Rita’s is a brand that serves assorted flavors of Italian ice and custard. For over 30 years they’ve been in the business of selling these frozen desserts to a loyal base of customers in more than 500 locations in the United States and around the world. But is Rita’s still a sound business to invest in?
You should know that more Rita’s Italian Ice shops have been closing than opening. Between 2016 and 2018 alone, the franchise had 159 total units close for business permanently.
How much does it cost to open a Rita’s Franchise? You’ll need a liquid capital of $100,000 and a net worth of $300,000. The initial investment range for this franchise is $194,863 to $528,061 with a franchise fee is $35,000.
Read on below for more information on how to franchise Rita’s Italian Ice and the many advantages and challenges you can expect in running this popular frozen dessert chain. Take our 7-minute franchise quiz to find out if Rita’s is the right opportunity for you.
Financial Requirements and Fees
The following are the financial requirements to franchise Rita’s Italian Ice.
|Fees / Expenses
|$194,863 to $528,061
In addition to these fees, Rita’s also charge a royalty fee of 6.5% and an ad royalty fee of 3%. This means you’ll be handing over 9.5% of total revenue to corporate. This is an above average franchise fee where the industry average is only 5%. This would be a point worth negotiating with the company before signing an agreement.
Rita’s also offers a 20% discount on franchise fee for veterans. The term of agreement to run a Rita’s Italian Ice is 10 years.
Average Sales / Revenue per Year
It isn’t known officially how much Rita’s Italian Ice makes annually but a Rita’s location in Adamsdale, Pennsylvania saw gross revenue of $173,866. After expenses this business had an annual cashflow of $38,729.
This revenue assumed you were managing the unit yourself and not hiring a full-time manager. If you did hire a manager, the business would be operating at a break-even point at best. It would be up to you to improve the marketing and sales of the unit to increase revenue.
Jim Hagan, a former Rita’s franchise operator in Virginia, said there wasn’t enough business to keep the business operating in his market. While sales started strong the first few months, traffic volume couldn’t be sustained and the unit went out of business back in 2013.
Rita’s Franchise Facts
|Rita’s Franchise Company, LLC
|Food and Beverage
Rita’s Italian Ice started in 1984 in Philadelphia. Bob Tumolo, a former firefighter, opened the business on his front porch and named the shop after his wife Rita. By 1987, Bob, along with his brother John, branched out and expanded their locations across Philadelphia. The demand for their Italian ice was high that by 1989, they started to franchise Rita’s.
Rita’s Italian Ice is known to have so many different flavors. There are over 95 flavors you can choose from and Rita’s assures you that they’re all made fresh. In fact, batches of flavored ice must be sold within 36 hours.
Rita’s menu consists of Italian ice, frozen custard, Gelati (layered Italian ice and custard), Blendini (Italian ice and custard blended together), Concrete (creamy thick custard), Misto shakes (Italian ice shakes with custard), milkshakes, and frozen drinks. For food, Rita’s also sells frozen custard cakes, custard cookie sandwiches and custard by the pint.
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The flavors that Rita’s sells range from fruit flavors such as mango (their best seller), to chocolate, cookies and cream, root beer, and even peanut butter and jelly. They also have options for those that are looking for sugar-free treats.
Rita’s is mainly located in the United States but they’ve also recently branched out to several Caribbean nations, the Philippines (until 2022), India, and China. At their peak, the company had more than 600 units.
The majority of stores in the United States operate in a seasonal schedule. This means that they open on the first day of March until the third Sunday of September wherein they close during the cold weather months. However, if a Rita’s store is located in shopping malls or if they are located in warmer areas, they could be open all year round.
Rita’s also has a rewards program for customers. Once registered, you just have to scan the app every time you visit Rita’s. By the 8th visit, you’ll be able to get a free treat from the menu.
The Italian ice brand is also well-known for giving away free Rita’s Italian Ice every year on the first day of spring. Millions of Italian ice are given out during this event and it has been going on for 25 years. The only time this event was cancelled was in 2020 and 2021 due to the pandemic.
To franchise a Rita’s, you’ll need to download their franchise report which can only be done so once you complete their franchise form and questionnaire here. Within one business day, a representative from Rita’s will call you to answer any questions you may have and confirm the personal information. If your questionnaire is approved and you meet their financial qualifications, you’ll be able to receive their current Franchise Disclosure Document.
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Once you’ve reviewed the document and get back to them, you’ll go through an Operations and Training Overview. You will also go through a validation process that connects you with current Rita’s franchisees to help you determine whether Rita’s is the right franchise for you. The company will also conduct a background and credit check.
You will then meet the team at their headquarters in Trevose, Pennsylvania. You’ll be given a tour at Rita’s and also taste their products. Once you and Rita’s are in agreement regarding the franchise, you’ll be given a franchise agreement to sign. You will also pay all the initial fees and start the process on opening your Rita’s franchise. At present, the president and CEO of Rita’s Italian Ice is Linda Chadwick.
How Much Does Rita’s Franchise Make in Profit?
There is no official information as to how much a Rita’s franchise makes in profit. But a store up for sale claims that sales that reached $38,729 a year. This was for a seasonal unit that was only open between March – September.
Advantages of a Rita’s Franchise
There are many advantages in owning a Rita’s Italian Ice franchise. Here are a few:
Rita’s caters to the young and old. It’s been operating for 30 years serving frozen desserts to everyone. No alcoholic beverages are included although Rita’s had a mocktail line once. But all in all, it’s a family friendly place with treats everyone can enjoy.
Rita’s may only be known for their Italian ice and frozen custard. But the varieties they offer are plenty. There are also many flavors to choose from. And aside from drinks and custard, you can also get snacks.
All in all, Rita’s Italian Ice seems like a no-frills kind of business. The product line is simple and the target customers are everyone who enjoys frozen desserts. Even the franchise reviews are positive. One review claims that Rita’s has even provided them with stability.
Challenges of a Rita’s Franchise
To prepare for a Rita’s Italian Ice franchise, you need to know what the challenges are. Here are some to expect:
Units are Closing
Here are the number of unit closures for Rita’s according to Franchise Disclosure Documents:
- 2016: 65
- 2017: 51
- 2018: 43
Considering these closures occurred before the health crisis this is not a strong indicator for health of the business. Successful operators don’t just go out of business.
To make matters worse, as of January 15th, 2022, the company closed their operations in the Philippines. This included shuttering the doors of seven units operating in Manilla.
As mentioned above, Rita’s operates on a seasonal schedule. There will be months that the business will be closed. This seems like a big disadvantage and a challenge because you could have more sales if you were open all year round. If you’re not open year round, you won’t generate as much revenue.
This would be no problem if you’re in a location with a warmer climate throughout the year or you’re in a shopping mall location. So be sure to plan out your future Rita’s location carefully.
One poster on Quora said that most of the problems his friend had while running Rita’s Italian Ice were employee issues. Some would not show up for shifts while others would not be able to clean the surroundings properly. The poster cited this might have been because the business could only offer minimum wage.
We only hope these issues were studied and resolved such as making sure employees were trained properly and wages were increased even a bit. Unfortunately, for many units the revenues don’t appear to support a higher wage.
Is the Rita’s Franchise Right For You?
Unlike other companies, Rita’s has not made their most recent financial reports open to the public so it’s hard to study whether or not Rita’s is profitable. But if you’re still interested, you can discuss your concerns directly with Rita’s team by messaging them on the details provided above.
But as you can see from the examples I’ve listed, you should be careful and conduct due diligence before investing in this franchise. This is a concept that has seen more closures than grand openings that past 5 years. This is never a good sign for a franchise business.
What is an alternative Rita’s Italian Ice franchise?
A frozen dessert business you can open near you is Pelican’s SnoBalls. They’re well known for their flavored snow balls and have over 500 locations around the United States.
To franchise Pelican’s SnoBalls, expect the investment to be $61,150 to $195,300. You can check out our full guide on Pelican’s SnoBalls here.
And there you have it! With this guide, I hope you better understand the opportunities and risks of a Rita’s Italian Ice franchise.