Generation Next Franchise Brands, Inc. (“Company” or “Generation Next”) announced today the launch of a new, Company-owned robotic vending kiosk portfolio.
The Company-owned portfolio will initially launch with 12 Reis & Irvy’s-branded, robotic soft-serve vending kiosks capable of serving frozen yogurt, ice cream, sorbet, gelato, even organic almond milk-based frozen desserts and other, yet-to-be-announced products. These kiosks will be installed in a variety of location categories including hospitals, colleges, family fun centers, large corporate facilities, military bases and airport locations.
According to Generation Next CEO Nick Yates, the purpose of the Company-owned portfolio - which could grow significantly - is three-fold. First, the Company-owned kiosk portfolio will allow Generation Next to more easily pilot new products and marketing strategies, as well as develop and refine best practices, new technologies and flavor profiling that can be passed on to its Reis & Irvy’s franchisees.
Secondly, the Company-owned portfolio will allow Generation Next to fill gaps in its national footprint and take advantage of opportunities that often present themselves. “Despite the fact we now have 285 franchisees across the country, there are countless opportunities for Reis & Irvy’s that cannot be taken advantage of through the franchise model alone. Filling these gaps and taking advantage of these opportunities benefits everyone: Generation Next, the Reis & Irvy’s brand, strategic partners, shareholders and our franchisees,” Yates said.
Lastly, a growing portfolio of Company-owned robotic kiosks will provide the company with an additional revenue stream, strengthening the Company’s bottom line and adding value to the enterprise as the portfolio grows. “Generation Next, through its wholly-owned subsidiary, 19 Degrees, will realize 100 percent of the operating profits from the Company-owned portfolio,” Yates noted.
The Company-owned portfolio will consist of Reis & Irvy’s kiosks situated at high-value locations or markets where Reis & Irvy’s does not have independent operators or franchisees. “Exclusive territory and market agreements will, of course, also be respected,” Yates added. “We’re looking to enhance our footprint by taking advantage of opportunities to expand the Reis & Irvy’s brand in as many ways as possible.”
Locations for the Company-owned portfolio will be secured by the Reis & Irvy’s team. Kiosks and special location agreements will be owned and held by Generation Next’s wholly-owned subsidiary, 19 Degrees, Inc. Routine stockings, service, and cleaning of the robotic kiosks will be performed by trusted independent service providers under contract with the Company and its subsidiary.
Prior to the Company-owned portfolio announced today, the Company operated its own Reis & Irvy’s robotic kiosks in calendar year 2017 as part of a beta test of its robots and a testbed aimed at analyzing customer behaviors and preferences, as well as to benchmark sales and revenue expectations on a per-kiosk basis.
In 2017, those kiosks averaged annual gross revenues of $73,730, with the lowest performing kiosk achieving $51,420 in gross revenues and the highest achieving $113,508.
Based on lower and conservatively estimated annual gross revenue of $50,000 for each kiosk, the Company estimates an annual EBITDA* [1] of approximately $1.6 million for each route of 100 kiosks it operates
“Our business model consists of domestic and international franchising. We have appointed over 285 domestic franchises since our inception and we have sold exclusive territory licenses in Canada, Israel and Australia. Combined these contracts provide future revenue potential of over $156,000,000. We are very excited to now announce the launch of the third division; this new corporate-owned operating portfolio,” Said Nick Yates, CEO of Generation Next. “As the demand for our technology increases, we will work with our franchise network where possible to place as many robots, however, having the ability to facilitate accounts in areas we don’t have franchisees allows us to avoid missing out on any opportunities to generate more revenues and provide our shareholders with maximized value as well as promoting the Reis & Irvy’s brand at the same time. We don’t see any reason why we couldn’t place thousands of robots across the US in a very short amount of time given the opportunities being presented to us.”
*[1] EBITDA is a non-GAAP term defined as Earnings Before Interest, Taxes, Depreciation, and Amortization. Furthermore, it is assumed that the general & administrative expenses will be absorbed by the Company’s other operating subsidiaries.
