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TCBY Sweetens its Value Proposition

"We offer a range of seating options that guests can move around to create their own seating areas inside the space," Casey says. "We learned in our consumer research that both our core as well as our target audience really wanted that nice, comfortable place to hang out. And frozen yogurt, because of its nutritional profile and flavor, was being considered much more than a treat. It's a healthy snack and even a meal replacement. Because of the way the consumer wants to use a TCBY, comfort was important, and we're finding that people do enjoy the new environment and stay longer. Beyond the seating, most of our franchisees are also putting in flat-screen TVs for entertainment."

Casey adds that extensive consumer research laid the foundation for the entire rebranding effort. "We did some very strong research with our target audience as well as our future target audience before we did the brand work," he says. "We needed to understand what their needs are, the best way to contemporize and change the design of TCBY. The outcome of that was the new logo treatment, a lot of interior design changes that focus on the fun aspects of frozen yogurt as well as on the wellness, the taste and the flavor.

"So, it was taking those core pillars that have always provided us with a competitive advantage and bringing them to life in the physical spaces of our stores. The consumer insights informed us and the team that developed the brand work did an incredible job. It's something that TCBY will continue to evolve and refresh to ensure that the brand always stays in step with consumers as they evolve, as well."

To that end, he notes that while self-service delivers what customers say they want today, the company will remain nimble and continue to invest in research and to adapt its facilities and product offerings as necessary. It also remains committed to providing franchisees with the option of opening full-service stores in markets where that's the best fit.

Full-service stores offer a significantly different TCBY experience and a menu driven by specialties such as parfaits and sundaes that are prepared to order by a team member behind the counter. Café-style seating is offered, and the environment, while accommodating for guests who choose to enjoy their selection in the store, is more traditional than the comfortable and bright social lounge atmosphere of the new prototype. Casey notes however that some franchisees who have opted to maintain a full-service format are incorporating elements of the new design as they refresh their stores.

Franchisee Sweet Spots: Cost and Simplicity

Operationally, it doesn't get much simpler than frozen yogurt, and the equipment package required is minimal, including yogurt dispensers, coolers, freezers, under-counter refrigeration in full-service units, and drop-in tables for toppings. Upright display refrigeration is also included on the sales floor in units where the franchisee opts to leverage TCBY's frozen cake and pie retail sales program. Some units also include a dipping cabinet for the chain's newer hand-scooped frozen yogurt. "It's a fairly standard equipment package and not customized to us," Casey notes. "What's proprietary to us is our product, not our equipment."

In both full-service and self-service stores, allocation of space is similar, with the kitchen or back of the house typically comprising roughly 30 percent of the total square footage.

Staffing levels are generally low, but Casey points out that the move to a self-service format did not significantly impact labor costs. "We learned when doing the consumer research that even though it's a self-service model, they still want customer service," he says. "They want to be educated and shown how to use the dispensers, they want employees on the floor talking to them about the products and making sure that they can get rung up quickly. So it's not a lack of service, it's just service that's deployed in a different way."

Another attraction for franchisees is total cost of entry compared to other types of franchised foodservice concepts. The company's 2012 franchise disclosure document lists total estimated initial investment of $140,000 to $397,740, excluding real estate lease costs and unusual architectural circumstances. Of that, the initial franchise fee is $25,000, of which $5,000 is reimbursable for grand opening marketing expenses.

Despite all of the changes made at TCBY, Casey says the company remains focused on providing franchisees with build-out costs that create a great economic model. The target it shoots for is a 2-to-1 sales-to-investment ratio. "That's the number we measure ourselves against because we know that it's the most important element to our franchisees, not only to generate the wealth that they want to generate when they choose to franchise, but also to encourage them to develop multiple stores."

Consistent with TCBY's longtime business model, the majority of stores are franchised locations, and most are owned and operated by single-unit franchisees. Over the past two and a half to three years, however, coinciding with the debut of the self-serve format, Casey says many franchisees have begun to expand and open additional units. In some cases, master franchisees operate up to 20 stores. "That's really an indication of the economic model that we're providing," he says. "It's a good model for them and one that they want to continue and open new locations with."

A Swirl of New Product Innovation

Design, format and economics aside, of course, it's the product that ultimately brings consumers in and keeps them coming back. As first to market some 30 years ago, Casey says the chain has a distinct competitive advantage. "If you go back to the very beginning, the brand was about innovation. It was about founder Frank Higgenbotham's belief that you didn't have to sacrifice taste, flavor and quality to arrive at a healthy product. Now in 2013, even though we've launched the self-serve format and we're doing some really interesting things with TCBY, those pillars of flavor, quality and nutrition still drive the brand."