Alex Hormozi: I Built a $100M Frozen Yogurt Empire in 11 Minutes

The video is about the frozen yogurt industry, including its profitability, franchise structures, and potential for improvement in customer experience.

This video by Alex Hormozi was published on Jan 11, 2023.
Video length: 11:19.

In this video, Alex Hormozi talks about the frozen yogurt industry and how it works.

He shares insights on the profitability of frozen yogurt stores, the challenges of owning a franchise, and the potential for success in a commoditized market.

He also provides tips on how to improve customer experience and stand out from competitors.

• Frozen yogurt stores make around $2,100 a day selling 500 cups at 8 ounces each.
• The average store makes between $750,000 and $800,000 a year.
• Owners take home around $93,000 a year.
• Franchises take around 6% of the top line, which can be 60% of the owner's take-home pay.
• Franchises structure their fees to optimize returns on capital.
• Many frozen yogurt stores have poor customer experiences with sticky floors, messy cups, and out-of-order machines.
• Improving customer experience can be a way to out-compete other stores.
• Franchises save on bulk purchasing, but may upcharge new franchisees.
• Foreclosure sites can be a cheaper way to open a franchise.
• Golden Spoon, Yogurtland, Menchie's, and Pinkberry are popular frozen yogurt franchises.
• Most frozen yogurt franchises are commoditized with little brand differentiation.
• There is no dominant brand in the frozen yogurt industry.
• Yogurtland prices their yogurt by weight, allowing customers to control how much they spend.
• Removing the small cup option led to an increase in sales by 20-30%.
• The order in which items are presented is in reverse order of cost to the company.
• The highest performing Yogurtland stores have better service, cleaner stores, and more selection.
• Word of mouth and affiliate marketing are the most profitable ways to acquire customers.
• Partnering with fraternities, sororities, and companies can lead to successful promotions and competitions.
• Offering crazy incentives to join a text list can lead to acquiring leads for a low cost.
• Creating a visually appealing store with floor-to-ceiling candy can lead to overwhelming customers and more sales.
• Default options are powerful in sales, as seen in Yogurtland's removal of the small cup option.
• Offering more options can lead to customers buying and consuming more.
• Reminding customers of the store on a regular basis can lead to repeat business and referrals.

I Built a $100M Frozen Yogurt Empire in 11 Minutes - YouTube

Frozen Yogurt Industry Profitability

• Frozen yogurt stores make around $2,100 a day selling 500 cups at 8 ounces each.
• The average store makes between $750,000 and $800,000 a year.
• Owners take home around $93,000 a year.
• Franchises take around 6% of the top line, which can be 60% of the owner's take-home pay.
• Franchises structure their fees to optimize returns on capital.

Franchise Structures

• Franchises save on bulk purchasing, but may upcharge new franchisees.
• Foreclosure sites can be a cheaper way to open a franchise.
• Golden Spoon, Yogurtland, Menchie's, and Pinkberry are popular frozen yogurt franchises.
• Most frozen yogurt franchises are commoditized with little brand differentiation.
• There is no dominant brand in the frozen yogurt industry.

Potential for Improvement in Customer Experience

• Many frozen yogurt stores have poor customer experiences with sticky floors, messy cups, and out-of-order machines.
• Improving customer experience can be a way to out-compete other stores.
• Being better than the bottom 25% of stores can lead to success.

I Built a $100M Frozen Yogurt Empire in 11 Minutes - YouTube

Psychology and Business Lessons

• Franchises structure their fees to optimize returns on capital.
• There is potential for success in commoditized industries.
• Improving customer experience can be a way to out-compete other stores.
• Being better than the bottom 25% of stores can lead to success.
• Foreclosure sites can be a cheaper way to open a franchise.

Pricing and Presentation

• Yogurtland prices their yogurt by weight, allowing customers to control how much they spend.
• Removing the small cup option led to an increase in sales by 20-30%.
• The order in which items are presented is in reverse order of cost to the company.
• Buffets use the same strategy of presenting cheaper items first.
• Yogurtland starts with the highest margin item, then adds lower margin items, and finishes with more expensive items like fresh fruit.

Customer Experience

• The highest performing Yogurtland stores have better service, cleaner stores, and more selection.
• Word of mouth and affiliate marketing are the most profitable ways to acquire customers.
• Partnering with fraternities, sororities, and companies can lead to successful promotions and competitions.
• Offering crazy incentives to join a text list can lead to acquiring leads for a low cost.
• Creating a visually appealing store with floor-to-ceiling candy can lead to overwhelming customers and more sales.

Default Options

• Default options are powerful in sales, as seen in Yogurtland's removal of the small cup option.
• Fast food places use default options to encourage customers to choose larger sizes.
• Buffets use default options to encourage customers to fill up on cheaper items first.
• Yogurtland starts with the highest margin item and adds lower margin items, then finishes with more expensive items like fresh fruit.
• Offering more options can lead to customers buying and consuming more.

Marketing and Advertising

• Word of mouth and affiliate marketing are the most profitable ways to acquire customers.
• Partnering with fraternities, sororities, and companies can lead to successful promotions and competitions.
• Offering crazy incentives to join a text list can lead to acquiring leads for a low cost.
• Creating a visually appealing store with floor-to-ceiling candy can lead to overwhelming customers and more sales.
• Reminding customers of the store on a regular basis can lead to repeat business and referrals.

Strategies for Success in the Frozen Yogurt Industry

• Acquiring equipment from failed businesses can dramatically decrease startup costs.
• Franchise structures can be profitable, but require careful consideration of fees and restrictions.
• Improving the customer experience can lead to increased sales and loyalty.
• Offering unique flavors and toppings can differentiate a business from competitors.
• Word of mouth referrals are a powerful and cost-effective way to acquire customers.
• Encouraging customers to share their positive experiences can lead to exponential growth.

Watch the video on YouTube:
I Built a $100M Frozen Yogurt Empire in 11 Minutes - YouTube