FDD Talk: How Much Does a Nothing Bundt Cakes Franchise Make (Average Revenues and/or Profits)? (2024)

In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Nothing Bundt Cakes franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Nothing Bundt Cakes franchise, based on Item 7 of the company’s 2021 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Nothing Bundt Cakes franchise, based on Items 5 and 6 of the company’s 2021 FDD

• Section IV – Number of franchised and company-owned Nothing Bundt Cakes outlets at the start of the year and the end of the year for 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD

• Section V – Presentation and analysis of Nothing Bundt Cakes’ financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• 2019 and 2020 average, median, highest, and lowest net revenues for 270 franchised Bakeries (“Included Franchisee Bakeries”), all of which have been operating for at least 24 months as of December 27, 2020

• 2020 average net revenues, cost of goods sold, gross margin, payroll costs, occupancy expenses, marketing and advertising, other expenses, interest expense, depreciation and amortization, taxes, net income, EBITDA, and total franchisee principal’s benefit achieved by 236 Included Franchisee Bakeries that provided Nothing Bundt Cakes with complete 2020 financial statements prior to the issuance of the 2021 Disclosure Document

• average and median net revenues achieved during the first and second full 12 months of business by all 42 franchised Bakeries that opened during the 2018 calendar year and have been open a minimum of 24 months as of December 27, 2020

Section I – Background Information

20 Things You Need to Know About the Nothing Bundt Cakes Franchise

Acquired by Roark Capital

1. In mid-May 2021, Levine Leichtman Capital Partners (LLCP), a Los Angeles-based private equity firm, announced that it has sold its portfolio company Nothing Bundt Cakes to Roark Capital. Nothing Bundt Cakes is the market-leading franchisor and operator of gourmet bakeries offering specialty Bundt cakes and retail gift items.

2. The company’s products are handcrafted and baked on-site daily with high-quality ingredients and proprietary formulations distributed by its in-house facilities. At the time of the announcement, Nothing Bundt Cakes had nearly 400 locations in the U.S. and Canada.

3. Matthew Frankel, managing partner of LLCP, said, “Kyle Smith and the entire Nothing Bundt Cakes team have built a truly unique business that is positioned for continued growth, with an incredible culture built around great people. The Nothing Bundt Cakes investment has been very successful for LLCP, with exceptional same-store sales growth and robust franchise development.”

4. “This was driven by the efforts of the Company’s management team along with value creation initiatives, including technological enhancements, menu innovation, supply chain improvements, and the introduction of corporate stores through both strategic M&A and de novo openings. We are grateful for everything the management team and founder, Dena Tripp, have done to create value for its shareholders, bakery owners, and guests. We wish the team all the best in their next chapter,” said Frankel.

5. Kyle Smith, president and CEO of Nothing Bundt Cakes, commented, “Today marks an important milestone for the Company, and we would like to thank LLCP for their close relationship with our team and for their valuable contributions and strategic insight over the years. LLCP’s deep expertise in franchising combined with their management-centric approach made for the perfect partner in scaling our business and further developing our one-of-a-kind brand.”

6. North Point served as the lead financial advisor, with support from Baird, and Honigman LLP served as legal counsel to Nothing Bundt Cakes in connection with the sale.

Opened Two New Locations

7. In early November 2021, Nothing Bundt Cakes opened two new locations, one in the Dayton, Ohio area and the other in the Virginia Beach area. The Dayton location is the second one in the area for franchise owners Jeff and Renee Hall. Sean and Dana Whitaker own the Virginia Beach location, which is the third one for the family.

8. Nothing Bundt Cakes Beavercreek is currently under a soft opening and the Halls plan to have a grand opening sometime in January following the holiday rush. In 2018, the Halls opened their first Nothing Bundt Cakes shop in Miamisburg in the Shoppes at the Exchange retail center north of Austin Landing. It’s been a successful first three years, said Renee Hall, with over 12,000 customers who subscribe to the bakery’s eClub.

9. The Halls said, “(Customers) have definitely been super supportive and excited for us. It’s really been neat to see the customer reaction. When we tell them (we’re opening another shop) they’re excited for us and they’re happy for us. So, that makes for a good feeling.”

10. The shop operates as a carryout-only bakery, selling four different sizes of Bundt cakes ready for purchase. If a customer doesn’t see a cake in the flavor they like that’s ready to go, Hall said they can make a fresh, hand-crafted Bundt cake within 15 to 20 minutes. There’s also a retail space in the bakery with balloons, small gifts, candles, and more available.

11. At the new location, the Halls are especially looking forward to being closer to Wright-Patterson Air Force Base and serving the military community. They said, “We do donate and do some things already through them (WPAFB). So, we’re really excited to further that relationship with them and then just the community in general. We just love the area, and it just seemed like a great place for a lot of reasons to put another bakery.”

12. Robert and Sherry Whitaker became Nothing Bundt Cakes franchisees in 2015 with the aim of leaving a legacy to their sons and grandchildren, daughter-in-law Dana Whitaker said. And the opportunity to run a business is bringing the kids on board. The family’s third location, owned by Sean and Dana Whitaker, opened on Oct. 27 in Virginia Beach’s Haygood Shopping Center.

13. The parents had opened the first location in Newport News Tech Center and a second in Virginia Beach’s Hilltop area, which are now owned and operated by their son Brandon. Dana Whitaker, who has a degree in applied mathematics and taught high school math, said it was an easy career change when the in-laws extended the business offer. She added, “I’ve always loved baking and did so with my grandmother.”

14. Husband Sean Whitaker works in computer programming but helps out in the evenings and whenever time allows. Dana Whitaker said plans are under way to open the fourth Nothing Bundt Cakes in Norfolk sometime between 2022 and 2023, with Sean eventually coming on board full-time and fulfilling the elder Whitakers’ dream.

15. “It’s nice to work with the family, especially when it’s for such a fun, happy, joyful brand,” Dana Whitaker said. With corporate support, Nothing Bundt Cakes is always looking to reward organizations and causes having a positive community effect with appreciation and tasty cakes, she said. “Just before school started,” Whitaker said, “I went to all the nearby schools and took free cakes to teachers, thanking them for what they do, especially during the pandemic.”

16. Substantial training is required to ensure design and brand standards are followed, and Dana Whitaker said she is ready to handle every aspect of the creative process. “It really is a joyful experience working with the family and with a national operation that is dedicated to happiness through exceptional cakes and giving back to the community,” she said. “Simply joyful.”

Company History

17. Nothing Bundt Cakes was founded in 1997 by Dena Tripp and Debbie Shwetz in Las Vegas, Nevada. Tripp and Shwetz had been baking together for years and their family and friends always told them that they should start their own bakery. After thinking about it and doing some research, Tripp and Shwetz realized that there was a gap in the market for cakes made from pure, high-quality ingredients. Tripp and Shwetz decided to focus on Bundt cakes, which no other brand was doing at the time.

18. After developing Nothing Bundt Cakes over the next decade, Tripp and Shwetz decided to start franchising in 2006. Even after franchising started, Tripp and Shwetz wanted each location to maintain that “mom and pop shop” feeling to emphasize that their Bundt cakes are made from scratch with only the best ingredients.

19. In 2016, Nothing Bundt Cakes was acquired by Los Angeles-based private equity firm Levine Leichtman Capital Partners (LLCP). In 2021, LLCP sold Nothing Bundt Cakes to Roark Capital. Today, there are Nothing Bundt Cake bakeries all across North America.

Entrepreneur’s Franchise 500

20. Nothing Bundt Cakes ranked No. 16 on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

• Detailed estimates of Nothing Bundt Cakes franchise costs, based on Item 7 of the company’s 2021 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Detailed information on Nothing Bundt Cakes’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2021 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2018

• Outlets at the Start of the Year: 234
• Outlets at the End of the Year: 276
• Net Change: +42

2019

• Outlets at the Start of the Year: 276
• Outlets at the End of the Year: 318
• Net Change: +42

2020

• Outlets at the Start of the Year: 318
• Outlets at the End of the Year: 362
• Net Change: +44

Company-Owned

2018

• Outlets at the Start of the Year: 6
• Outlets at the End of the Year: 6
• Net Change: 0

2019

• Outlets at the Start of the Year: 6
• Outlets at the End of the Year: 13
• Net Change: +7

2020

• Outlets at the Start of the Year: 13
• Outlets at the End of the Year: 14
• Net Change: +1

Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis

• This Item sets forth historical net revenue and cost information for Nothing Bundt Cakes’ franchised Bakeries which was provided to Nothing Bundt Cakes by its franchisees.

• As of December 27, 2020, there were 361 franchised Bakeries and 14 company-owned Bakeries open and operating in the United States.

• Part I of this Item sets forth the net revenues of 270 franchised Bakeries (“Included Franchisee Bakeries”), all of which have been operating for at least 24 months as of December 27, 2020. The Measurement Period in Part I is January 1, 2019 to December 27, 2020.

• Included in this Item 19 are 5 franchised Bakeries owned and operated by Nothing Bundt Cakes’ founders.

• Nothing Bundt Cakes has excluded from Part I net revenue information of the 91 remaining Franchisee Bakeries because these Bakeries were not open and operating for the entire Measurement Period.

• The information contained in Part I was taken from the POS System.

• Part II of this Item sets forth average net revenues, average cost of goods sold, average gross margin, average payroll costs, average occupancy expenses, average advertising expenses, average other expenses, average interest expenses, average depreciation and amortization expenses, average net income, and average EBITDA achieved by 236 of the Included Franchisee Bakeries from January 1, 2020 through December 27, 2020 (the “2020 Calendar Year”).

• The 236 Included Franchisee Bakeries provided Nothing Bundt Cakes with complete 2020 financial statements prior to the issuance of the 2021 Disclosure Document. 34 of the Franchisee Bakeries were excluded on the basis that they did not provide Nothing Bundt Cakes with complete 2020 financial statements before the issuance of the 2021 Disclosure Document.

• Part III of this Item sets forth the average net revenues achieved during the first and second full 12 months of business by all 42 franchised Bakeries that opened between January 1, 2018 and December 30, 2018, and have been open a minimum of 24 months as of December 27, 2020.

• Nothing Bundt Cakes has not audited or independently verified the data submitted by the Included Franchisee Bakeries and no assurance can be offered that the data does not contain inaccuracies that an audit might disclose. Nothing Bundt Cakes will provide you with written substantiation for the financial performance representation upon reasonable request.

Part I – Included Franchisee Bakeries’ Average Net Revenues and Growth in Average Net Revenues During the Measurement Period

• “Net Revenues” includes all revenues generated from all business conducted at or from a Bakery during the Measurement Period, including amounts received from the sale, shipping, and delivery of food items, amounts received through the E-Commerce program and from gift card sales, and other products and services, merchandise, and tangible property of any nature whatsoever, whether in cash or for credit, and whether collected or uncollected.

• “Net Revenues” does not include the amount of any applicable sales tax imposed by any federal, state, municipal, or other governmental authority if such taxes are stated separately when the Guest is charged and franchisee pays such amounts, as and when due, to the appropriate taxing authority.

• Also excluded from Net Revenues are the amount of any documented refunds, chargebacks, credits, and allowances given to Guests in good faith pursuant to Nothing Bundt Cakes’ standard procedures for issuing such refunds.

• The “Average Net Revenues” for the Included Franchisee Bakeries were calculated by taking the sum of the Included Franchisee Bakeries’ Net Revenues and dividing it by the total number of Included Franchisee Bakeries.

• The “Percentage Growth in Average Net Revenues” was calculated by taking the difference between the Average Net Revenues achieved by the Included Franchisee Bakeries in 2020 and 2019, and dividing it by the Average Net Revenues achieved by the Included Franchisee Bakeries in 2019.

Included Franchisee Bakeries

2019

• Number of Included Franchisee Bakeries: 270
• Average Net Revenues: $1,168,968
• % Growth in Average Net Revenues: n/a
• Number of Bakeries Above/Below Average: 117/153
• Median Net Revenues: $1,127,873
• High Net Revenues: $2,791,568
• Low Net Revenues: $414,269

2020

• Number of Included Franchisee Bakeries: 270
• Average Net Revenues: $1,295,169
• % Growth in Average Net Revenues: 10.8%
• Number of Bakeries Above/Below Average: 109/161
• Median Net Revenues: $1,210,422
• High Net Revenues: $3,108,047
• Low Net Revenues: $458,198

Part II – Average Net Revenues, Average Cost of Goods Sold, Average Gross Margin, Average Payroll Costs, Average Occupancy Costs, Average Advertising Expenses, Average Other Expenses, Average Interest Expenses, Average Depreciation and Amortization Expenses, Average Net Income, Average EBITDA, and Average Total Franchisee Principal’s Benefit

• “Average Net Revenues” is determined by taking the sum of included franchisees’ Net Revenues and dividing it by 236. For the 2020 Calendar Year, the high Net Revenues reported to Nothing Bundt Cakes was $3,122,238 and the low was $459,560.

• “Cost of Goods Sold” is defined as all direct costs including dry ingredients, packaging, and decorating costs.

• “Average Gross Profit” is defined as Average Net Revenues less Total Average Cost of Goods Sold.

• “Payroll” is defined as the cost of hourly employees, management labor, and manager salary or bonus payments, but does not include owner salary or draw.

• “Occupancy” is defined as all charges imposed under the lease agreements, including base rent, percentage rent, and common area maintenance charges.

• “Advertising” is defined as the cost of local store marketing efforts, as well as national marketing costs paid for on behalf of the franchisees.

• “Other Expenses” is defined as the sum of other operational costs required to operate the Bakery, including but not limited to royalties paid to Nothing Bundt Cakes, utility costs, repair and maintenance costs, credit card merchant fees, office supplies, and other expenses.

• “Interest Expense” is defined as financing charges for any outside bank loans being paid by the franchisee to their lender of choice.

• “Depreciation and Amortization” is defined as non-cash costs to expense, over time, the capital investments made by franchisees into their Bakeries.

• “Total Expense” is defined as the sum of Advertising, Occupancy, Labor, Other Payroll, Other SG&A, Interest Expense, and Depreciation and Amortization Expenses.

• “Net Income” is defined as Average Gross Profit minus Total Expense.

• “EBITDA” is defined as Net Income plus Interest Expense, Depreciation and Amortization Expenses, and Income Taxes.

• “Reported Franchisee Principal Expenses” is defined as any expenses reported by the franchisee as specifically paid to the Principal benefit such as, but not limited to, Payroll, Consulting Fees, Home Office, and Automobile Expenses.

• “Total Franchisee Principal’s Benefit” is defined as EBITDA plus Reported Franchisee Principal Expenses.

Average (236 Bakeries)

Net Revenues: $1,307,280 (100.0%)

Cost of Goods Sold: $304,103 (23.3%)

Gross Margin: $1,003,177 (76.7%)

Expenses:

• Payroll: $415,900 (31.8%)
• Occupancy: $75,801 (5.8%)
• Marketing and Advertising: $51,185 (3.9%)
• Other Expenses: $194,550 (14.9%)
• Interest Expense: $6,310 (0.5%)
• Depreciation and Amortization: $16,456 (1.3%)
• Taxes: $7,073 (0.5%)
• Total Expense: $767,277 (58.7%)

Net Income: $235,901 (18.0%)

Add Back to Net Income to Calculate EBITDA

• Interest Expense: $6,310 (0.5%)
• Depreciation and Amortization: $16,456 (1.3%)
• Taxes: $7,073 (0.5%)

EBITDA: $265,741 (20.3%)

Reported Franchisee Principal Expenses: $46,154 (3.5%)

Total Franchisee Principal’s Benefit: $311,895 (23.9%)

Part III – Average Net Revenues and Percentage Growth in Average Net Revenues for Bakeries Opened During 2018

• The table below sets forth the Average Net Revenues and the Percentage Growth in Average Net Revenues achieved by all 42 Bakeries that opened during the 2018 calendar year and which have been open and operating a full 24 months as of December 27, 2020.

• “Average Net Revenues First 12 Months of Operation” was calculated by taking the sum of the included franchisees’ Net Revenues achieved during the first 12 months of operations, and dividing it by the total number of included franchisees.

• “Average Net Revenues Second 12 Months of Operation” was calculated by taking the sum of the included franchisees’ Net Revenues achieved during the second 12 months of operations, and dividing it by the total number of included franchisees.

• The Average Net Revenues reflect the first and second full 12 months of business, and does not necessarily reflect sales achieved during any entire calendar year (January through December).

• The “Percentage Growth in Average Net Revenues” was calculated by taking the difference between Average Net Revenues Second 12 Months of Operation and Average Net Revenues First 12 Months of Operation, and dividing it by the Average Net Revenues First 12 Months of Operation.

Year Bakery Opened: 2018

• Number of Bakeries: 42
• Average Net Revenues First 12 Months of Operation: $885,285
• Number of Bakeries Above/Below Average: 18/24
• Median Net Revenues First 12 Months of Operation: $840,192
• Average Net Revenues Second 12 Months of Operation: $1,120,536
• Number of Bakeries Above/Below Average: 19/23
• Median Net Revenues Second 12 Months of Operation: $1,045,191
• % Growth in Average Net Revenues: 26.6%

• This analysis does not contain complete information regarding costs associated with starting up and operating a Bakery.

• The data presented in Parts I, II, and III is for established Bakeries open and operating a minimum of 24 months as of December 27, 2020.

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