FDD Talk: Nothing Bundt Cakes Franchise Review (Financial Performance Analysis, Costs, Fees, and More) (2024)

In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Nothing Bundt Cakes franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Nothing Bundt Cakes franchise, based on Item 7 of the company’s 2020 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Nothing Bundt Cakes franchise, based on Items 5 and 6 of the company’s 2020 FDD

• Section IV – Number of franchised and company-owned Nothing Bundt Cakes outlets at the start of the year and the end of the year for 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD

• Section V – Presentation and analysis of Nothing Bundt Cakes’ financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:

• 2018 and 2019 average, median, highest, and lowest net revenues for 227 franchised Bakeries (“Included Franchisee Bakeries”), all of which have been operating for at least 24 months as of December 29, 2019

• 2019 average net revenues, cost of goods sold, gross margin, payroll costs, occupancy expenses, marketing and advertising, other expenses, interest expense, depreciation and amortization, taxes, net income, EBITDA, and total franchisee principal’s benefit achieved by 201 Included Franchisee Bakeries that provided Nothing Bundt Cakes with complete 2019 financial statements prior to the issuance of the 2020 Disclosure Document

• average and median net revenues achieved during the first and second full 12 months of business by all 47 franchised Bakeries that opened during the 2017 calendar year and have been open a minimum of 24 months as of December 29, 2019

Section I – Background Information

16 Things You Need to Know About the Nothing Bundt Cakes Franchise

Leverages HotSchedules Technology to Manage Employees and Expand Nationwide

1. In mid-June 2019, HotSchedules, the leading provider of workforce and back office solutions for the restaurant and hospitality industries, announced that it had been selected by Nothing Bundt Cakes to provide a reliable and intuitive technology solution during a time of expansion.

2. With the opening of Nothing Bundt Cakes’ 300th location in May 2019, HotSchedules will help bakeries by providing forecasting functionality around employee scheduling, alerting owners when employees are going into overtime and preventing the company from violating labor laws, and maintaining compliance in each state where the company operates.

3. According to Susan Hern, vice president of operations and training for Nothing Bundt Cakes, “With our focus on providing an extraordinary experience and strong financial model at Nothing Bundt Cakes, we want to support our bakery owners with tools to make managing business functions and staffing easier and less time consuming. We chose HotSchedules because it offers more robust forecasting and labor functionalities and will easily integrate with our new POS system, which will help our bakery owners take advantage of technology to increase efficiency and retain employees.”

4. David Cantu, co-founder and chief customer officer of HotSchedules, added, “In an industry where hiring is an issue and employee retention is crucial, it’s important to have the right forecasting and labor tools to protect employees. At HotSchedules, our mission is to help restaurant and retail managers and their teams utilize technology in order to maximize productivity and drive revenue. We are eager to help Nothing Bundt Cakes excel in its nationwide expansion plans, and our technology will help new franchise owners succeed from the start.”

Expands Corporate Bakery Footprint, Acquires San Diego Bakeries

5. In late November 2019, Nothing Bundt Cakes announced that it had successfully acquired six franchised bakeries in the San Diego market. As company-owned operations, the San Diego Bakeries will benefit the Nothing Bundt Cakes’ brand and support West Coast bakery owners, eventually becoming Nothing Bundt Cakes’ training base on the West Coast and serving as additional outlets for research & development and product innovation. The expanded company-owned geographical footprint will also allow Nothing Bundt Cakes more direct touchpoints with its customers to ultimately drive the highest levels of guest satisfaction.

6. Kyle Smith, CEO of Nothing Bundt Cakes, commented, “We are thrilled to add these San Diego Bakeries to our company-owned portfolio that includes locations in Dallas, Texas and Baton Rouge, Louisiana. We believe that this acquisition provides us a great opportunity to improve our overall support to our bakery owners, while providing an extraordinary experience to our guests.”

7. Matthew Frankel, a partner at LLCP (Nothing Bundt Cakes’ parent company), stated, “This acquisition demonstrates our continued support of the NBC investment. We remain focused on building value for the benefit of NBC’s bakery owners, guests, employees and investors. We are excited to take part in the next chapter of growth for the San Diego Bakeries.”

Continues to Bring Joy Amid COVID-19 Pandemic with National Bundt Day Giveaways

8. In early November 2020, Nothing Bundt Cakes launched its countdown to National Bundt Day, Nov. 15, with a weeklong giveaway on social media. Beginning Monday, Nov. 9, the brand gave away 20 $20 Nothing Bundt Cakes gift cards every day through Saturday, Nov. 14, encouraging fans to share photos and joyful memories on Instagram for a chance to win.

9. On Sunday, National Bundt Day, Nothing Bundt Cakes’ Instagram and Facebook feeds featured the content shared by its fans throughout the week so their joy could ripple forward to all who see it.

10. Dena Tripp, co-founder and chairman of Nothing Bundt Cakes, said, “We believe National Bundt Day is the most joyful day of the year, and last year we were able to celebrate with festivities for our guests in all our bakeries across the nation. This year, we’re taking the fun online and hope our loyal guests will join us to share the small, the everyday, and just-because joys still experienced during this difficult year.”

11. Throughout the ongoing COVID-19 pandemic, Nothing Bundt Cakes has continued to bring joy through Bundt Cake donations across the nation. From recognizing high school graduates to supporting essential workers and first responders, Nothing Bundt Cakes bakery owners are always working to give back to their communities.

12. Kyle Smith, CEO of Nothing Bundt Cakes, said, “We are in the joy-giving business, and we always encourage our bakery owners to give back within their communities. This year, it’s never been more important or rewarding to offer a helping hand, sweeten someone’s day and bring joy and smiles to those around us.”

Company History

13. Nothing Bundt Cakes was founded in 1997 by Debra Shwetz and Dena Tripp in Las Vegas, Nevada. Shwetz and Tripp had been baking cakes together for years and after some encouragement from friends and family, they realized that there was a gap in the food industry for cakes made from pure, high-quality ingredients.

14. After a few years of establishing the Nothing Bundt Cakes brand, Shwetz and Tripp started franchising the concept in 2006. Each location maintains a “mom and pop shop” feel and the cakes are still made from scratch with quality ingredients.

15. In 2016, Nothing Bundt Cakes was acquired by Los Angeles-based private equity firm Levine Leichtman Capital Partners (LLCP). At the time, Nothing Bundt Cakes had 175 locations around North America. Today, there are Nothing Bundt Cakes bakeries all across the United States and Canada.

Entrepreneur’s Franchise 500

16. Nothing Bundt Cakes ranked No. 45 on Entrepreneur’s 2020 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Nothing Bundt Cakes franchise costs, based on Item 7 of the company’s 2020 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Nothing Bundt Cakes’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2020 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2017

• Outlets at the Start of the Year: 187
• Outlets at the End of the Year: 234
• Net Change: +47

2018

• Outlets at the Start of the Year: 234
• Outlets at the End of the Year: 276
• Net Change: +42

2019

• Outlets at the Start of the Year: 276
• Outlets at the End of the Year: 318
• Net Change: +42

Company-Owned

2017

• Outlets at the Start of the Year: 6
• Outlets at the End of the Year: 6
• Net Change: 0

2018

• Outlets at the Start of the Year: 6
• Outlets at the End of the Year: 6
• Net Change: 0

2019

• Outlets at the Start of the Year: 6
• Outlets at the End of the Year: 13
• Net Change: +7

Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis

• This Item sets forth historical net revenue and cost information for Nothing Bundt Cakes’ franchised Bakeries which was provided to the franchisor by its franchisees.

• As of December 29, 2019, Nothing Bundt Cakes had 317 franchised Bakeries and 13 affiliate-owned Bakeries open in the United States.

• Part I of this Item sets forth the net revenues of 227 franchised Bakeries (“Included Franchisee Bakeries”), all of which have been operating for at least 24 months as of December 29, 2019. The Measurement Period in Part 1 is January 1, 2018 to December 29, 2019.

• Included in this Item 19 are five franchised Bakeries owned and operated by Nothing Bundt Cakes’ founders.

• Part II of this Item sets forth average net revenues, average cost of goods sold, average gross margin, average payroll costs, average occupancy expenses, average advertising expenses, average other expenses, average interest expenses, average depreciation and amortization expenses, average net income, and average EBITDA achieved by 201 of the 227 Included Franchisee Bakeries from January 1, 2019 through December 29, 2019 (the “2019 Calendar Year”).

• The 201 of the 227 Included Franchisee Bakeries provided Nothing Bundt Cakes with complete 2019 financial statements prior to the issuance of the 2020 Disclosure Document. 26 of the Franchisee Bakeries were excluded on the basis that they did not provide Nothing Bundt Cakes with complete 2019 financial statements before the issuance of the 2020 Disclosure Document.

• Part III of this Item sets forth the average net revenues achieved during the first and second full 12 months of business by all 47 franchised Bakeries that opened between January 1, 2017 and December 30, 2017, and have been open a minimum of 24 months as of December 29, 2019.

• Nothing Bundt Cakes has excluded from this Item 19 results of the 13 affiliate-owned Bakeries, one Canadian bakery, and 90 that were not open and operating for the entire 24-month Measurement Period.

• Nothing Bundt Cakes has not audited or independently verified the data submitted by the included Bakeries and no assurance can be offered that the data does not contain inaccuracies that an audit might disclose. Nothing Bundt Cakes will provide you with written substantiation for the financial performance representation upon reasonable request.

Part I – Included Franchisee Bakeries’ Average Net Revenues and Growth in Average Net Revenues During the Measurement Period

• “Net Revenues” includes all revenues generated from all business conducted at or from a Bakery during the Measurement Period, including amounts received from the sale, shipping, and delivery of food items, amounts received through the E-Commerce program and from gift card sales, and other products and services, merchandise, and tangible property of any nature whatsoever, whether in cash or for credit, and whether collected or uncollected.

• “Net Revenues” does not include the amount of any applicable sales tax imposed by any federal, state, municipal, or other governmental authority if such taxes are stated separately when the Guest is charged and franchisee pays such amounts, as and when due, to the appropriate taxing authority.

• Also excluded from Net Revenues are the amount of any documented refunds, chargebacks, credits, and allowances given to Guests in good faith pursuant to Nothing Bundt Cakes’ standard procedures for issuing such refunds.

• The “Average Net Revenues” for the Included Franchisee Bakeries were calculated by taking the sum of the Included Franchisee Bakeries’ Net Revenues and dividing it by the total number of Included Franchisee Bakeries.

• The “Percentage Growth in Average Net Revenues” was calculated by taking the difference between the Average Net Revenues achieved by the Included Franchisee Bakeries in 2019 and 2018, and dividing it by the Average Net Revenues achieved by the Included Franchisee Bakeries in 2018.

Included Franchisee Bakeries

2018