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Flip Flop Shops Targets National Expansion

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Flip Flop Shops is looking to grow via franchising.

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Darin Kraetsch has set himself an impressive goal: He wants to do with flip flops what Sunglass Hut did with sunglasses some 20 years ago.

“There are a lot of similarities, from the casual product to the small footprint to the real estate. And both are focused on one core product,” said Kraetsch, CEO, Flip Flop Shops, Kennesaw, Ga., which has 18 locations nationwide.

Founded in 2004, Flip Flop Shops has evolved from a mom-and-pop specialty operation into a company with national ambitions and industry recognition. The burgeoning chain is one of the recipients of this year’s “Hot Retailers” awards from the International Council of Shopping Centers (click here to see story).

Flip Flops Shops’ evolution was spearheaded by its current management team, who came on board in 2008 and subsequently launched a franchise program. The team is well-versed on the ins and outs of franchising. Kraetsch was a founding partner and principal of the fast-casual dining company Raving Brands Holdings, and served as executive VP for its flagship brand, Moe’s Southwest Grill. Prior to that, he held several key management positions with Cold Stone Creamery. Brian Curin, president of Flip Flop Shops, worked with Kraetsch at Raving Brands and Cold Stone Creamery, where he held executive positions. Ditto for COO Alan Woods. All three are now principals in Flip Flop Shops.

“We were all very passionate about the product and thought Flip Flop Shops was a great idea, with a great name,” Kraetsch said. “Our goal was to put it on a national stage via a franchising program.”

The company has 50 locations in development. It expects to open 20 shops by year-end (the final count could be even higher), with a total of 235 stores by the end of 2013.

Flip Flop Shops taps directly into the booming popularity of what has become, particularly for high school and college students, a year-round obsession. From the cheap shower slippers of years past, flip flops are now available in all manner of styles, colors and price points. Some even come with orthopedically-correct insoles, and heel cups and arch supports with premium leather and hard rubber.

The store prototype has a laid-back but active beach-lifestyle feel, complete with coconut suntan-oil scents that waft through the air and surfing videos that play on flat-screen TVs. The footprint ranges from 500 sq. ft. to 700 sq. ft.

Flip Flop Shops carries the latest styles and leading brands (the selection also includes some sandals and closed-toe products that fit into the active beach lifestyle). Prices range from about $20 to $149. Each shop carries nine core brands, with 15 to 20 optional labels approved for franchisees.

“The idea behind the optional brands is that we wanted franchisees to have some local flexibility in product,” Kraetsch said. “Experience has taught us that while you have to be consistent when franchising, you also need to allow for some flexibility to cater to local buying habits.”

Currently, the company is rolling out a test of a new sunglass program from an Australian brand.

“It fits with our main product, and we think the price points—$49 and $59—will provide us with nice ancillary sales,” Kraetsch said.

He doesn’t rule out expanding into some other, smaller-focused categories. But the main attraction will not change.

“We want to avoid becoming a trinkets shop that has an ancillary selection of flip flops,” he said. “Flip flops are our core business, and we will remain true to it.”

During the winter months, Flip Flop Shops broadens its offerings to include fleece-and wool-lined flip flops and more close-toed products.

“We actually experience some of our best sales in November and December, even in cold-weather regions,” Kraetsch said. “People come to buy gifts, or they are going on vacation and want to pick up something for themselves.”

Flip Flop Shops’ national rollout is primarily focused on high-traffic regional malls. But it also has opened in such high profile, non-traditional centers as Universal Studios/ City Walk, in Hollywood, and Mandalay Bay, in Las Vegas. And airport locations are on the horizon.

The chief executive is enthusiastic about the future: “Given the success we’ve had to date, who knows what the future will hold once the economy truly rebounds?”

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