BASKIN ROBBINS: Franchisees Lose $1.45 per Scoop on Promo

November 17, 2009 unhappyzee

Discount promotions like Baskin Robbins 31 Cent Scoop Night might be great for ice cream lovers and great for the franchisor… but what about the Baskin Robbins franchise owner who foots the bill? According to Smart Money, BR franchisees lose roughly $1.45 a scoop on 31 Cent Scoop Night

It’s one of the hottest topics in franchising. Here’s why: Franchisors make money off the gross sales of their franchisees, regardless of franchisee profitability. Some franchisors make additional money marking up ingredients and food products to their franchisees. Public franchisors benefit from higher sales – and stock prices – that are not tied to franchisee profitability.

SmartMoney.com surveyed franchisees from different franchise chains regarding the cost to them of some current and recent promotions. The Smart Money article points out that franchisees generally bear the brunt of a promotions’s cost, including the food, labor, rent and utilities, among other things.

Here’s the Smart Money finding for Baskin Robbins 31 Cent Scoop Night, which report a $1.45 loss per sandwich:

Baskin Robbins

Promotion: 31 Cent Scoop Night – This annual promotion occurred between the hours of 5pm and 10pm on April 29.

What they normally charge: $2.29 (one single scoop)

Promotion Price: 31 cents

Bottom line for restaurant: Loss of roughly $1.45 a scoop

Baskin-Robbins’ 31 Cent Scoop Night is done in the name of charity. Not only does the company donate $100,000 to NVFC National Junior Firefighter Program, but it’s also quite generous to ice cream lovers as well. One scoop (of any flavor you choose) for just 31 cents compared to the regular price of $2.29 at one location in Wisconsin is a pretty sweet deal. Franchisees don’t feel much of that goodwill, however: Beyond the approximate 60-cent cost of the ice cream, a spoon and a cup, store operators also pay another $1.15 per scoop for rent, utilities and labor, estimates one store owner in Wisconsin. Baskin-Robbins spokeswoman, Danielle Sullivan, says the company’s own calculation on per-item profitability differs from those provided to us by franchisees, but she declined to give specific figures. She also declined to comment further on costs and profits.