“Quick summary” Are you considering opening a yogurt business? Well, you're headed in the correct direction! Frozen yogurt is a popular, delectable delicacy that is increasingly gaining popularity among customers.
Let's understand through some quick numbers - As per a report published by ResearchAndMarkets.com, the global frozen yogurt market size was valued at USD 2.0 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 5.5% from 2021 to 2028.
And the rising popularity of frozen yogurt as a healthy alternative to ice cream is the reason behind these whopping numbers.
Frozen yogurt has grown in popularity (over time) as a result of business owners' innovations in increasing the variety of flavors and enabling consumers to customize their frozen yogurt with the toppings of their choice.
It sounds like a fascinating industry, don't you think?
But let me tell you - It's also crucial to determine initial frozen yogurt business startup costs and comprehend what it takes to launch this kind of business before making the leap.
Don't worry! We have you covered.
In our blog post, we'll be considering the important steps you should take to launch a frozen yogurt business and even the costs associated with all these steps you should consider when preparing your budget.
Before starting your frozen yogurt business, it's crucial to understand the different types of costs you'll encounter. These costs can include fixed costs such as rent and equipment, variable costs such as ingredients, and one-time costs such as permits and licenses. By knowing these costs upfront, you can create a solid business plan and budget for success.
When it comes to starting a frozen yogurt business, location is one of the most critical factors to consider. Suppose you are looking to start your frozen yogurt business.
In that case, you can't ignore the frozen yogurt biz startup costs associated with location, such as renting, leasing, or purchasing a property, security deposit, utilities, and insurance, as it takes up much of your startup and operational costs.
Your business's location can significantly impact costs, revenue, and overall success.
Keep reading to find out how much renting & leading space for your frozen yogurt biz costs and which factors surround location costs.
The cost of rent and lease for a frozen yogurt business can vary greatly depending on the location, size, and property type.
Here are some factors to consider when estimating the cost of rent and lease for a frozen yogurt business:
While you are starting off your frozen yogurt biz, and (especially) if you are tight on budget, you need to consider every expense that comes your way. One such expense that is going to take a big chunk of your money is a security deposit while renting a space.
When finalizing the property, your landlord will ask for a security deposit as protection to pay off (in case you damaged the property or violated any of the terms). The amount of the security deposit will depend on several factors, such as the rental or lease agreement terms, the size and condition of the property, and the landlord's requirements.
If we talk about general terms, the security deposit for a commercial property can range from one to three months' rent or lease amount. So, that means if you are paying a monthly rent of $10,000, then the security deposit may be anywhere from $10,000 to $30,000.
So, given this hefty amount, it is more than crucial to consider the amount of security deposit when budgeting for your frozen yogurt business, as it can significantly impact your initial expenses(especially if you are short of funds).
Utilities and insurance costs for your frozen yogurt biz are another consideration that you should include while calculating the costs.
Here are some of the benefits of these considerations:
By budgeting all the utility expenses, such as electricity and water usage, and managing them properly, you can easily reduce your overhead expenses while boosting your profits. In the same manner, by choosing the right insurance coverage and working with an experienced insurance agent or company, you can get the best coverage at competitive rates, which improves your bottom line.
After location, the other crucial thing to consider while deciding the total frozen yogurt biz startup costs is equipment cost. For your frozen yogurt business, you need to purchase a variety of equipment such as a frozen yogurt machine, Point of Sale system, furniture and fixtures, refrigeration to store ingredients, and other necessary equipment.
In the below points, we will discuss the various equipment and its costs that will hugely impact the overall frozen yogurt business startup costs.
Frozen yogurt machines (by default) become a crucial part of your business. Because having a high-quality machine can make a significant difference in the end product that you provide to clients, let us tell you for your relief that a frozen yogurt maker doesn't take much from your capital. The price of your frozen yogurt machine is affected by various factors, such as the size, quality, and brand of the machine.
A basic frozen yogurt machine can cost anywhere between $400 and $1,500 on average. You can double the cost of the initial machine if you plan to use two to provide two different types of frozen yogurt.
You should also take into account supplementary expenses when buying a frozen yogurt machine, such as supplies, upkeep, and repairs.
Ultimately, the machines for your frozen yogurt business could cost anywhere from $725 to $6,220 overall.
Quick-Tip: Spending on a high-quality machine can be worthwhile in the long term, as it will help guarantee that your consumers always receive a high-quality product.
If you want to start a frozen yogurt shop, you need to prepare to spend money on serving items, including ladles, spoons, scoops, and cups.
Despite the fact that the precise cost of these things can vary depending on the type, quality, and amount acquired, the cost of all the equipment should be considered when creating a budget for your frozen yogurt business costs.
|Startup Cost||Average Cost Range (USD)|
|Measuring cups and spoons:||$5-$50|
|Spatulas and spoons:||$5-$30|
|Tongs and ladles:||$5-$30|
|Ice cream scoops:||$5-$20|
|Whipped cream dispenser:||$20-$100|
|Storage containers for toppings and dry goods:||$10-$100|
|Toppings dispensers (candy dispensers, cereal dispensers, etc.):||$50-$200|
|Fruit slicers and choppers:||$20-$100|
|Knives and scissors:||$20-$50|
Note: In the list above, the costs we mentioned are approximate and will vary based on the location, quality, supplier, and other factors. Additionally, the list can also change based on your requirements, and you need to clear the business needs and make decisions accordingly.
The Point of Sale (POS) system is considered to be one of the most crucial investments when beginning a frozen yogurt business.
The frozen yogurt POS system can be used to rapidly and accurately accept client orders, provide individualized recommendations, support marketing strategies, and facilitate inventory management.
A simple point-of-sale system that includes hardware and software normally costs around $1,000. However, the price is mainly based on the system's features and functionality.
Additionally, installation, training, and ongoing support could cost extra. In accordance with Statista reports, more than 60% of businesses claimed they spent between $1,000 and USD 3,000 on the best-in-class POS system.
Aside from the initial cost, many providers of frozen yogurt POS systems could also demand that businesses buy hardware upgrades and software upgrades.
It's also crucial to take into account the possibility that POS software will require an additional monthly payment for features like customer assistance or data storage. Before purchasing a POS system, businesses should always take into account all recurring costs.
The cost of furniture and fixtures for a frozen yogurt business will depend on several factors, including the size of the business, the location, and the type and quality of furniture and fixtures needed. It is important to carefully consider the specific needs of your furniture & fixture business requirements and plan your budget around it accordingly.
Here are some common furniture and fixture item requirements that you will need for your frozen yogurt biz, along with their estimated frozen yogurt business startup costs:
Refrigeration to store ingredients and keep them fresh is crucial. So, definitely considering the cost for the same is important.
Recent reports show that a commercial refrigerator ranges from $1000 to $3000 USD. The price range to get high-quality refrigeration is between $7,000 and USD 20,000, which you most probably use in frozen yogurt business and processing facilities. Your geography and scope of business determine the size of refrigeration you require.
In addition, the continual cost of electricity is used to keep the refrigerated unit running. The overall expenses can also vary by location, with different states having different electricity tariffs. Consider the refrigerator's upkeep and repairs as well. The price of upkeep and repair work can differ based on the problem, location, and type of refrigerator.
Overall, it's crucial to plan ahead and consider all of the expenses associated with refrigeration, including the cost of purchase, energy use, upkeep, and maintenance.
Supplies and inventory costs are yet another crucial consideration when starting and running a frozen yogurt business. From cups and spoons to toppings and frozen yogurt mixes, the supplies you need can vary depending on your menu and the scale of your operation.
Even the quality of the materials you choose and the inventory management tools you will use for your frozen yogurt biz will also significantly affect the costs.
So, you need to consider your requirements properly and effectively manage your suppliers to minimize waste, control costs, and ensure that you always have the necessary supplies to serve your customers.
Below, we will be considering the expenses related to frozen yogurt mix & supplies, followed by cleaning supplies as well as packaging materials and the tips to manage it effectively. Let's find out!
Frozen yogurt mix and topping are among the key ingredients that frozen yogurt businesses will use. So considering its supply and Inventory is vital to ensure minimum expense and maximum utilization.
Quick tip: It's important to compare prices from different suppliers to find the best deals and consider bulk purchasing to save on costs. (But make sure to manage it properly)
Here are a few things that it includes:
The cost of packaging materials for a frozen yogurt business can vary depending on several factors, such as the type and size of the packaging, the ordering quantity, and even the suppliers that you decide to go with!
Let's run some quick figures: If you are using plastic cups with lids to serve frozen yogurt, the cost per unit can range from $0.05 to $0.25, while the cost of spoons can range from $0.01 to $0.05 per unit.
Suppose you are also offering take-out options or are selling pre-packaged frozen yogurt cups. In that case, you also need to consider the cost of additional packaging materials such as bags, boxes, or labels. The cost of these materials can range from $0.10 to $1.00 per unit.
Here's advice: It might be appealing to go for the cheapest option available, and it is beneficial in the short term, but in the long term, it will not be suitable as it can impact the customer experience leading to negative reviews and bad brand reputation. Therefore, balancing the cost with the quality and overall customer satisfaction is essential.
Ultimately, the best way to determine the right cost for your packaging materials for a frozen yogurt business is to research various suppliers, compare prices, and calculate the total cost based on the required quantity.
To determine the accurate frozen yogurt business cost of cleaning supplies, you need to make a list of all the cleaning supplies you use, including the quantity and price of each item.
Some of the common cleaning supplies for a frozen yogurt business will include:
Once you have a complete list of your cleaning supplies and their prices, you can calculate the total cost by adding up the cost of each item. And on average, a small to medium-sized frozen yogurt business might spend anywhere from $50 to $150 per month on cleaning supplies.
You may want to set a budget for cleaning supplies each month or quarter to ensure that you have enough funds to keep your business clean and maintain the hygiene standards at your workspace.
To operate your frozen yogurt biz for a long time and to do it profitably, you need to market and advertise your business which also requires a huge chunk of money. It can be a significant expense, especially for small businesses with limited budgets.
So, developing a comprehensive marketing strategy that balances your goals with your budget and leverages a mix of traditional and digital marketing channels is essential. The costs will cover developing a user-friendly website, social media management and marketing, and influencer marketing.
Keep reading to know more about the frozen yogurt business costs associated with entire marketing and advertising!
The cost of developing a website for your frozen yogurt business is based on different factors, such as the complexity of the website, the features required, and the web development agency or freelancer you choose to work with.
Here are some approximate figures to give you an idea:
Promotions and Discounts are a crucial part of your overall marketing plan. Customers love this and feel important(when you offer appealing discounts and promotions) while increasing customer experience.
The cost of offering promotions and discounts for your frozen yogurt biz will vary depending on the type and frequency of promotions.
Check out some of the ways you can offer discounts & promotions along with their cost:
The cost of social media marketing for frozen yogurt biz can vary widely depending on the social media channels you use, the level of engagement you will require, and the scope of the marketing campaign.
Here are some potential costs you can consider:
So, by keeping in mind all the factors mentioned above and their cost - you will be spending somewhere around $10000 for social media marketing per month.
For starting and running a frozen yogurt business(without much hassles), you need to include various legal and administrative costs that can quickly add up. From Business registration fees to Legal and accounting fees and even permits and licenses, there are many legal and administrative expenses that come with starting a business.
Failing to comply with legal requirements can result in hefty fines or even legal action, which is why it's crucial to understand the frozen yogurt biz startup costs associated with these responsibilities upfront.
Let's discuss all the relevant legal costs that you need to consider to ensure no problems later on! Keep Reading!
When starting a frozen yogurt business, it's important to factor in the costs of business registration fees. These fees can vary widely based on your location and the legal structure of your business. The fees can range from a modest $50 to a steep $800 depending on the state and type of business entity you choose.
In addition to registration fees, you may need to obtain a business license or permit, register for taxes, and file annual reports. These requirements can also vary by location and business type, so it's important to do your research and budget accordingly for all associated fees and costs.
To navigate the process successfully, you may consider consulting with a local attorney or business advisor who can guide you through the registration and licensing process and help you avoid any costly mistakes. By taking the time to understand the fees and requirements involved in registering your frozen yogurt business, you can set yourself up for success and avoid any surprises down the road.
Legal and accounting fees are crucial expenses for a frozen yogurt business as they help ensure the business remains legally compliant, financially stable, and protected from potential legal and financial risks.
Proper legal and accounting practices can help prevent costly legal disputes, financial penalties, and tax issues that can cripple a business's operations. Through this, you can focus on your core operations and growth while ensuring that all your legal and financial affairs are handled professionally and efficiently.
Let's have a look at the figures for legal & accounting fees:
However, incorporation or forming a legal entity can range from $1,000 to $2,500. Intellectual property registration, such as trademark or patent application, can range from $1,000 to $5,000. These are approximate figures for a few general legal requirements. You can consult with your legal advisor for a better understanding.
The cost of licenses and permits for a frozen yogurt business can vary depending on the location and specific requirements of the local government.
Let's find out some of the most crucial ones:
As you are already aware that the best employees are an asset to your business. So, as a frozen yogurt business owner, you need to spend on employees, their supplies, and the benefits given to them to operate your business efficiently.
It's essential to understand the costs associated with hiring and managing employees to develop a comprehensive budget and ensure that you can afford to pay your staff fairly while still generating a profit.
Keep reading to know more about the costs associated with hiring and managing staff.
The hiring and training costs for staff in a frozen yogurt business can vary depending on several factors, such as the size of the business, the number of employees, the experience level of the staff, the location of your business, training needed, etc.
Check out some of the frozen yogurt business startup costs that you will incur while hiring & training staff:
So, consider all these hiring and training costs as they will require some considerable expenses from your total revenues.
Payroll and Employee Benefits also affect the final cost of operating a frozen yogurt business. So, here are some of the expenses regarding Employee Payroll and benefits that you can keep in mind while deciding on the total cost.
In addition to payroll and benefits costs, there are other costs associated with employing staff in a frozen yogurt business, such as employee uniforms and other expenses.
Have a look at some of the potential costs you can consider while accounting for uniforms & supplies:
Contingency funds are crucial for any business and become helpful when it comes to uncertain situations. Businesses need to set aside some emergency funds while starting the business and even add some proportion of income every month.
A contingency fund can also help you take advantage of new opportunities or invest in new initiatives that can help grow your business. Read on to find out more about the importance of having a contingency fund and how much proportion of funds to set aside every month.
Having a contingency fund is important for any business, including the frozen yogurt biz. A contingency fund is a reserve of cash or other assets that a business can use in case of unexpected events. Having a contingency fund is essential for your frozen yogurt business as it acts as a safety net during tough times and even protects the business from unexpected expenses while ensuring long-term viability.
Here are some reasons why having a contingency fund is crucial for a frozen yogurt business:
We recommend you set aside at least 10% to 20% of the total frozen yogurt business startup costs in your contingency fund. You can use this fund to pay for unexpected expenses or emergencies that may arise during the startup phase or even while operating your business in the long run.
By setting aside a contingency fund, you can better prepare for any unforeseen circumstances and avoid having to dip into your personal finances or take on additional debt to cover these expenses in your frozen yogurt business.
Quick Tip: It is important to factor this contingency fund into the initial budget and to regularly review and update the contingency plan to ensure it remains relevant and effective as the business evolves. It can include re-evaluating the amount set aside for the contingency fund or revising the plan to address new potential risks.
By taking a proactive approach to risk management and maintaining a contingency fund, the business owner can help ensure the long-term success and sustainability of the frozen yogurt business.
Starting a frozen yogurt business might be a fun business. But, it goes a lot in starting and operating a successful business.
But we hope our comprehensive guide will help you out in determining which things to consider before starting a frozen yogurt business, the effective steps to operate it, and the cost for each and everything.
The initial investment may end up falling between $80000 and $150,000 if you take into account all the variables, including location, supplier, hardware requirements, renovation, licenses, and marketing. Even though it is expensive, you can eventually benefit from owning and operating a prosperous frozen yogurt business if you make well-considered decisions and use clever marketing strategies.
Still, if you are looking for expert guidance on getting started or regarding the costs associated with it, reach out to the expert at OVVI. Our team will understand your requirements and get back to you!
Yes, it is surely possible to make money with a frozen yogurt business. You just need to make the right decisions to manage the business efficiently and effectively. (This goes for every business, and frozen yogurt is not an exception.)
One advantage of the frozen yogurt biz is that the cost of ingredients is relatively low compared to the selpng price, leading to higher profit margins enabpng frozen yogurt businesses to make money.
On the other hand, frozen yogurts are quite trending right now and have become a popular dessert option, which is yet another way to attract customers and make money.
Here's a quick tip from our experts: It is important to conduct market research and develop a sopd business plan to ensure that the business is profitable. And with careful planning and management, a frozen yogurt business can be profitable.
The profit margin of a yogurt shop is quite significant due to the high markup on the products. Studies have shown that a typical 10-ounce serving of frozen yogurt has a 500% markup, which means that the selling price is five times the cost to produce it. It is even after subtracting the cost of cups and spoons.
So while it may seem unbelievable that yogurt can sell for more than 59 cents an ounce when it costs less than a dime to make, the markup allows yogurt shops to get some amazing profit margins.
The frozen yogurt business can be profitable if managed effectively. As you mentioned, one of the reasons for this profitability is the low core costs associated with the business.
According to industry reports, chain yogurt shops report an average annual sales volume of $750,000 - $800,000, assuming they have been open for at least 2 years. It suggests that there is significant revenue potential in the frozen yogurt industry, especially for established businesses with a loyal customer base.
To maximize profitability, it's important to focus on providing high-quality products and services that meet your customers' needs. And do manage your expenses effectively to minimize expenses and maximize profitability.
The target market for the frozen yogurt business is as follows:
If you want to start a froyo business and are looking for some quick & helpful pointers to get started, then check out the below list.
You need to: