This is the first time Swiss Farms has offered franchising in its 41-year history, with John Betz & Associates Inc. having signed on to open three Swiss Farms stores in the next three years, as reported in CSP Daily News last week.
Rob Coldwell, manager of franchising for the company told CSP Daily News that [image-nocss] people interested in franchising the "America's Drive-Thru Grocer" concept frequently approached the company over the years, and the company built up a database of names. The company began contacting interested parties at the beginning of this year. "So the early adopters are local business people and entrepreneurs who have just really always loved the brand, shop at the stores and were ready to go as soon as we were."
While Coldwell declined to provide an exact number of franchise agreements under development, he said there have been more than 1,000 interested parties, and that those closing by the end of this year are expected to be a "combination of multis and singles."
The company first filtered through those candidates with an appropriate background and experience in the company's Pennsylvania, New Jersey, Delaware and New York geography. The "most challenging" requirement is the financial one, according to Coldwell. Initial investment for a location ranges from $750,000 to $1.29 million, averaging about $1 million.
"In this lending environment, we look for qualified candidates to have about $250,000 of their own money to invest and the ability to borrow on the remaining," he said. The price includes "hard and soft costs associated with the building, equipment, inventory and grand opening." Franchisees will also pay an undisclosed royalty.
So why franchise with Swiss Farms? "The returns are there, it's ground floor, and it's a good opportunity with the current real estate market," Coldwell said. In 2008, the average sales volume for a Swiss Farms was $1.6 million, up more than $60,000 from 2007. As for the real estate, Swiss Farms locations are 1,650 square feet and require only about a half an acre of land. Coldwell adds, "On top of that, it's a relatively simple business to operate. Ninety percent of our items are bar-coded, which means the bulk of what we sell has already been prepared, and that helps to reduce our labor."
Coldwell described the overall Swiss Farms concept as the "express lane to the supermarket," with customers driving up, ordering and then driving away with their groceries. "In about 400 to 500 items that we regularly carry, that gets us about 85% of what goes through the express lane of the grocery store," he said.
A prototype store, which will be Swiss Farms' 13th corporate store and a model for franchise locations, is slated to open in mid-November in Ridley Park, Pa. For increased merchandising, the new store consists of three sides of glass and has eight 42-inch LCD screens connected to a meteorological site to tie offerings to the weather. For faster service, there are two service doors on each side, as well as car bypass lanes. The company has also built in an express lane to accommodate future plans for online ordering. Coldwell didn't provide a date for the launch of the online offering, but said, "We're going to work through the intricacies of the new store and then we're in the works of building the application for the online ordering."
He said the Broomall, Pa.-based company soon hopes to expand beyond their current geography but first wanted to get a good foundation of support, product and distribution in its core market. "Our vision is to be America's drive-thru grocer, so we're working toward that. That's more of a five-year-plan to really start going across the country." As for the company's planned mix of corporate/franchise stores, Coldwell said, "We don't have a ratio defined, but we are going to continue our company expansion, in addition to the franchise."Click the Download Now button below for an additional view.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.