Rita’s gives franchisees recipe for success

October 26, 2016

 

ritasMODESTO — Nick Schutte was never nervous about bringing an East Coast cult treat to the Central Valley. For him, the proof was in the product.

“I had a really good feeling that it would be a hit,” Schutte said.

He’s talking about Rita’s Italian Ice, a Philadelphia-based water ice company with more than 700 locations across the United States. Thanks to two local franchisees — Schutte and Bob Tanon — there are now multiple locations in San Joaquin and Stanislaus counties.

“The concept hasn’t made it to the West Coast yet aside from our branch, so that’s good for us,” Schutte said.

Schutte opened his first location on McHenry Avenue in January. In August, he opened a second location on Shaffer Road in Atwater. A third location in Ceres is planned for early 2017.

“We actually signed on to do a seven-store development,” Schutte explained. He has rights to areas between Merced and Ripon, as well as Lodi and Lathrop.

“We basically have the right to the city,” he said. The franchise model assures business owners do not overlap.

Products include Italian ice, cream ice, gelati, frozen custard, milkshakes and frozen drinks in a variety of flavors.

Schutte isn’t the only franchisee in the Central Valley. Bob Tanon is committed to a four-store run in Stockton, Manteca and Tracy.

“We talk. We have monthly calls and we stay in touch,” Schutte said. “The Northern California Rita’s franchisees are all friends. It really is like a tight knit family.”

Tanon’s first location on March Lane opened May 16.

“Our first week we did $35,000 which is tremendous for a cult treat restaurant,” Tanon said. “Our first day opening, we over doubled the company record. We’re on pace to do $800,000 our first year.”

Tanon credits his success largely to his preemptive marketing strategy. It’s similar to the one he used when he opened Gym Stars Gymnastics in 1999 but with more social media.

“I pay very close attention to the trends in the area. Social media is just a huge, huge part of the opening of any business,” he said.

Tanon said he also ran a face-to-face marketing campaign where he visited neighboring businesses.

“Our first day before we opened the doors, we had a line… that line never stopped until we locked the doors at night,” Tanon said. “I think a lot of it has to do with [preemptive marketing].”

To maintain service, Tanon has 22 employees. Three work full time. Schutte said he employs about 10 employees per location.

Part of the success, however, has to do with the treat. Tanon echoed Schutte’s sentiments. He said he was never nervous how Rita’s would fare in California. He knew the product would be a hit.

Originally from Pennsylvania, Tanon discovered Rita’s while visiting family and it quickly became a favorite.

This was the first time Tanon had opened a franchise. His Gym Stars business morphed into four stores, but there wasn’t any brand to lean on.

“I knew that the (Rita’s) product was tremendous, so I didn’t have to reinvent the wheel. I didn’t have to create the product,” Tanon said of the benefits of franchising.

For Schutte, franchising is what he knows. Prior to opening Rita’s he owned a Mr. Pickles sandwich shop. He sold it to focus solely on Rita’s.

“I think with franchising, you obviously pay a lot more money but you get the backing of the name. It’s turnkey,” Schutte explained. “It comes a little more quickly.”

Schutte and Tanon agree that an upside to franchising with Rita’s has been the support.

“Just about anything that I need, I can just call them. It’s very, very unique in that way,” Tanon said.

“I don’t have any regrets about joining the franchise, and I think it’s only going to get better,” Schutte echoed.

Tanon said his total investment including the fee and to open the doors was about $350,000. He believes he will recoup 100 percent of his investment in 13 months or less.

For Schutte, he said costs were in the ballpark of $250,000 to get started.

He had some of the money saved and used an SBA loan for the rest.

“The interests rates are a little bit lower,” Schutte explained. “If you have the experience and a business you’ve done it with before, you can almost use that as collateral.”

“Business is going great,” Schutte said. “We’re winding down to our peak time of year, and we’ll kind of see how our first winter goes.”

Tanon also added a Rita’s truck to his business plan at the beginning of September and averages five events per week.

“The Rita’s truck comes out to our sporting events,” said University of the Pacific marketing and sales manager for athletics Jeremy Neisser. “We’ve heard nothing but rave reviews from our fans. I’m a soft-serve guy, so (Tanon) gave me an ice cream the size of my head!”

The Rita’s truck serves treats at all of the outdoor sporting events Pacific hosts including soccer, field hockey, water polo and tennis.

“The relationship is beyond just setting up and selling at our sporting events. There’s a partnership,” Neisser said.

 

If you go:

Rita’s (Stockton)

2829 W March Lane

Open seven days a week

11 a.m.-10 p.m.

 

Rita’s (Modesto)

2001 McHenry Ave.

Open seven days a week

11:30 a.m.-9:30 p.m.

 

Rita’s (Atwater)

2810 Shaffer Rd.

Open seven days a week

11 a.m.-10 p.m.

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