How to Open a Halloween Store

I ran across a blog post that has lots of good facts and one huge error about opening a temporary Halloween store.  The blog is called The Daily Apple and has been publishing on blogspot since 2004. The blog post is Apple #414: Those Halloween Stores.

I’ll get the error out of the way up front so you know to disregard the sales figures and profitability guesses in the post.  The author claims a single Halloween Express store rung up sales of $70 million in 2 months (which is unfathomable).  From that he deduces what you can make, conservatively:

• Now let’s say that the $70 million store is really unusual and it makes twice as much as any other Halloween store. So our store will only make $35 million.

• If we further assume that our rent is that really high $200K, that still leaves us with a profit of over $34 million. In two months.

To the author’s credit he diligently cites his sources in the footnotes.  A closer look at a 2008 BizJournals source article reveals that the $70 million figure referred to the sales of the 180 store chain, not a single store:

…the business, even with a store open only from the end of September until early November, can be huge.

Owenton-based Halloween Express had about $70 million in sales for 2007, he said.

Halloween Express has 180 stores in 27 states, Sigretto said.

That would put the average gross sales per store at $388,888 for 2007 (as opposed to Daily Apple’s $34M )

The costs for going the franchise route?  According to the Bizjournals article:

Franchisees pay a fee of $10,000 to buy the rights for the first store, including the rights to open more locations if first-year sales indicate the territory will support more stores, Sigretto said.

Franchisees typically invest a total of about $80,000 to open, including inventory. The stores typically make a profit by the second year, Sigretto said.

Despite the rather major gaffe in The Daily Apple post, there is a lot of industry and concept info in it about both independent and franchised Halloween retailing.  (The errors may even be corrected by now as I pointed them out in a comment.)

Reminder about Stealth Earnings Claims:  The Louisville Biz Journal article has a lot of good info on the Halloween Express franchise, though remember to always verify sales and profit numbers the company floats out to the press.  Though it’s a grey area, Halloween Express officials should not be publicly making those claims outside of the Item 19 section of their Franchise Disclosure Document.  It could be innocent, or it could be a red flag.

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Photo license:  Creative commons  Photo credit:  ScottSchrantz

Post from: Franchise Pick