Recently, I often saw people saying that Isaac Toast is not as good as it used to be or that it is in crisis on communities or YouTube, so I looked for some related information.
It is synonymous with ‘good franchise’, but the reality in terms of numbers is a bit complicated.
1. Signs of crisis in numbers
What stands out most is the trend in the number of stores.
As of recently, there are 25 new openings and 22 contract terminations. It’s almost reached the level of ‘Ton Dtum’.
In the past, people were lining up to open, but the fact that the number of people leaving and coming in is now similar is clearly a sign that the growth rate has slowed.
2. Is it really a ‘good headquarters’?
If you look at the financial statements, Isaac Toast is truly amazing.
Franchise fee/interior margin of 0 won: This has been maintained for 20 years.
Flat-rate royalty rate of 150,000 won per month: Compared to other places that usually charge 3-5% of sales, this is almost a service level.
Operating Profit Ratio 9.9%: When places like Egg Drop take more than 20%, here we only keep half.
It is clear that the headquarters is not structured to enrich itself by taking money from store owners.
3. But why do store owners leave?
Ultimately, it is a question of ‘profitability’. Isaac Toast’s average annual sales are about 210 million won, which is much lower than the restaurant industry’s average of 310 million won.
The ham special costs 3,800 won, and the labor intensity is high compared to the money left over from selling one.
There is a limit to the amount that can be baked at one time, so there is a limit to increasing sales during peak times.
From the store owner’s point of view, you might say, “The head office is good, but my bank account is not good.”
4. Isaac Burger’s failure and limitations of the brand
The head office also felt a crisis, so they took a gamble with ‘Issac Burger’, but ended up losing about 500 million won.
Isak’s image of ‘cost-effective toast’ was so strong that it didn’t seem to work in the 10,000 won handmade burger market.
I think this is a clear example of the difficulty of brand expansion.
5. Conclusion: Will it fail?
It is a company that is absolutely not going to go bankrupt any time soon as it operates without debt and has quite solid assets, including the headquarters building.
On the contrary, in recession times like now, there is a tendency for the demand for toast in the 3,000-4,000 won range to increase (recession breakfast).
However, questions remain as to whether the good philosophy of ‘win-win management’ will continue to be sustainable in business terms.
Because the head office’s margins are so low, they have little stamina to invest in new businesses, and store owners are worried about limited sales.
In the end, the reality is that it is too nice (price) to become a problem.
Personally, I hope these good companies do well, but it seems clear that it is time for change.