Magnolia Bakery CEO Bobbie Lloyd went on a trip to Ireland last summer, thousands of miles from the nearest location.
Still, when her husband mentioned her job title to others, there were gasps. “‘Oh my God, I love Magnolia Bakery,'” Lloyd remembers them saying.
One Utah couple’s passion for Magnolia was so strong, they expressed interest in getting involved. It just so happened the New York-based company was on the cusp of growing its first U.S. franchising program. The two sides kept in touch and followed up. And now, the husband and wife—along with their three daughters and two sons-in-law—will open the first domestic franchised Magnolia in Salt Lake City next year.
“We know that there’s enormous brand love, and I want to bring that everywhere,” Lloyd says.
Currently, Magnolia has 12 locations across New York, Los Angeles, and Chicago, all of which are company owned except for a licensed outlet in LaGuardia Airport. It also has seven international franchise partners who operate over 35 locations in India, Jordan, Kuwait, the Philippines, Qatar, the United Arab Emirates, and Turkey.
The concept is widely known for its banana pudding, but it also offers an assortment of cakes, cheesecakes, brownies and bars, and cookies. It was founded in 1996 in NYC’s West Village neighborhood.
The U.S. franchising venture is part of a multi-year journey. In 2021, the brand was acquired by RSE Ventures, which has a portfolio that also includes &pizza, fuku, and Bluestone Lane. At the time, Magnolia put together a five-year plan of where to invest, including building out the C-suite, upgrading infrastructure, relaunching the website, rebranding the company, rolling out a CPG project, and developing a wholesale program.
Domestic franchising appeared to be the next logical step, with plenty of evidence to back it up. The chain has operated e-commerce nationwide shipping since 2011, so the brand has experienced first-hand just how much consumers across the country love it. Through this channel—and other marketplaces like DoorDash, Wonder, and GoPuff—Magnolia sees where product is going and can feel the diverse demand.
“Its brand awareness and brand equity far exceed its footprint,” says Jason Mattes, VP of domestic franchise development and sales. “There’s so much demand for our menu, for our products. We have such deep customer loyalty. It’s just, how do we then expand the reach of our current points of distribution, and we believe having franchisees in the local markets, they’re going to have the same level of care and standards and relations with the customers as we do that we have with ours in New York City and Chicago and in L.A. Franchising was the natural vehicle by which to do that.”
Franchising is nothing new to Magnolia. It’s been operating that way internationally for 15 years, opening in countries where it had major challenges incorporating ingredients and teaching others about American-style desserts.
Lloyd doesn’t anticipate having the same roadblocks in the U.S. since the brand has already been thoughtfully designed for scale and consistency.
“Americans know how to bake most of the time,” she says. “They understand baking from scratch, flour, butter, eggs, sugar, chocolate, dairy, and we have this algorithm that if you take those six categories of ingredients, you can create about a billion products. And so just as we do here, we simplify it. Our stores, especially in New York City, are super-high volume locations and small footprints and so we’ve simplified the model that I’m almost going to say it’s dummy proof and that you learn by technique instead of by recipe. And once we teach you those processes, you can pretty much make anything within our locations.”
A franchisee’s first location will be a flagship, a store that represents the best of Magnolia and features all revenue channels. This can either be a 1,200-square-foot shop or a 2,000-square-foot shop and production hub that ships freshly baked products to 600-800-square-foot satellite locations. These smaller stores don’t bake from scratch and mix ingredients, but the product is fresh and customers will still see the theater of baking, like icing cakes, scooping banana pudding, and placing whipped cream on top of cheesecakes.
Franchise growth will initially focus on the Eastern Seaboard, where customer affinity and market proximity to New York City is strongest. According to Mattes, this will allow Magnolia to establish a strategic foothold for scalable expansion beyond the Mississippi River.
“That will help us de-risk early franchise openings and position the brand for sustainable long-term national growth,” Mattes says.
The development executive stresses that market fit is important, but he adds that the single-most important part of franchise evaluation is the franchisees, which is why Magnolia made an exception for its first operators in Utah. They owned a successful Subaru dealership, proving they are “entrepreneurs at heart” and they had the financial background to support development in Salt Lake City, according to Mattes.
The duo fits the four C’s he looks for in operators— capital, capacity, commitment, and community.
Additionally, from research, Magnolia found that Salt Lake City per capita consumes more snacks and desserts than anywhere else in the country, likely because of the significant Mormon population and its religious rules against caffeine and alcohol.
“They are going to be teachable, trainable, coachable,” Mattes says. “They want to do things the right way. They’re not going to cut corners. They understand how important it is to build that first location the right way. They are going to be great brand ambassadors. They’re going to be involved in the business. They’re not just building this to then hire a manager and not be involved. They’re going to be involved. Then you combine that with the market that has this insatiable desire and this unbelievable sweet tooth, it just was like a perfect opportunity for us to award our first franchise there.”
Mattes emphasizes that Magnolia will be selective about its growth. There was one NYC-based store for 10 years before the brand began slowly adding locations over nearly two decades.
The company is determined not to fall into the trap that so many other food and beverage concepts have fallen victim to over the years.
“I’ve been franchising 20-plus years, and I’ve seen so many different brands grow just for growth’s sake,” Mattes says. “We’re going to grow intentionally in the right areas with the right people. You’re never going to hear Bobbie and I say, well, we’re going to award 500 franchises by this time next year. That’s not the approach. We want to be very strategic and intentional because we’re trying to build something that’s going to be successful and sustainable over the long-term. And so we’re going to measure our success based on the success of our franchisees, and we’re not going to award more franchises than we can support.”
