Fresh off a sweet first-quarter earnings surprise, Little Rock, Ark.-based
, franchisor of frozen yogurt outlets, has signed a pact to pair its brand with the closely held
Subway Sandwiches & Salads
chain. In one big lick the move gives TCBY the potential to grow into Subway's 11,000 shops in the U.S.
The deal, announced Wednesday, is part of a fast-food trend to pair different brands under one roof in a marriage of convenience. The two brands can share facilities and provide products that will appeal to customers at different times of day.
"Literally overnight we have access to 11,000 locations that we did not have yesterday. I don't know how many of those we will develop, but we do at least have access to that," says Stacy Duckett, a spokeswoman for TCBY.
TCBY's earnings surprise came March 13 when the 15-year-old company reported earnings of 1 cent per share, when the consensus expectation was a penny loss, according to
Zacks Investment Research
. No analysts follow the stock, according to
Nelson's Investment Research
. The stock closed Wednesday at its 52-week high of 5, up 1/8 from Tuesday. Its 52-week low was 3 3/4.
Net income for the yogurt purveyor --
Hillary Rodham Clinton
used to sit on its board -- increased to $251,651 for the first quarter, its best first quarter since 1990. It's a quarter that's traditionally a dog for ice cream and frozen yogurt companies, notes Duckett, who began her career as a yogurt server for the chain. A year ago, the quarter ended with a net loss of $504,677, or 2 cents per share. Net income for 1996 was $6.5 million, or 26 cents per share, compared with a net loss of $21.4 million, or 83 cents per share, a year earlier.
The company restructured in 1995 and is starting to see results, Duckett says.
If you've been in a major airport lately, chances are you've been tempted to grab a TCBY yogurt before you hop on your plane. Of its 2,700 locations, the firm has some 250 airport outlets, along with units in convenience stores, gas stations and other so-called nontraditional locations.
Subway, with its 11,000 outlets, is the second-largest fast-food chain in the U.S., behind only
in terms of unit count. The burger giant has some 12,000 U.S. units now. All Subways are franchised. TCBY, save for one corporate-owned unit, is a franchised chain too. Under the dual-branding pact, which is with TCBY's subsidiary,
, franchisees of both chains can bring in the other brand.
Subway sells submarine sandwiches made to order on bread baked in the units, and has several offerings aimed at health-conscious diners. It doesn't sell french fries, but you can get potato chips.
TCBY sells soft-serve frozen yogurt and has added some ice cream to appeal to more customers. Despite America's expanding waistline and continued zest for fattening goodies, there's still strong interest in low-fat frozen yogurt, Duckett contends. It's especially delicious with hot fudge sauce.