Each of the 65 Fosters Freeze franchises is located in California, like this one in San Jose, but … [+]
Courtesy of Fosters Freeze
Fosters Freeze, a 75-year-old brand, could easily be considered the Dairy Queen of California. It’s a totally franchised operation, known for its soft-serve ice cream and burgers, with 65 outlets with every single outpost located in California.
But that’s about to change. Its owners, 36-year-old CEO Neal Dahya, his 34-year-old brother Nimesh Dahya, VP of Brand Growth Strategy, cousin Sanjay Nahya, head of marketing and two other cousins, are looking to expand beyond California.
Their goal is targeting contiguous states and then moving westward.
The Dahya brothers are savvy franchisees with an impressive track record. The duo has invested in and run a series of franchises including Applebee’s, IHOP, and Burger King.
Neal Dahya says the brothers acquired one IHOP, managed to spike its revenue, and gained capital funding from several local and regional California banks, to expand their footprint.
In June, 2015, the Dahya brothers and three family members acquired Fosters Freeze, headquartered in Pomona, California, for an undisclosed price. Since then, its revenue has risen annually and spiked 20% in the last fiscal year.
The Dahya’s were attracted to it because “All of our restaurants were out of state, but our entire family is from California,” explains Neal Dahya.
Why did they wait five years to step up franchising? He says it needed to strengthen its infrastructure and support its current franchises to be successful before it looked to expand. It remodeled some locations, updated packaging, introduced a new logo, and streamlined the supply chain.
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“Now we feel we’re capable of growth,” he says, which stepped up its franchising efforts in August 2020.
Currently, a new Fosters Freeze is set to open in 2021 in North Salinas, California in Monterrey County, operated by existing franchise owners, Jared and Bruce Abbot.
“Once that opens, and they’re able to see the full design that will help with our growth,” Neil Dahya cites.
Its outreach to find new franchisees includes “targeted PR and content marketing solutions, social media campaigns and SEO in designated states,” he says.
It’s targeting Nevada and Arizona as new states to expand in. It can tap the brand’s supply chains and many former Californians have moved to these nearby states, are familiar with the brand and feel a nostalgic connection to it.
Franchising is what Neal and Dimesh Dahya learned at IHOP and Applebee’s, which moved toward all franchising, with few or no company-owned stores. But in the future, owning some shops is a possibility.
Neal Dahya also doesn’t expect the pandemic to curtail any franchising growth. In fact, Fosters Freeze’s revenue has risen 20% during the pandemic despite indoor dining in California being prohibited or curtailed. Indeed 24 of its locations offer drive-thrus and 40 walk-ups.
While the pandemic has affected all restaurants including Fosters Freeze, Nimesh Dahya says at the outset, “It made a big impact on our supplies. However, we overcame it and sales have been up over double-digits due to our store layouts and having walk-up windows.”
To ensure safety of its employees, PPE masks are worn by the staff, employee temperatures are taken, and hand sanitizers can be found at all stores.
And it’s partnered with several third-party food delivery services including GrubHub, Uber Eats and DoorDash at most stores to boost sales. Some stores are located in remote locations, where third-party delivery isn’t viable.
It’s known for its soft-serve ice-cream but its two most popular food items are its Big Boss Burger and Double Classic Burger.
Asked why he would urge a customer to choose Fosters Freeze if a Dairy Queen were located nearby, Neal Dahya replies concisely, “Our soft service ice-cream is tastier and our food is better.”
Looking into next year, Neal Dahya expects that “the Salinas location will be up and running, and we’ll have a couple of more locations in the pipeline.”
Dahya describes the three key to its future success as: 1) creating exceptional guest experiences and maintaining that nostalgic feel, 2) sustaining food excellence, 3) staying on top of technology via online and mobile ordering and self-ordering kiosks.