Rita’s Italian Ice
Rita’s is in a position where it can provide its products to anyone in the world who wants to open a location. In the past month alone, Rita’s has inked agreements for 12 units in Idaho, 20 units in Hawaii and 40 units in Washington, all to open within the next 10 years.
“We are very methodical in who we bring into the system so we can keep it strong,” Senior Director of Franchise Development Mo Boutara says. “We do our due diligence on the prospect, making sure the brand works for both of us. We want to recruit people who add value to the system.”
“Plus, we’re able to do things competitors can’t do,” adds Eric Taylor, chief development officer at Rita’s. “Not just with the ice and custard, but with the flexibility of our model. We can put Rita’s in stadiums, amusement parks, malls – just about anywhere and in any store.”
Rita’s opened 71 new stores in 2014 and 70 so far this year, including some major venues such as AT&T Stadium for the Dallas Cowboys, University of Phoenix Stadium for the Arizona Cardinals and MetLife Stadium, home of the New York Jets and New York Giants. All of these locations have been go-to venues in the country for the Superbowl and the College Championship, which means huge business for Rita’s.
“I’m most proud to be the one overseeing such fast development,” Taylor says. “I take personal pride seeing new Rita’s pop up across the country, especially in new, big-name locations.”
Frozen treats are a $21.4 billion industry and Rita’s is proud to own the Italian ice category. It is also proud of the happiness its products bring to the company’s customers. Indeed, its mission is to be the happiest frozen treat experience in the world. “People try the product once and they’re hooked,” Boutara says. “We enjoy the fact that we are the powerhouse in the Italian ice category.”
Rita’s signature product, Italian ice, is made fresh every day with real fruit. It offers more than 65 different flavors, even creating new ones for its new locations in Hawaii, Philippines and Dubai, to show appreciation for the new customer base. The award-winning frozen custard pairs perfectly with the Italian ice, offering a variety of different flavors that can be enjoyed in a cup, cone or as a sundae.
To innovate its product even further, Rita’s partners with other brands to create new flavors and products for its Italian ice, such as Swedish Fish, Starburst, Sour Patch Kids, Jelly Belly and Peeps. It also offers seasonal flavors for the holidays, like caramel apple and peppermint. Other treat offerings include Gelati, Misto ®, milkshakes, frozen custard cakes, Blendinis ®, cream ice, sugar-free Italian ice and custard cookie sandwiches made with OREO ®. Rita’s seems to have something for everyone with a sweet tooth and has earned a ferocious cult following.
Leaps and Bounds
Rita’s has taken a giant leap into franchising the company in the convenience store and gas (C&G) market. After opening two C&G locations the past two years and finding great success, the company decided this was an avenue to investigate for further opportunities.
“When I looked into it, I felt like we could still provide
a full menu and labor wouldn’t be an issue,” Taylor explains. “There were a lot of positives to expand this. We’ve now made a concerted effort to enter this space.”
The C&G market is facing a number of challenges, including declining fuel margins, cigarette sales and premium gas sales, and increasing labor costs and competition from grocery stores and wholesale clubs. But Rita’s offers C&G stores a solution to add additional sales and turn an underused space into a profit center. Rita’s is a very well known brand, especially on the East Coast, so when it partners with a C&G store, it gives the location instant credibility with consumers and boosts traffic and sales.
“If someone comes in to purchase gas and sees a Rita’s, they might purchase a Rita’s product,” Boutara says. “We’re like a godsend for convenience stores! The stores don’t have to promote it. We provide comprehensive support and training to them. Our name is all over the country now and that comes with a tremendous value.” All Rita’s needs to operate within a C&G store is 250 square feet and a little bit of space in the back for dry storage and refrigeration. Even in such a small space, Rita’s can offer all of the same products with its express units as it would in a regular store space.
“There’s an empty void someone can fill,” Taylor says. “Our cost of entry and equipment is low and our margin is high. We appeal to both kids and adults. Any C&G that has a car wash, we can get outside and let people sample the products, which results in about three or four people from the car wash line coming in and buying something. We’re a good complement to these locations.”
Rita’s offers a number of perks for C&G stores that want to take part in the franchise, such as:
- •Dedicated design services
- •Dedicated construction project management
- •Dedicated training program
- •Scalable and flexible business model and footprint
- •Simple equipment package
- •Ongoing marketing support
Rita’s positions its express unit as a franchise opportunity for the C&G stores. The company has a host of branding and messaging tools to ensure customers know when a C&G location contains a Rita’s. “There would be no doubt that if a convenience store has it, you’ll know about it,” Boutara says. “We’re doing extremely well as a company and brand. We are in a good position to cherry pick the best locations suited for us.”
But Boutara says Rita’s won’t franchise with just any C&G location because it wants to ensure that the partnership will be beneficial to both parties. The C&G store must be a branded store such as BP, ConocoPhillips, Chevron and Texaco, be at least 3,000 square feet in size, have a canopy, receive a minimum of $100,000 in non-fuel monthly sales and dispense a minimum of 100,000 gallons of fuel monthly.
“One way we can move forward even more is the actual C&G store owner can be an operator of Rita’s,” he explains. “Or they can be landlords and let one of our franchisees open and operate our express unit in their store. As long as everything meets the criteria, we’re gung-ho to do it.”
From a strategic level, Rita’s is developing partnerships with multi-unit operators, while also focusing on branded petroleum shoppers. This has all been a natural evolution for Rita’s C&G area developers Ice & Go LLC and M&M ARC, Inc.
These partners are working on opening five to 10 locations by the end of 2015 with hopefully another 10 to 15 opening next year. They are creating more brand awareness by focusing on locations that are heavily trafficked such as travel centers, truck stops and C&Gs near high schools and college towns, all to make getting gas a more exciting experience.
These are all “home run locations,” notes Rita’s Area Developer and Owner of Ice & Go Scott Stevens. “You look at our industry and see we have premium real estate,” he says. “It’s a big win for everyone. For an industry focused on what we do without a lot of flexibility, there’s a chance here, a sweet spot to have a differentiating part of your business. That’s a win for Rita’s, the industry and the customers.”
“Rita’s presents a unique opportunity for C&G retailers to achieve a viable and sustainable profit center in their stores,” says Meenu Sandhu, who owns M&M ARC, Inc. with her husband Madhusudan. “The C&G space has potential to become an attractive and convenient destination for quality dessert made fresh daily – that’s far from your typical gas station, but this partnership makes it all possible.”
The Treats Business
Rita’s corporate side describes itself as a fun organization in the treats business. “We take our business seriously, but we try not to take ourselves too seriously,” Taylor says. “We’re not in this just to make money; we want to have fun and be a part of the community.”
While Rita’s may be national brand, it’s a locally run business. Every franchisee runs its own business, while Rita’s ensures it becomes a part of the overall mission’s success. But this means that all marketing efforts are localized as well. Locations all over the nation work with local schools, community organizations and nonprofits. Rita’s also offers a “Free Ice Day,” or FDOS to its diehard fans, every spring to celebrate the birth of the spring season. 2015 marked the 23rd anniversary of this annual offering.
At the corporate level, Rita’s has a 10-year partnership with Alex’s Lemonade Stand Foundation (ALSF), a foundation that raises money for childhood cancer research and finding cures. At the store level, Rita’s raises money for the foundation with different events. It also offers an annual “CEO of the Day” event, where an ALSF hero has the opportunity to visit the corporate headquarters and learn how to make all of the treats. This year, six stores across the country hosted an ALSF hero to serve as a Rita’s ambassador for the day and serve Italian ice to customers as “chief ice maker.” One of the chief ice makers did such a good job that she ended up getting hired on the spot.
Thus far, Rita’s has raised $4.2 million to help ALSF and is a top contributor to the organization. Rita’s believes it is important to give back to the communities it becomes a part of and be a true partner to them.
Rita’s partnerships with the community and franchisees pay off tremendously for both sides. For the community, consumers receive an affordable product, a wide range of flavors and great-tasting treats. Franchisees incur a low unit investment and low labor and food costs with a huge margin of return.
“The growth is great, the group I work with is tremendous, the product is to die for,” Boutara says. “It’s all about ice, custard and happiness. Most importantly, we help people and businesses achieve their personal vision and potential. We’re making an impact to the company bottom line while also helping franchisees achieve their business vision.”