to give a customer the Ability to pick their own pricing by Usage do it oftentimes people will blame Themselves not you when they overuse or Overspend think about minutes back in The day or text messages number two you Want the most people to see the thing That makes you the most money first we Want to use up as much of their spending Power on the things that make us the Most profit number three if you have a
Type of product or service where someone Can sample multiple things the more Things you offer them the more things That they will ultimately buy and Consume number four if you are starting A business unless it's something brand New and completely radical there's Likely somebody who started a business Just like yours who failed and you can Oftentimes buy all their stuff for 10 Cents or five cents on the dollar and And dramatically decrease your startup Cost if you can get a decent amount of Actual equipment for that amount of Money when you go to the right seller And that is a motivated seller number Five the power of the default option the Fact that they went from removing the Tiny cups to only giving large and Bucket sized cups for yogurt encourage People to use more yogurt themselves and They do that because it looks silly in Comparison six when you're trying to Promote something that costs very little Money especially consumer products it's Very difficult to acquire customers with Paid advertising profitably that's why a Lot of these places raise funding if you Don't have tons of cash and you're not Funded then the two most profitable Strategies for acquiring customers you Get Word of Mouth which is referrals It's not just having a very good product Which is important but reminding and
Encouraging people to share it my Podcast I just decided to say hey guys If you could leave a review and share This with somebody that would be great As soon as we did that we 20xed the Number of reviews that we were getting And our growth skyrocketed just because I asked by the way click subscribe and Notification Bell and all those things And share those fantastic
