Soup Nazi for $30K
Al Yeganeh, the Soup Nazi character from the Seinfeld T.V show is franchising his soup restuarant. They’ve signed 123 deals so far, and they’re aiming for over 1,000 units. The franchise fee is reported to be $30,000 with royalty and advertising fees totalling 6%.
Special kiosks sold by the company and storefront locations will bear Yeganeh’s “The Original Soup Man” logo with his photo. For $10, customers will get eight ounces of soup _ from seafood bisque and chili to cold and exotic soups _ plus bread, a beverage, fresh fruit and a small chocolate.
Can this work? I’ve seen a few soup focused franchises coming online lately (Zoup,San Francisco Soup Co.), but I’m skeptical of this small-scale soup franchise. They are making the soup in New Jersey where it will be frozen and shipping to franchisees. I’d feel much more comfortable franchising a nice soup and sandwich cafe, or sandwich cafe known for their soups like Panera Bread, Pickerman’s Soup & Sandwich Shop, Obee’s Soup Salad Subs, or Schlotzky’s.
Strangely, as Professor Bainbridge points out, franchisees are prohibited to use the words “Soup Nazi” or “Seinfeld”.
I wouldn’t buy it!
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I don’t know. I think a soup franchise could do ok. Most people I know like soup and they could be filled with enough ingredients to make you full. I would think most soup places do have other items to eat like bread or sandwiches. I’m surprised there aren’t more soup franchises or individual stores.
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I tend to agree with you, Jess, that soup franchises can be the “next big” thing for QSRs. I think there is a definite opportunity here. There is no waiting time to serve the soup since all the employee has to do is laddle it in a bowl. There are an infinite number of creative soup recipes that can be offered.
The Soup Nazi franchise seems to amateurish to me. Someone will soon come along and develop a franchise with the right themed decor and menu mix.
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I don’t know whether a soup focused franchise work. Is it fighting people’s existing palatte of sandwiches?
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$10 for non-homemade soup? (so you get bread and a bevvie with it…big deal!)
For half that price, I can go to Draeger’s and get their soup made fresh from scratch daily in the store (their butternut squash bisque ROCKS) along with fresh-baked bread from their onsite bakery. OR I can go to Safeway and buy their soup (It’s a bit on the salty side though, which is why I don’t go there…)
Just seems really pricey to me.
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I am curious as to why you would think the Soup Man concept will not be successful. I also would like to know why you think that the management team is poor. Their CEO invented SoBe and sold it to Pepsi for $370 million, so he is obviously pretty good at both forecasting demand for a new concept and brand building. The original chef Al Yegenah is on board, but I am not familiar with any of the other principals.
Also, the use of a kiosk location minimizes employee costs, allows for great locations in malls, and keeps rent reasonable vs. an inline buildout.
Another point is that the SoupMan concept is really the only one agressively expanding and trying to grow to become a ntional brand. Zoup, SoupBox and the Madison WI chain are all very tine players and will never likely become nationally recognized.
Couple these thoughts with the fact that Al, the original chef, will be supervising production likely means that it will be a vastly superior product to any other soup on the market today. There was a reason people did lineup to eat his soup way before Seinfeld did an episode. It appears as though they are trying to become the only national player in higher end gourmet soup.
I agree about the kiosks though, they could be much better looking.
The franchises seem to be selling well, so it appears as though more people would disagree with you, so I would respectfully like for you to address some of these points if you have time.
Thanks!
Dave
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#6 Dave -
Hi Dave. Thanks for visiting.
Here are a few quick comments on your post: 1) part of the attraction to the NY store is the atmosphere and the commanding owner, franchises won’t have that in-store selling point; 2) look of the store/kiosk front is poor and foreign to those outside of NYC 3) people pay franchise fees to buy into an existing recognizable brand and system, and this new franchise will be prohibited from using the famous mark of Soup Nazi; 4) I never said they had poor management.
I’m skeptical of franchises who seem to rely partly on T.V. characters from the 1990s. Is the soup good? I’m sure it is great, maybe some of the best available.
What reliably seems to attract customers succesfully today is more than good food, but also historically include larger themed or pleasantly styled, large seating areas (see Panera Bread, Schlotzky’s, Potbelly’s). I know kiosks cost less and work great for traditional snack food like pretzels, ice cream, coffee, but not “meal” type foods where people want to sit down and eat it.
I do think there is ripe opportunity for new soup-focused franchises. With some changes I’d be positive on the franchise, but not yet.
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Uh, regarding the poor management comment, you did say that, here is a cut and paste of your post:
While I don’t think the Soup Nazi franchise is the one to buy (store size and look is bad, management is poor), I think the soup franchise concept does have real potential.
I do appreciate the input and comments though!
Dave
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Ok, you’re right. I did say poor management. I skimmed the above post and didn’t see that comment, but finally found it in another soup related May 2005 post.
I don’t remember what information I was basing that opinion on. Probably I was assuming Al Yeganeh was going to lead the venture distribution, and his stubborness would be an asset in some areas, but a big hinderance in others. I agree Bello did a super job marketing SoBe, and as interim CEO and investor he can transfer those skills to the restaurant business. But the restaurant business has left the corpses of many otherwise successful entrepreneurs. I think you’ll agree that it is a tough business, even for the experienced entrepreneur.
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not sure if the soup concept would work or not. however, i would avoid your idea of owning an obee’s, been there done that. that franchise is floundering badly, myself and many others found that out the hard way. just before i closed shop corporate head quarters could only give me a list of three (that’s correct 3) stores in the chain that were making money.
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10 - It looks like there are more than 3 stores operating at least on their web site. http://www.obees.com/location.htm
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I personally think this entire concept is a pig going to get slaughtered. With soup being an easy add on to any sub or sandwich joint, the competition can easily chop into the bottom line. Yeah, its a novelty concep, but novelty doesn’t pay the rent or you and the employees. I’d stay away from this as it sounds like the next thing to go under.
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http://media.www.drurymirror.com/media/storage/paper740/news/2007/02/12/Life/soup-Nazi.To.Appear.In.Chili.CookOff.Booth-2711611.shtml
Soup Nazi in a chili cookoff, that’s funny!
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Turns out, the critics were correct. NY Post reports that many units don’t last a year, and that customers balk at returning to a store where a 12 oz serving runs $7-11. See: http://www.nypost.com/seven/09132007/news/nationalnews/soup_nazi_furor.htm
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1. The issues with the franchisor are much deeper than it appears.
1. The company is undercapitalized. An investment bank retained to raise capital for the franchisor had discontinued its efforts after having received commitments for approximately 25% of the targeted capital. This was a result of the poor operating results of the company and its underlying franchisees.
2. The company has been seeking an acquiror of its operations. Throughout this effort the issues and challenges brought to the attention of the company by its franchisees have been quietly addressed but none of the problems have been resolved.
3. The misrepresentations made by the franchisor to induce franchisees to acquire territories and open up an Original Soupman outlet are many: (a) understatement of food costs; (b) co-branding with Cremalita ice cream to balance overall sales in warm months was abandoned soon after first 12 stores opened for business; (c) mandated use of cups and bowls that are 25% larger than purported serving portions, resulting in giving away 25% more product than consumer was paying for and at the same time causing an increase in purchases of product from the company to replenish inventory.
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For everyone’s own good…stay away from Soupman. The Soup is great. But…don’t even think of it as a good investment….unless your idea of a good investment is to lose tons of $$….like hundreds of thousands. Franchisor is a horror and phony, misrepresents cost of investment and COGS, model has never worked…price point is too high to build any loyal following that will even support the operation to a break even point. Speak to the 12+ locations that already closed and the Franchisees all lost Hundreds of thousands, filed for bankruptcy and lost their homes. Didn’t know that many closed? Maybe because the Franchisor and their soldiers don’t disclose what they are required to.
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