Custard’s next stands: Andy’s looks to grow, with franchises playing key role
Written by Thomas Gounley – April 2013
When Andy Kuntz and his parents, the founders of Andy’s Frozen Custard, learned the frozen custard business at a Wisconsin shop in the 1980s, the owner imparted a lesson that probably came in handy the last few years.
“Leon [Schneider] … always said that if you take care of the product, and you take care of the service, this business will be recession-proof —and he’s been right,” said Kuntz, who is now the company’s president.
While Andy’s continued to slowly grow its number of corporate stores over the past few years —doling out treats from Blackberry Concretes to Ozark Turtles —the Springfield-based company is now shifting a focus back to new franchise stores, with a goal of doubling the company’s locations within a few years.
The company’s ability to survive the recession, Kuntz said, may just be human nature.
“People, when they’re sad, they go out for a treat, and when they’re happy, they go out for a treat,” he said.
Founded in 1986 at the Lake of the Ozarks, Andy’s moved to Springfield the next year, and began getting into franchising when it had three locations, opening four franchise stores each in 2005 and 2006.
“We opened the eight stores and we wanted to make sure things were right, so we put on a pause on franchise sales for several years,” Kuntz said.
Today, of the company’s 17 current locations, six are owned by franchisees —a drop attributable to corporate purchase of several franchise stores. The company, which moved into its current headquarters on North Boonville Avenue about a year ago, has locations in Missouri, Arkansas, Texas and Illinois.
About 18 months ago, Kuntz said, the company made the decision to re-focus on franchises.
“Not that we were surprised, but we were like, ‘These stores are doing very well, why don’t we try to grow the franchise side of the business as well?’ ”he said.
Kuntz said the company receives six to 10 franchise inquiries a week, far more than could ever pan out. But the company has also been more active on the recruiting side as well —attending a conference in Las Vegas last month, for example —with an eye on primarily attracting those who want to open multiple locations.
At least four more locations will open this year, Kuntz said —corporate stores in Fayetteville, Ark., and Countryside, Ill., and franchise stores in Kirkwood, Mo., and Tulsa, Okla.
“The fact that two of them are company-owned certainly puts a lot more responsibility on us as far as responsibilities go, but it’ll be a lot easier today to open up these four than it was back in ’05,” Kuntz said.
Franchisee Steve Owens and his family —the owners of Joplin Regional Stockyards —will be responsible for the company’s venture into Oklahoma.
“Always loved their product; loved the image,” said Owens, who lives in Mount Vernon.
The family hopes to have the first location in Tulsa open in mid-June, Owens said, and is under contract for three stores, with an eye on more.
Besides the Springfield stores, Kuntz said Andy’s considers northwest Arkansas and the Chicago areas its corporate markets, leaving franchises to fuel the growth elsewhere. Starting next year, he said, he envisions two to four corporate stores opening a year, along with three to five franchise stores —the latter eventually increasing to six to 10.
“Do I think that we have the chance to grow bigger than the Midwest —Missouri, Kansas and Texas and Oklahoma, and all that?” he said. “I do.”
The stores average more than a million dollars a year in sales, Kuntz said, with Springfield area stores averaging 2 to 3 percent sales growth in recent years, and some stores in newer markets averaging between 12 and 25 percent growth.
Franchisees pay $32,000 for the first store, and $28,000 for subsequent locations. The company takes 6 percent of sales as royalty, and another 1 percent goes into a corporate advertising fund.
The company’s main challenge, Kuntz said, is increasing costs.
“The treat that used to be $2.95 is now $3.95, it seems like …and approaching $4.25,” he said. “I think at the end of the day, if you can bring your family of four to Andy’s and all get the treat you want for $20, it’s probably not too bad a deal.”
Additionally, expansion hasn’t worked for everyone in the industry, though Kuntz believes his business is unique and committed to quality enough to make it work.
“A lot of the frozen yogurt guys that five, eight years ago were growing like mad and building stores —a lot of them have closed more than half,” Kuntz said.
While Kuntz shied away from talking about specific competitors, Fayetteville, Ark.-based Shake’s Frozen Custard had 37 stores in March 2003, according to a News-Leader story on a location opening in Nixa, and was aiming for 600 by 2007. The Nixa location is no longer operating; the company now has 15 locations, according to its website.
Such stories may underscore the emphasis that Kuntz is putting on ensuring franchisees fit in with the corporate culture.
“It’s a 10-year agreement, it’s someone that you’re partnering with,” he said. “You’ve got to be able to get along.”
Owens, meanwhile, said he’s excited to see his first location come to life.
“If you live in Springfield, you know what Andy’s is. That’s what we’re trying to duplicate down in Tulsa.”