- 2 days ago
16 Handles CEO Neil Hershman explains why Gen Z is fueling frozen yogurt’s comeback and how the brand plans to stay ahead as competition heats up.
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00:00Frozen yogurt is having a moment yet again, and this time it's fueled by Gen Z.
00:05We're here now with Neil Hirschman, CEO of 16 Handles.
00:08Thank you so much for being here today.
00:09Of course. It's a beautiful day, so it's a perfect day for frozen yogurt.
00:12It is. I would say that almost every day is a perfect day for frozen yogurt.
00:15I even eat it in the winter, I have to say.
00:17Yeah, I mean, you're our customer, so I appreciate it.
00:20That's what my family thinks as well.
00:22Of course. I mean, tell us a little bit about some of the trends that we're seeing recently.
00:26Again, frozen yogurt always kind of a staple, but we're seeing really now,
00:29people are really into it. What do you think is going on?
00:31I will say there's a big media shift into focusing on frozen yogurt.
00:35Now, same-store sales for 16 Handles have been increasing steadily over the years,
00:39so it's not as much as a this is a new wave of frozen yogurt
00:43as we've been laying the groundwork and the bricks for many years,
00:47and we've seen our sales rise 20%, 30% for now probably three years in a row.
00:52But there's definitely a big consumer shift this summer, I would say,
00:57into, like, we've got to get frozen yogurt every night of the week now,
01:01and we love to hear that at 16 Handles.
01:04I'm sure you do.
01:04It's definitely a big business.
01:05Of course. I'm sure you do.
01:06I mean, when you see all of these, especially kind of Gen Z-aged people,
01:10really posting a lot on social media,
01:12and then the media coverage that then follows that,
01:14what do you think is really driving that?
01:16Is it just seeing it on social media and then people want it more,
01:19or why are people now so much more excited?
01:22Because, again, all these posts, all these lines.
01:25Yeah, I think there's obviously the understanding that frozen yogurt is a healthier treat.
01:32It's still dessert. It's not a salad.
01:33But if you're going to get dessert anyway, why not get frozen yogurt?
01:36Especially, I think, during COVID, we all went a little unhealthy
01:39because maybe we were all sad or bored or something
01:44until we're eating these big, you know, 1,000-calorie cookies and whatnot.
01:47But now we're starting to shift and say,
01:49hey, look, our health is important.
01:51Our wellness is important.
01:52But also we want dessert.
01:54And 16 Handles and frozen yogurt really fills that void
01:57where it's a great alternative.
01:59And then with 16 Handles and many of the other self-serve frozen yogurt treats,
02:03it's so customizable.
02:04And, like, everything today is about experience.
02:06When you talk about Instagram and social media,
02:08people want to make this custom frozen yogurt that's for them.
02:12And that's what 16 Handles is all about.
02:14We want our guests to have individuality
02:16to make one of a million combinations in our store.
02:18And that's why we've got 16 flavors
02:20and, obviously, the 50, 60 toppings in every single location.
02:24Yeah, the customizable part of it is so important
02:26because when you go and you have someone else
02:28putting on a few toppings for you
02:29or you have to pick one or two,
02:31it's really not the same experience
02:32as getting to put on exactly what you want
02:35and get your flavor combination.
02:37When you think about kind of these new places that are popping up,
02:40you know, 16 Handles has been around for a while now.
02:42And then you have some of these new ones popping up,
02:44some new trends when it comes to what they're offering.
02:47How does 16 Handles stay kind of relevant to the trends
02:50but also true to the business that you've always had?
02:53Yeah, that's a great question.
02:54I think we're actually setting a lot of the trends, too.
02:57A few months ago, we launched Kefir Soft Serve,
02:59the world's first kefir frozen dessert,
03:02which is just a different type of probiotic.
03:04Before that, it was oat milk.
03:05We were the first people to step into the vegan,
03:08non-dairy, lactose-free type trend.
03:09And so with flavor innovation,
03:11we actually launched a new flavor every 16th of the month.
03:14So from an operational standpoint,
03:16you're talking about distributing across many states
03:18new flavors 12 times a year,
03:21probably 15 times a year.
03:22Like this month, we have a double launch.
03:24That's a very hard thing to do.
03:25The newcomers in the space,
03:26you can't match that
03:28because we've, again, built this groundwork.
03:31We have the creameries
03:32and the infrastructure to be able to do this.
03:35And so I think we're staying on top of trends
03:37and even setting trends in many of the regions
03:39that we're actually in.
03:40And sometimes we're early.
03:41Like for kefir, I think we are early to that.
03:43It's not necessarily a household product yet.
03:46There's a big brand called Lifeway
03:47that you constantly see at the grocery store
03:49selling a dairy or a kefir
03:53that's more like a milk bottle.
03:55But nobody's doing it in frozen yogurt,
03:58frozen dessert form.
03:58So we're excited to continue to set trends.
04:01And then as we see other trends being set,
04:03like we have flexibility within our model.
04:06We love learning new things
04:08and going along the way.
04:10I'm obviously a younger CEO.
04:11It's like I'm in tune very much
04:13with what's happening out there.
04:14And I keep a small core team
04:17so that we can be adaptable.
04:18Is I want to be a trendsetter
04:20or go where the market's going.
04:23If the customer demand shifts,
04:24we will be the first people there.
04:25Yeah, it's so important to have that balance
04:27of setting the trends and also adapting to the trends
04:29and getting to really do it all.
04:31It sounds like, though,
04:32you have such a big undertaking,
04:33making your own product, creating new products.
04:36Again, I am excited to try the kefir one.
04:38I haven't tried that myself.
04:39With all of this massive undertaking
04:41that you have here in so many locations,
04:43what have you really found to be the biggest challenges
04:45as you open new locations or launch new flavors?
04:48What's really the biggest challenge for you?
04:50Yeah, that's a great question.
04:52And as we expand,
04:53we're entering new states
04:55where they've never heard of 16 handles.
04:57We've got about 50 locations
04:58with another 70, 80 on the way.
05:02And so there's obviously mistakes made in growth,
05:05I will say,
05:06and fun learned lessons along the way.
05:08Distribution is one of the hardest things to get right,
05:10to make sure you've got every flavor.
05:12When there's 16 flavors in the store,
05:14it means there's actually probably 20 flavors in the store
05:16because we're constantly rotating them.
05:18And so to make that happen
05:19and also keep innovating
05:20and make sure those new things are there every single month
05:23is a difficult task,
05:24but it's a lot of fun.
05:26And then we get to invite these new customers
05:29who've never heard of 16 handles
05:30in a state like Arizona
05:31where we just opened two stores
05:33to come to 16 handles for the first time.
05:35And they see this massive flavor wall,
05:38giant, beautiful, clean toppings bar.
05:40And then a really inviting guest area
05:42because one thing that's important to us,
05:43always 25 seats in our stores.
05:44We want people to come and eat.
05:46Every other concept's like,
05:47hey, take it and go, get out of here.
05:49We don't want to pay for rental space.
05:50We're going to take bigger spaces
05:52and we're going to make sure your family,
05:54your friends, your soccer club team,
05:56whatever it is who's coming to eat 16 handles
05:58has a place to enjoy it.
05:59And that's very important in our model.
06:01And so when people get to come to 16 handles
06:03for the first time,
06:04they're just so excited
06:05and we earn their loyalty from that grand opening.
06:07Yeah, that's so interesting to think about
06:09the idea of actually having room for people
06:10because you're right,
06:11a lot of places are like,
06:12get in, get out, onto the next.
06:14And so to actually have a place
06:15where you'd want to spend time and enjoy
06:17and have it be more of a social situation,
06:19it makes a lot of sense for that.
06:21When it comes to the kind of nature
06:22of frozen yogurt,
06:23again, having this kind of resurgence right now,
06:25some people are saying
06:26it's a little bit cyclical
06:27and others are saying,
06:28no, it's actually steady.
06:29You're just not seeing that.
06:30So where do you fall in that debate?
06:32Yeah, it's steady overall
06:35if you look at the long-term trend,
06:36but there definitely are
06:37like sub-cycles within it, I'd say.
06:40And I would even say
06:40that they're regional and market-dependent.
06:43And a lot of like the cyclical aspect,
06:46I would say is a failure of large brands
06:49that just didn't innovate
06:50and didn't take action
06:52and were household names
06:54and no longer household names
06:55and are closing all their stores
06:57across the country,
06:58which gives a perfect opportunity
06:59for a franchise like 16 Handles to expand.
07:02And that's what we're seeing happening right now.
07:04But I think it was their lack of innovation and action
07:06and not necessarily that consumer demand changed
07:09and people didn't want frozen yogurt anymore
07:11because people wanted frozen yogurt.
07:12They just didn't like the stores
07:13that they were going to
07:14and they want a fresh, clean, healthy product
07:17in an inviting, welcoming space.
07:19And that's what we're offering.
07:20Yeah, and thinking about that,
07:21I mean, you were mentioning
07:22that you're kind of a younger CEO
07:23and how that kind of helps you
07:25with staying on top of the trends
07:26and everything that's going on in the industry.
07:28What else do you think is important
07:30knowing that you are kind of a younger CEO,
07:32but with such a massive company
07:33that has so much appeal
07:34to so many people across the country,
07:36what really benefits you
07:38from having that kind of younger perspective?
07:40Yeah, I think it's just,
07:41I'm able to see trends as they happen
07:43and I lead by precedent.
07:46I franchise myself in this brand
07:48six locations around Manhattan,
07:50which is where I started.
07:51I started as a franchisee
07:52and then acquired the franchisor.
07:53But I continue to be a franchisee
07:55because I want to know
07:55what it's really like operating these stores
07:58as we grow
07:59so I can understand the franchisee sentiment,
08:02the customer sentiment.
08:03I really get great hands-on learning
08:05through my stores.
08:06And then as we grow,
08:07I set ambitious goals.
08:09I want to become a million dollar AUV,
08:11which is the average sales per location brand.
08:17And in frozen yogurt,
08:18that was unheard of.
08:18But now our average store
08:19is already selling over a million ounces
08:21of frozen yogurt per year,
08:22which is how we weigh our cups by the ounce.
08:24And we're getting close
08:26to that million dollar AUV,
08:27which means really happy franchisees,
08:29very, very busy and happy stores.
08:32And it's going to be a great brand.
08:34Amazing.
08:35Well, tell us,
08:35I mean, as you look to the future,
08:36where do you see 16 Handles going?
08:38I know you have new locations,
08:39you're opening new territories.
08:41Where do you see this in the next five years?
08:42Yeah, we're closing in
08:43on the 100 store count.
08:44And once we do that,
08:46we'll set the 200 store count goal
08:47and continue growing from there.
08:50And I think there is a lot of opportunity
08:51across America
08:52to have many very successful stores
08:55that are really community-centered destinations,
08:57places where you want to bring your family.
08:59One thing, like I heard recently
09:01that I loved is
09:02somebody got their learner's permit
09:03and the first place
09:05that they could drive was 16 Handles.
09:06And that's somebody
09:07who's been going to 16 Handles
09:08since they were, you know,
09:09probably three or four years old
09:10with their parents
09:11and now has grown up
09:12and continue to support the brand.
09:14And when they go to college
09:15and they come back in the summers,
09:16I know exactly where they're going to be.
09:18And so that's what we want to create.
09:19It is a pink or a blue cup of happiness
09:21that we're selling at the end of the day.
09:23It is a great dessert,
09:24a little bit better for you
09:26than some of the alternatives out there.
09:27And so we want to earn loyalty
09:29and keep growing as a brand.
09:31Amazing.
09:31Well, it sounds incredible.
09:32I can't wait to give all of these a try.
09:34I'm going to stick my spoon
09:34in every single one.
09:36And yeah, Neil Hirschman,
09:37CEO of 16 Handles,
09:38we really appreciate you being here today.
09:39Thanks for having me.
09:40Let's eat some fries.
09:41All right, let's do it.
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