The frozen-treat wars show no sign of cooling off as summer heats up demand for chilly snacks, and Franklin, Tenn.-based Tasti D-Lite plans to ride that trend to big growth with a refreshed brand image and an aggressive new franchise business model.
No newcomer to the frozen-dessert segment, 22-year-old Tasti D-Lite is trading on its reputation as a low-calorie indulgence with mainstream appeal that has been featured on “The Apprentice” and several episodes of HBO’s “Sex and the City.” Tasti D-Lite is a dairy-based frozen dessert, not frozen yogurt or ice cream. Unlike Pinkberry and other competitors that have embraced the trend for tart flavors, Tasti D-Lite focuses on a traditional, family-friendly flavor that is sweet and creamy.
“What makes us unique is that we offer a sweet and creamy profile. So it’s got an all-family mainstream appeal,” said chief marketing officer Bill Zinke. “It’s not something that’s just going to appeal to someone who likes a particular flavor. It’s going to appeal to anyone who likes things that are sweet and creamy, which is the bulk of the country.
“And yet our average flavor or most of our flavors for a small, 4-ounce serving have 80 calories or less, 1.5 grams of fat, 14 grams of carbs or less and have 5 grams or less of sugar.”
Tasti D-Lite has more than 100 flavors, all of which are made by adjusting a vanilla or chocolate base with a variety of flavored syrups. Each Tasti D-Lite machine holds two flavors, and most stores have two or three machines so they can keep four or six flavors “on tap” at a time. Because every flavor is based on either vanilla or chocolate, the stores can offer any of the flavors on request.
CHAIN FACTS NAME: Tasti D-Lite LLCHEADQUARTERS: Franklin, Tenn.MARKET SEGMENT: light frozen dessertsTOTAL NO. OF UNITS: 50SYSTEMWIDE SALES: unavailableLEADERSHIP: James H. Amos Jr., chief executiveYEAR FOUNDED: 1987
“We have a machine that also can do custom blends,” said vice president of franchise development Nikki Sells. “So if you go into one of our stores and want banana, but they don’t have banana, they can make a banana while you’re right there.”
Tasti D-Lite’s adherence to traditional flavor profiles with mass-market appeal does not mean it is ignoring trends, however. A line of “superfruit” smoothies made with pomegranate, açai, goji berry and mangosteen was rolled out a year ago, spurred by interest in the antioxidant-rich fruits, Zinke said.
Tasti D-Lite, which was founded in 1987, was purchased in February 2007 by New York-based private-equity firm Snow Phipps Group LLC for $21 million. James H. Amos Jr., an operating partner in Snow Phipps, was tapped as Tasti D-Lite’s chief executive. A resident of the Nashville, Tenn., area, Amos established the chain’s headquarters in Franklin. Officials noted that the locale is more centralized geographically and less costly than New York, making it easier for franchisees to spend time there.
The new management approached Tasti D-Lite with the goal of refreshing the brand and growing through a franchise business model. Previously, the company had been growing through licensed wholesalers who could purchase a machine and the license to sell the product in their own businesses, but did not receive marketing or branding support.
“A licensed wholesaler does not work under a franchise agreement,” Sells said. “We’re now providing an entire business format to go with that and setting it up as a franchise system, and we’ve been franchising for about 14 months.
“In some of our stores that were opened many years ago, we’d have people who would buy Tasti D-Lite machines and license to buy the product, and they would put it in their own business,” Sells said. “For instance, there was one in the back of a furniture store.”
Tasti D-Lite converted to a franchising model in February 2008, Zinke said, and the concept’s existing licensed wholesalers were invited to become franchisees. There are currently about five licensed wholesalers left in the Tasti D-Lite system, Sells said, and as their contracts expire they will not be renewed.
Licensing “doesn’t have the same structure support and branding of a franchise company,” Sells said. “When you walk into a franchised business, you see a common store design, you see a common seating. Franchise operations have that consistency.”
To achieve consistency and refresh Tasti D-Lite’s brand identity, “we developed a new logo to make it more contemporary and added the tagline that was ‘Dessert your guilt’ because our product is so healthful, with only 80 calories per small serving,” said Zinke. “We also in that process developed a whole new store design.”
The new Tasti D-Lite cafes strive to be upbeat, contemporary spaces with sleek furniture and bright colors. They range in size from 600 square feet to 1,300 square feet, with the average store having a footprint of about 900 square feet.
“We’re trying to create locations that are comfortable places to sit and relax and escape, with seating. [Tasti D-Lite] has a comfortable space, and it’s a good place to come with family, friends; it’s really a destination,” Zinke said.
The flagship Columbus Circle store at 60th Street and Broadway in New York is about 1,300 square feet and seats about 20 people.
The estimated initial investment for a single-unit franchise ranges from $253,700 to $431,410 and includes a $30,000 franchise fee, said Sells.
“The reason for that discrepancy is because it’s really going to make a difference based on where the store is located,” said Sells. “It costs more in New York City to open a store than it does in Little Rock, Arkansas.”
On May 5 the chain inked a deal with franchisee MM Ventures LLC to open 35 new stores over the next 10 years in New York, New Jersey and Connecticut.
“Our vision is to grow to a 500-unit network,” Zinke said. “We have 50 now. And with the existing franchisees, area developers and international developers, we have commitments to build 240 locations. It will obviously take time to build all those, but they’re all committed, and we have international and domestic prospects as well.” — [email protected]
