Rita Franchise Cost, Profit & Failure Rate 2024

Italian food is famous all around the world. Opening an Italian place can be an excellent investment because clients, especially American clients, are often attracted by what is known as the best cooking tradition in the world.

Italian restaurants aren’t the only ones that exploit the Italian nuance. Rita’s Ice Franchise, for example, is a chain of quick restaurants that serves primarily Italian Ice and Frozen Custard.

If you are interested in opening one of these quick-service restaurants, the good news is that you can, and in this article, you’ll find out anything you need to know about the Rita’s Franchise.

Rita Franchise
Rita’s Franchise

About Rita’s Italian Ice

As mentioned, Rita’s Italian Ice is a chain of quick-serve restaurants known for its Italian Ice and frozen custards. It also offers other types of specialties, all inspired by the Italian cooking tradition.

Rita’s retail shops are places where they are served quickly, they take their frozen custard, and they often have it outside.

For this reason, Rita’s stores are often small, easy to run and manage, but always crowded with many clients.


History Of Rita’s Franchise

History Of Rita's Franchise

Rita’s company was founded in 1984 by Bob Tumolo. They served water ice and soon started using the Italian name ice for their products.

The success was so quick that only three years later, Tumolo was already ready to open a second store. In 1989, he decided to franchise the business.

This way, he allowed third-party entrepreneurs to open their Rita’s store after paying a franchise fee to the main company.

With this strategy, more and more Rita stores were opened very quickly.

Today, there are more than 600 Rita locations in the United States. They are spread throughout 30 states, mainly located in the Mid-Atlantic.

In 2013, Rita opened their first store outside the United States, in China.

The Tumolo family is no longer the company owner: in 2017, Argosy Private Equity and MTN Capital acquired control over Rita’s stakes.


Rita Franchise: Business Model

Rita’s has been a franchise almost since it was founded. If you want to open Rita’s restaurant, you can contact the company (check their website), provide your information and any document they require, and obtain a franchise contract. You’d be the owner of Rita’s location.

Business ModelQuick-serve restaurant franchise
Initial Investment$200,000
FranchiseYES
Franchise Fee$30,000
Number of outlets8290 in the U.S.
Liquidity $100,000

How Much Does It Cost To Open A Rita’s Store?

Opening a new Rita restaurant is quite a big investment. The initial investment can be calculated, including the franchise fee and the expenses related to the location (rent or purchase), furnishing, and supplying.

Depending on where you want to open your Rita’s, your restaurant can be bigger (so it can host clients inside) or smaller.

Even if it’s a small restaurant, however, you need to consider that you’ll need to create a small area outside where clients can consume their Italian Ice, which will require an investment as well.

The franchise fee is rather high: it’s $30,000. You need to pay this fee to be authorized to use Rita’s name and product. You need to pay for it only once; after that, the restaurant is all yours.

Considering everything, you can consider an initial investment of about $200,000. It could be slightly higher or lower depending on the dimensions of your location.


Rita’s Italian Ice Franchise Revenue

Based on the median sales of 464 franchises, Rita’s Italian Ice Franchises make $248,340 in sales per year on average.

Since this is an average figure, you must note that the sales for different Rita franchises could vary depending on a number of factors such as type of store, location, number of employees, etc.

Here’s a breakdown of 464 shops from bottom to top:

TierTop TierMiddle TierBottom Tier
Number of shops in tier141142141
Highest gross sales for tier$705,764$271,282$201,607
Lowest gross sales for tier$271,332$202,939$43,192
Average gross sales for tier$352,771$239,230$151,508
Number of shops that exceeded or obtained average sales627385
Median gross sales for tier$342,925$240,504$161,647

Rita’s Italian Ice Franchise Profit

Rita's Italian Ice Franchise Profit

If we consider an EBITDA margin of 24%, then Rita’s Italian Ice franchise owner makes $59,601 in profits per year.

Since Rita’s Italian Ice franchise has not revealed any financial information of its franchises, we had to calculate the EBITDA margin as per the industry standards.

This is how we calculated this amount:

Financial OverviewPercentage of RevenueAmount ($)
Individual Franchise Annual Revenue100%248340.00
Rent9.50%(23592.30)
Insurance4.75%(11796.15)
Salaries19.00%(47184.60)
Franchise Royalty Fees4.75%(11796.15)
Utilities1.90%(4718.46)
Cost of Goods Sold (COGS)23.75%(58980.75)
Labor (Variable)12.35%(30669.99)
Total (Expenses)76.00%(188738.40)
Net Profit24.00%59601.60

Note: The displayed expenses are estimates based on industry averages and standard costs. Actual expenses may vary due to factors like location, business size, and market conditions. We recommend conducting detailed research or consulting with a financial advisor for a tailored financial analysis.


Payback Period Of Rita’s Italian Ice

On average, Rita’s Italian Ice franchise makes $59,601 profit per year, and the investment is $200,000.

So, to find out how long it will take to earn back the initial investment:

Payback Period = Investment / Yearly Profit = $200,000 / $59,601 = 3.4 years

Based on these figures, it will take approximately 4 years to pay back the initial investment for Rita’s Italian Ice. This time period could be longer or shorter depending on your sales, revenue, and profit figures.


Failure Rate Of Rita’s Italian Ice

Franchised Outlets:

YearOutlets at the Start of the YearOutlets at the End of the YearNet Change
2018591565-26
2019565564-1
2020564531-33

For the Franchised outlets:

  • In 2018, the failure rate was (26)/591×100≈4.40%
  • In 2019, the failure rate was (1)/565×100≈0.53%
  • In 2020, the failure rate was (33)/564×100≈5.32%

According to the above-mentioned data, Rita’s franchised outlets have been declining consecutively from 2018-2020, showing a failure rate between 4.40% and 5.32%.

This depicts that it is risky to invest in the franchise as the number of outkets has been declining.


Requirements

Rita Franchise has some requirements for their franchise candidate. In particular, before you apply, make sure you have minimum $100K cash liquidity and/or $300K minimum net worth.


Training And Support

There is a training program available for Rita’s franchise partners.

The program includes teaching about how to furnish your restaurant, how to prepare and serve the products, where to find suppliers, how to communicate with clients, how to market your business, and so on.


Obligations And Restrictions

The Rita Franchise doesn’t have particular obligations and restrictions for its franchise partners.

Of course, you need to maintain certain quality standards, and you can’t serve products in your Rita’s restaurant that are not Rita’s branded. 


Terms Of Agreement And Renewal

The franchise contract allows you to become the owner of your Rita’s location forever.

There is no expiration date on the contract, and that’s why the franchise fee is so high. You pay once to be autonomous for the rest of your business life.


Financial Assistance

Rita’s Franchise program provides some financial assistance, but it is provided to third-party entities. 

For those looking to open a franchise in the ice cream industry, possibilities include Kona Ice, Menchie’s Franchise, Twistee Treat, Milky Way, and Baskin Robbins.


Comparison Franchise: Rita’s VS 85° Bakery

CompanyRita’s Franchise85 °C Franchise
Founded19842003
Number of Outlets600+1000
Franchise Fee$35,000$15,000
FranchiseYesYes

Conclusion

Rita’s restaurants are very successful. It could be a good investment if you want to open one, but it’s not little.

If you have the liquidity required (at least $100K), you can invest in your new Rita’s restaurant and become its owner.

To submit your application, you can simply go to Rita’s website and fill in a simple form. They’ll call you back.

Also we recommend you to have a look at Cold Stone Franchise as well ! We are sure you would love that too!!


Rita’s Franchise: FAQ

Is Rita's a franchise or chain?

Rita’s is a franchise. Anyone who has the requirements can submit their request to become Rita’s franchise partner.

Who is the owner of the Rita's Franchise?

Today, the owner of Rita’s franchise is Argosy Private Equity and MTN Capital. Each of the two entities possesses 50% of the company.

How many Rita's restaurants are there?

There are more than 600 Rita’s restaurants in the United States. They are mainly located in the Mid-Atlantic area.

Is the Rita's Franchise a good investment?

The Rita’s Franchise is a big investment, but it can still be worth it because Rita’s is a well-known brand, their restaurants are all successful, and they can quickly create a return on investment.

Is the Rita's Franchise worth it?

Even though the investment is big, it is still worth it, especially if you already have the $100K and don’t have to borrow them. 

Who founded Rita's Italian Ice?

Rita’s was founded in 1984 by former Philadelphia firefighter Bob Tumolo.

Where is Rita's Italian Ice headquartered?

The headquarters of Rita’s Italian Ice is located in Trevose, Pennsylvania.

Reference: Start a Rita’s Franchise Company Franchise, 2022 Costs & Fees (franchisegator.com)Rita’s Italian Ice – Wikipedia

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