I spoke with a former franchisee of Nrgize, a smoothie bar by Kahala Corp of Stone Cold Creamery fame. Nrgize has very good tasting healthy smoothies and complementary healthy foods.
The franchisee was open for about a year before closing its doors. The location was in a popular suburban fitness center. At first, the thought of exposure to all the healthy clientèle sounded like a sure win. However, sales were lower than expected from gym members and public walkins from non-members to buy smoothies was extremely rare.
It’s a good lesson on understanding visit rates from a given population and repeat visits. I’ve heard this rule of thumb and it seems to makes sense —– If you have a great food product and are the only provider, you will likely get close to 20% of the population to visit you twice a month. With competition and a less than unique food offering, you should figure less than 12% will visit you twice a month. You will quickly see that a 5k regular visiting member gym would yield at best 66 transactions per day. If your average ticket is $5 at a 12% capture rate, your sales will be $118,800/year which is probably nowhere near profitable territory.