Wall Street Journal Takes a Look at Tasti Expansion

The WSJ's Ellen Byron took a look today at the state of Tasti's worldwide expansion. The article noted some new details of the expansion plan, including that new products will be introduced such as baked goods.

James Amos, who, along with New York private-equity firm Snow Phipps Group LLC, acquired the New York-based frozen-dessert business for $21 million last year, is forging deals to expand the chain nationally and internationally with new store formats, additional flavors and new products such as energy drinks and baked goods.

The Journal notes that Tasti's success and appeal is thanks in large part to a group of devoted fans, who have given the brand a cult-like status. Byron raises the question of if this "distinctly New York phenomenon" can resonate across the country and across the world.

The article noted some impressive statistics about the geographic distribution of the expansion.

Two Tasti D-Lite stores opened this month in Seoul; expansion into Israel and Mexico is in negotiation. Late last month, Tasti D-Lite signed franchising deals for a minimum of 16 stores in Tennessee and at least 40 in Texas, including San Antonio, Austin and Houston. It is working on expanding into California and adding to the seven stores already in New Jersey. Next month, Tasti D-Lite plans to open two flagship stores in New York, including one on the ground floor of the Empire State Building.

Lastly, the article covered Tasti's effort to redesign and revamp the several run down locations currently in operation in New York. The program is surprisingly expensive.

Since closing the deal, Mr. Amos has been working to persuade Tasti D-Lite's existing store owners to transition from their previous licensing arrangement to a franchise, which gives the company more control over stores' appearance and operations. He has been selling the idea by promising financial incentives, updated store designs, as well as marketing and back-office support. Each franchise requires an investment $230,470 to $439,600, depending on factors such as size and location, the company said. Royalty fees of 5% of a store's gross sales are required weekly. Franchises also can expect to pay to build their brand. Contributions to a "marketing fund" amount to 2% of gross sales every week.