Insomnia Cookies Franchise & 3 Alternatives Available in 2024
This article is based on the video featured above, originally recorded for Vetted Biz Youtube Channel.
Insomnia Cookies Franchise is a U.S. bakery chain that specializes in delivering warm cookies, ice cream, and other baked goods. It was started by Seth Berkowitz in 2003 at the University of Pennsylvania when he began baking and delivering cookies late at night to students. Their first store was established in Syracuse. NY in 2004. Insomnia Cookies stores usually open from 10 AM to 3 AM on weekdays and from noon to 3 AM on the weekends. Krispy Kreme acquired them in 2018, but they still operate independently. As of April 4, 2021, Insomnia Cookies had 191 locations in 40 states nationwide. They have a very strong online presence with 50% of their sales coming from digital sources.
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How Is Insomnia Cookies Franchise Positioned in the Cookies Industry?
The industry brings $24.5 billion in yearly revenue and $1.1 billion in profit. While this industry has historically experienced stable demand due to stable diets over the years, changing nutrition trends that encourage cutting out carbohydrates and sugars from diets are leading to slower growth. Between 2016 and 2021, the industry shrunk by 2%. However, the industry is expected to return to growth over the five years to 2021, with revenue anticipated to increase at an annualized rate of 0.6% to $25.3 billion.
| Fiscal Years Ended | |||
|---|---|---|---|
| January 3, 2021 | December 29, 2019 | December 30, 2018 | |
| U.S and Canada: | |||
| Revenue | 782,717 | 587,522 | 443,563 |
| Non Fresh Revenue | 128,619 | 112,051 | 125,684 |
| Fresh Revenue from Insomnia and Hubs Without Spokes | 323,079 | 271,067 | 156,778 |
As reported by Krispy Kreme, Insomnia Cookies and Krispy Kreme stores that do not operate on a hub and spoke model brought in $323 million in 2021, up more than 100% from $156 million in 2018.
What Is Insomnia Cookies Franchise Valued At?
As of 2018 acquisition, Insomnia Cookies was valued at $137.5 million. More details about this valuation are in the table below:
| Insomnia Cookies | |
|---|---|
| Assets Acquired: | |
| Cash, cash equivalents and restricted cash | 1,233 |
| Marketable securities | – |
| Receivables | 232 |
| Inventory | 2,346 |
| Other current assets | 506 |
| Property and equipment | 22,364 |
| Other intangible assets | 104,500 |
| Other assets | 672 |
| Total identified assets acquired | 131,853 |
| Liabilities Assumed: | |
| Accounts payable | (5,866) |
| Accrued liabilities | (3,933) |
| Deferred income taxes, net | – |
| Long- term debt, less current portion | (2,692) |
| Other long-term obligations and deferred credits | – |
| Total liabilities assumed | (12,491) |
| Goodwill | 54,851 |
| Non-controlling interest | (34,758) |
| Bargain purchase gain | – |
| Purchase consideration, net | 139,455 |
| Transactiion cost in 2018 (approx.) | 3,952 |
What Are the Costs Associated with Running an Insomnia Cookies Franchise?
Insomnia Cookies no longer offers franchises but we will review the costs and profits associated with operating a cookie franchise. Let’s look at three alternatives to Insomnia, starting with Crumbl Cookies.
3 Franchise Alternatives to Insomnia Cookies
Crumbl Cookies
Crumbl Cookies is a cookie and baked goods chain that features a weekly rotating menu with open concept kitchens. It was founded by Sawyer Hemsley and has 326 franchised locations as of 2022.
The estimated total investment necessary to begin the operation of a Crumbl Cookies Franchise ranges from $347,666 – $691,783. The following costs are part of the upfront costs included in the initial investment for a Crumbl Cookies 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 franchise in 2022.
| Type of Expenditure | Amount | Method of Payment |
|---|---|---|
| Initial franchise fee | $25,000 (if the franchise agreement is signed on or prior to June 30, 2022) $50,000 (if the franchise agreement is signed after June 30, 2022) | Lump Sum |
| Initial tech and other equipment package | 23,300 – 167,650 | Lump Sum |
| Initial training fees, and travel, lodging, food, and other expenses while training | 20,000 – 30,000 | As Incurred |
| Real estate and improvements | 75,000 – 250,000 | As incurred |
| Rent – 3 months | 16,666 – 83,333 | As Incurred |
| Professional fees | 8,000 – 15,000 | As Incurred |
| Equipment, furniture, fixtures, decor, and supplies | 75,000 – 100,000 | As Incurred or Leased |
| POS system, computer hardware, and software | 3,500 – 8,000 | As Incurred |
| Signs | 6,500 – 15,000 | As Incurred |
| Misc. opening costs | 2,500 – 5,000 | As Incurred |
| Opening inventory | 5,000 – 10,000 | Lump Sum |
| Additional funds – 3 months | 10,000 | As Incurred |
| Total | 322,666 – 666,783 (if the franchise agreement is signed on or prior to June 30, 2022) $347,666 – 691,783 (if the franchise agreement is signed after to Jun 30, 2022 |
Does not include royalties or marketing fees. |
This is not an exhaustive list of fees and there might be other fees associated with starting a franchise. We recommend you talk to the franchisor to get a better idea of the required financials.
There are also fees associated with running a franchise. Once again, these numbers have been taken from Crumbl:
Royalty: 8% of Gross sales
Marketing Fee: 2% of Gross sales
Technology Fee: $500
What Much Does a Crumbl Cookies Franchise Owner Make?
| 2021 Calendar Year | Average | High | Median | Low |
|---|---|---|---|---|
| Total Revenue | 1,687,731 | 3,369,139 | 1,582,090 | 734,278 |
| Gross Profit | 749,555 | 1,771,793 | 707,912,53 | 282,380 |
| Net Profit | 357,512 | 618,102 | 279,212 | 33,260 |
For the 2021 calendar year, the median Crumbl Cookies franchise made $1,582,090 in revenue with $279,212 in profit. That is a profit margin of around 17.5%.
Based on the median sales provided by Crumbl’s franchise locations, at an average of a 17.5% profit margin it will take around 4.5 years to recoup your midpoint investment of $519,724. This is longer than other franchise opportunities. You may not get a 17.5% profit margin which would elongate getting a return on your investment.
Many factors affect the sales, costs and expenses of your Franchised Store. Such as the Franchised Store’s size, geographic location, menu mix, and competition in the marketplace. The presence of other baked goods stores; the extent of market penetration and brand awareness that Cumbl Cookies stores have attained in your market. Also, the quality of management and service at your Franchised Store.
Is the Crumbl Cookies Franchise Profit Worth the Franchise Cost?
To assign a valuation multiple for Crumbl franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems where more transaction data is available.
Under $1 Million Net Sales
- Estimated Selling Price = Net Sales – 0.61
$1 Million – $5 Million Net Sales
- Estimated Selling Price = Net Sales – 0.54
When you go to sell a Crumbl Cookies franchise based on the median multiple of .61 and net sales in 2020 of $1,582,090, it would sell for $965,074. This is significantly higher than the midpoint investment of $519,724.
The more franchised locations you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators.
How Many Crumbl Cookies Units Have Opened and Closed
| Outlet Type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2019 | 15 | 54 | +39 |
| 2020 | 54 | 141 | +87 | |
| 2021 | 141 | 326 | +185 | |
| Company-Owned | 2019 | 1 | 1 | +0 |
| 2020 | 1 | 1 | +0 | |
| 2021 | 1 | 1 | +0 | |
| Total Outlets | 2019 | 16 | 55 | +39 |
| 2020 | 55 | 143 | +87 | |
| 2021 | 142 | 327 | +185 |
As of 2021, there are 327 Crumbl Cookies outlets with 185 of them opening in 2021 itself. This might indicate strong growth in the industry and a demand for more outlets, boosting confidence that franchises in this industry are largely successful.
Mrs. Fields
Mrs. Fields is a cookie and related products chain that offers two types of franchised locations: a store and a kiosk. It is currently led by Darren Hale who is the CEO of the parent company, Famous Brands. As of 2021, they had 128 franchised locations.
The estimated total investment necessary to begin the operation of a Mrs. Fields Franchised store ranges from $255,995 to $415,500. The following costs are part of the upfront costs included in the initial investment for a Mrs. Fields 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 franchise in 2022.
| Type of Expenditure | Amount | Method of Payment |
|---|---|---|
| Initial franchise fee | 35,000 | Lump Sum |
| Travel and living expenses while training | 2,000 – 3,000 | Lump Sum, as Incurred |
| Real Estate Lease | Note 3 | Note 3 |
| Improvements and equipment | 179,495 – 312,500 | As Agreed, with Suppliers |
| Opening Product and soft goods | 5,000 – 10,000 | As Agreed, with Suppliers |
| Grand opening promotion, if opening a new store | 5,000 – 10,000 | Lump Sum |
| Deposits and other prepaid expenses | 4,000 – 5,000 | Lump Sum |
| Profesional fees | 9,000 – 10,000 | Lump Sum or as Arranged by Providers |
| Insurance | 2,500 – 3,500 | Lump Sum, or as Arranged by Providers |
| Coffee preparation and serving equptment | 2,500 – 10,000 | Monthly |
| Computer hardware and software | 3,500 – 4,500 | Lump Sum |
| Additional funds (3 months) | 8,000 – 12,000 | Lump Sum, as Incurred |
| Totals | 255,995 – 415,500 |
This is not an exhaustive list of fees and there might be other fees associated with starting a franchise. We recommend you talk to the franchisor to get a better idea of the required financials.
There are also fees associated with running a franchise. For Mrs. Fields, we see the following costs:
Royalty: 6% of Gross revenue
Marketing Fee: 3% of Gross sales
How Much Does a Mrs. Fields Franchise Owner Make
| Group | Number of Stores in Group | Average Gross Revenue | Median Gross Revenue | Range |
|---|---|---|---|---|
| Highest Quartile | 16 | 525,949 | 496,781 | 388,354 – 1,012,046 |
| Second Highest Quartile | 16 | 320,886 | 321,946 | 265,923 – 378,536 |
| Third Highest Quartile | 16 | 220,946 | 219,676 | 190,489 – 263,616 |
| Lowest Quartile | 16 | 102,147 | 101,313 | 30,702 – 179,223 |
| Total Group | 64 | 292,368 | 264,768 | 30,702 – 1,012,046 |
For the 2021 calendar year, the median Mrs. Fields franchise made $264,768 in revenue.
2021 Median Franchise Sales: $264,768
| Initial Investent (Midpoint) | %Profit Margin of Average Franchise Sales | Estimated Profits | Time to Recoup Investment |
|---|---|---|---|
| 335,747 | 10% | 26,476 | 15 years |
| 335,747 | 15% | 39,715 | 11 years |
| 335,747 | 20% | 52,953 | 9 years |
Based on the median sales provided by franchise locations, at an average of a 15% profit margin it will take around 11 years to recoup your investment. This is longer than other franchise opportunities. You may not get a 15% profit margin which would elongate getting a return on your investment. This is significantly more than other franchise opportunities.
Based on the median sales provided by franchise locations, at an average of a 15% profit margin it will take around 11 years to recoup your investment. This is longer than other franchise opportunities. You may not get a 15% profit margin which would elongate getting a return on your investment. This is significantly more than other franchise opportunities.
Is the Mrs. Fields Franchise Profit Worth the Franchise Cost?
To assign a valuation multiple for Mrs. Fields franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems where more transaction data is available.
Under $1 Million Net Sales
- Estimated Selling Price = Net Sales – 0.61
When you go to sell a Mrs. Fields franchise based on the median multiple of .61 and net sales in 2020 of $264,768, it would sell for $161,508. This is significantly lower than the midpoint investment of $335,747.
The more franchised locations you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators.
Mrs. Fields Statement of Income
| Years Ended | |||
|---|---|---|---|
| January 3, 2021 | December 29, 2019 | December 30, 2018 | |
| Revenues, net | |||
| Mrs. Fields gifts | $34,870 | $30,592 | $25,447 |
| Domestic franchising | 4,697 | 4,836 | 7,463 |
| Ad Fund – franchising | 1,125 | – | – |
| Mrs. Fields licensing | 918 | 1,367 | 1,728 |
| International franchising | 606 | 795 | 1,002 |
| Total revenues | 42,216 | 37,590 | 35,640 |
| Operating costs and expenses | |||
| Mrs. Fields gifts | 29,385 | 25,349 | 22,659 |
| Domestic franchising | 1,361 | 1,149 | 1,428 |
| Ad Fund – franchising | 894 | – | – |
| Mrs. Fields licensing | 153 | 474 | 349 |
| International franchising | 148 | 180 | 198 |
| General and administrative | 4,935 | 4,,670 | 5,551 |
| Depreciation and amortization | 978 | 935 | 1,530 |
| Total operating costs and expenses | 37,854 | 32,757 | 31,715 |
| Income from operations | 4,362 | 4,833 | 3,925 |
| Interest expense, net | 6,318 | 9,184 | 9,382 |
| Other income | (37) | – | (349) |
| Gain on debt extinguishment | (1,475) | – | – |
| Loss before provision for income taxes | (444) | (4,351) | (5,108) |
| Provision for income taxes | 530 | 393 | (1,644) |
| Net loss from continuing operations, net of income tax | (974) | (4,744) | (3,464) |
| Net loss from discontinued operations, net of income tax | – | (322) | (209) |
| Comprehensive loss, net of income taxes | |||
| Net loss | (974) | (5,066) | (3,673) |
| Foreign currency translation adjustment | 39 | 66 | 85 |
| Comprehensive loss | (935) | (5,000) | (3,588) |
In 2021, Mrs. Fields ran a loss of $974,000. This is down from a loss of $3.6 million in 2019, but the company is not doing well and prospective franchisees should wait to see if profits are seen again.
How Many Mrs. Fields Units Have Opened and Closed?
| Outlet Type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2019 | 172 | 151 | -21 |
| 2020 | 151 | 138 | -13 | |
| 2021 | 138 | 128 | -10 | |
| Company-Owned | 2019 | 0 | 0 | 0 |
| 2020 | 0 | 0 | 0 | |
| 2021 | 0 | 0 | 0 | |
| Total Outlets | 2019 | 172 | 151 | -21 |
| 2020 | 151 | 138 | -13 | |
| 2021 | 138 | 128 | -10 |
As of 2021, there are 128 Mrs. Fields outlets. They have been declining at a rate of around 15 locations per year. In an industry that is growing this is not a good sign. This might be due to frustrations owners have with the franchisor or declining sales in the product offerings, leading to owners not renewing their franchises.
Great American Cookies
Great American Cookies is a cookie and brownies chain that claims to be the home of the Cookie Cake. As of 2021, they had 128 franchised locations. It was owned by Mrs. Fields in 1998 but is owned by FAT brands now. As of 2020, they had 370 franchised and no company-owned locations.
The estimated total investment necessary to begin the operation of a Great American Cookies Franchised store ranges from $277,400 to $403,150. The following costs are part of the upfront costs included in the initial investment for a Great American Cookies 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 franchise in 2022.
Additional requirements for owning a Great American franchise is that you’re financially stable, with a net worth of at least $250K and liquidity of $100K per store.
| Type of Expenditure | Amount | Method of Payment |
|---|---|---|
| Franchise fee | $25,000 – $25,000 | Lump Sum |
| Grand opening marketing | 3,000 – 5,000 | As Incurred |
| Travel and living expenses while training | 1,000 – 3,000 | As Incurred |
| Cookie ingredients | 5,000 – 10,000 | As Incurred |
| Other opening inventory | 5,700 – 15,150 | Lump Sum |
| Architectural fees | 7,000 – 12,500 | As Incurred |
| Furniture, fixtures, equipment and decor | 91,000 – 121,000 | As Incurred |
| Signs | 4,500 – 9,500 | As Incurred |
| Prepaid rent and security deposit | 2,500 – 5,000 | As Incurred |
| Leasehold improvements | 115,000 – 165,000 | As Incurred |
| Utility deposits | 2,200 , 3,000 | As Incurred |
| Professional Fees | 1,000 – 6,000 | As Incurred |
| Computer System | 2,500 – 5,000 | As Incurred |
| Business licenses, permits, etc. (for first 6 months) | 1,500 – 2,500 | As Incurred |
| Insurance (3 months) | 2,500 – 3,500 | As Incurred |
| Additional funds (3 months) | 8,000 – 12,000 | As Incurred |
| Totals | 277,400 – 403,150 | For a traditional store |
This is not an exhaustive list of fees and there might be other fees associated with starting a franchise. We recommend you talk to the franchisor to get a better idea of the required financials.
There are also fees associated with running a franchise. For Great American Cookies, we see the following costs:
Royalty: 6% of net sales for the preceding month
Marketing Fee: 1.5% of sales for Traditional Mall stores, otherwise 2%
Local Marketing: 2% of Net Sales
How Much Does a Great American Cookies Franchise Owner Make?
Great American does not report yearly sales but does so monthly. Assuming the median of around $31,000, we can proceed with calculations below.
2021 Median Franchise Sales: $31,000 – 12 = $372,000
| Initial Investent (Midpoint) | %Profit Margin of Average Franchise Sales | Estimated Profits | Time to Recoup Investment |
|---|---|---|---|
| $680,550 | 10% | $37,200 | 21 years |
| 15% | $55,830 | 14.5 years | |
| 20% | $74,400 | 11.5 years |
Based on the median sales provided by franchise locations, at an average of a 15% profit margin it will take around 14.5 years to recoup your investment. This is longer than other franchise opportunities. You may not get a 15% profit margin which would elongate getting a return on your investment. This is significantly longer than other franchise opportunities in the industry.
Many factors affect the sales, costs and expenses of your Franchised Store. Such as the Franchised Store’s size, geographic location, menu mix, and competition in the marketplace. The presence of other baked goods stores; the extent of market penetration and brand awareness that Great American Cookies stores have attained in your market. Also, the quality of management and service at your Franchised Store.
Is the Great American Cookies Franchise Profit Worth the Franchise Cost?
To assign a valuation multiple for Great American Cookies franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems where more transaction data is available.
Under $1 Million Net Sales
- Estimated Selling Price = Net Sales – 0.61
When you go to sell a Great American Cookies franchise based on the median multiple of .61 and net sales in 2020 of $372,000, it would sell for $226,920. This is significantly lower than the midpoint investment of $680,550.
The more franchised locations you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators.
Great American Cookies Statement of Income
Statement of Income
| Year to date period ended – February 28, 2021 | |
|---|---|
| Revenues | |
| Royalty revenue | 1,068 |
| Franchise fee revenue | 52 |
| Total Revenues | 1,120 |
| Expenses | |
| Magnagement fees – affiliate | 448 |
| Selling, general and administrative expenses | – |
| Bad debt expense | 4 |
| Total Expenses | 452 |
| Net Income | 668 |
In 2021, Great American Cookies made a profit of around $668,000. No information has been made available by Great American Cookies about past figures.
How Many Great American Cookies Units Have Opened and Closed
| Outlet Type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2019 | 355 | 363 | +8 |
| 2020 | 363 | 369 | +6 | |
| 2021 | 369 | 370 | +1 | |
| Company-Owned | 2019 | 0 | 0 | 0 |
| 2020 | 0 | 0 | 0 | |
| 2021 | 0 | 0 | 0 | |
| Total Outlets | 2019 | 355 | 363 | +8 |
| 2020 | 363 | 369 | +6 | |
| 2021 | 369 | 370 | +1 |
As of 2020, there are 370 Great American Cookies outlets. New stores have been opening at a slowing rate with the average between 2018 and 2020 being 5 per year. However, only one new franchise opened in 2020.
Conclusion
We hope that this article gave you an idea of how profitable it is to run a franchise in the baked goods industry, taking Crumbl Cookies as the base model. While Insomnia Cookies no longer offers franchises, opting to keep everything under its own control, you might be interested in franchising a location for Krispy Kreme, the parent company of Insomnia. The cookies industry is expected to grow in the future and Crumbl Cookies, Great American, Mrs. fields, and Krispy Kreme all offer a chance to be a part of it.
Think you are interested in owning a cookies franchise or another franchise in the Food and Beverage industry? Check out our listings page on the Vetted Biz website for much more information about franchise opportunities.
