Do you want to know how much money frozen yogurt shops make yearly? If YES, here are 8 factors that determine the income & profit margin for frozen yogurt shops. The major motive behind starting any business is money, hence whenever an entrepreneur wants to start a new business, one of the first questions they usually ask is how profitable the business is.

This narrative also applies to entrepreneurs who are looking towards starting a frozen yogurt business. They would want to know how much they are likely going to make annually from their frozen yogurt shop.

The truth is that there is no one-mold-fits-all when it comes to how much a frozen yogurt shop is expected to make. There are some factors that we are going to look into before giving an estimate of how much an average frozen yogurt shop makes yearly and these factors are;

8 Factors That Determine How Much Frozen Yogurt Shops Make Yearly (Profit Margin)

1. The Size of the Frozen Yogurt Shop

One cannot conveniently state the amount a frozen yogurt shop is expected to make yearly if you do not know the size of the shop. As a matter of fact, the amount a mom and pop frozen yogurt shop will make annually is different from the amount a standard frozen yogurt shop franchise with several outlets will make even if they operate in same location.

Of course, the amount invested in a small frozen yogurt shop is different from the amount invested in a large frozen yogurt shop hence the amount they will both make will be far different. On the average, the approximate cost of starting a frozen yogurt shop can be anywhere between $5,000 and $500,000 and even more depending on what you want to achieve.

2. The Location of the Frozen Yogurt Shop

When it comes to setting up a new business, location plays a major role which is why feasibility studies and market survey are essential. For example, the amount a frozen yogurt shop that is located in a low traffic area will make yearly will be low compared to the amount a frozen yogurt shop that is located in a high – traffic area will make.

So, if you want to make it big with your frozen yogurt business, then you must be ready to rent a facility in a high traffic area, a location with the right demography of people with the purchasing power. Please note that you are going to be paying more to rent a store in a high – traffic area as against a low – traffic area.

3. The Type of Frozen Yogurt and other Products Retailed

Another important factor that will determine how much a frozen yogurt shop is expected to make yearly is the type of products produced and retailed in the shop. You will agree that there are frozen yogurt shops that retail all sorts of yogurts such as traditional frozen yogurt, tart frozen yogurt, smoothies made from frozen yogurt and yogurt parfaits.

The profits you are expected to make selling these different types of yogurts will be different when compared to the amount a frozen yogurt shop that sells limited types of yogurt.

4. Other Related Products and Services Offered by the Frozen Yogurt Shop

Aside from retailing a wide range of yogurt flavors, retailing other products like ice cream, toppings, etc will surely boost the amount you are expected to make from your shop. So also, if you offer delivery services, it will help you make more money.

5. The Management Style of the Frozen Yogurt Shop

Another key factor that will determine the amount a frozen yogurt shop is expected to make yearly is the management style of the shop. Trust me, the results you will get when you have a good manager and an average or bad manager managing same type of business will definitely be obvious and different. Even if you give the managers same conditions to work and same recipe and products to retail.

6. The Business Model of the Frozen Yogurt Shop

There are different Business models that a frozen yogurt shop can adopt and these business model offers different results. For example, the amount a frozen yogurt shop that also runs an online shop with deliveries make yearly will be different from the amount a strictly brick and mortal frozen yogurt shop will make yearly.

The amount a frozen yogurt shop that also sells franchise will make yearly will be far different from the amount a strictly one location walk-in frozen yogurt shop will make.

7. The Advertising and Marketing Strategies Adopted by the Frozen Yogurt Shop

Another key factor that will determine the amount a frozen yogurt shop can make yearly is the advertising and marketing strategies adopted by the shop. Trust me, there are several advertising and marketing strategies that can help a business increase their earnings, but you may be expected to spend more.

But the results you will make will far outweigh the amount you spent on advertising and marketing. Of course, you don’t expect a frozen yogurt shop that is engaging in aggressive advertising and marketing to make same amount yearly with a frozen yogurt shop that is passive with its advertising and marketing.

8. The Number of Years the Business is in Existence

Lastly, another key factor that will determine the amount a frozen yogurt shop is expected to make on a yearly basis is the number of years the business is in existence. In business, the number of years you are in existence will go a long way to determine the amount you will make.

For example in your first fiscal year (FY1) you might make a hundred and twenty thousand dollars ($120,000), in your second fiscal year (FY2) you might make two hundred and twenty thousand dollars ($220,000) and in your third fiscal year (FY3) you might make four hundred and fifty thousand dollars ($450,000). Interestingly, most businesses usually breakeven from the third year of operations.

In conclusion, according to IBIS World, frozen yogurt is a $1 billion dollar per year industry with 2508 stores in operation. Based on this estimate, the average store generates $398,724 in annual sales.

Estimated Profit Margin for a Frozen Yogurt Shop

In order to calculate the profit margin from a standard frozen yogurt shop, then you should be able to place a figure on the recurring and ongoing costs of running the frozen yogurt shop.

Generally Speaking, a frozen yogurt shop can make a profit margin of about a 30% – 45% gross margin (profit before labor and overhead costs) if careful planning is done when developing the recipes and you have access to cheaper labor and ingredient supply.

Solomon. O'Chucks