- Real Estate
- Food & Drink
Feb. 4, 2019
As the story goes, Sanford Health CEO Kelby Krabbenhoft and namesake philanthropist Denny Sanford were talking about how they wanted to lose a few pounds.
Sanford floated the idea of buying a weight-management company.
They looked at it briefly and then decided to start their own instead.
A little more than six years later, Profile by Sanford has reached 25 states, almost tripling its store count in the past year. There have been more than 400 licenses sold for locations in 45 states. For context, from 2012 through 2017, there were fewer than 40 licenses.
“We’ve actually had people interested about acquiring it because it was one of the most successful franchises,” Krabbenhoft said in a recent interview with Modern Healthcare. “But, at least while I’m here, I’m going to stay true to what we said — to see it be a $1 billion business.”
If the momentum continues, that could be achieved. There are 100 stores in development and anticipated to open this year.
“And we continue to sell 10 to 20 licenses a month right now and expect that will continue through the whole year,” said Nate Malloy, Profile’s CEO.
“I was just down in Tampa, and we have almost sold out that entire market. In Chicago, we have a group that has committed for 28 locations, and they’re just getting ready to open their first in March.”
The business, which is legally a for-profit entity separate from Sanford Health, is based on clinical research to provide an effective and sustainable weight-loss approach. The organization’s Profile Promise guarantees members will lose at least 15 percent of their body weight in 12 months, using a combination of coaching, Profile food products and technology designed to monitor progress.
Malloy points to multiple factors for the growth, starting with the fact that the program works.
“Our members are having great success,” he said. “That’s probably the biggest underlaying factor that’s driving our growth. The second is the credibility of the program being backed by experts at Sanford Health. It’s something our franchise partners feel good about. They know they’re not getting into a fad. The program is here to stay.”
Profile recently learned it not only cracked the annual Franchise 500 list from Entrepreneur magazine — but also ranked No. 164 in the report, which considers fees, growth, support, brand strength and financials behind national franchises.
“So we went from not being ranked to into the top 200, which is pretty rare,” Malloy said.
That puts Profile in the company of national franchises such as Mainstream Boutique, which ranked No. 155 last year, Charleys Philly Steaks, which ranked No. 160, and Dickey’s Barbecue Pit at No. 170.
“We’re committed to developing the program to best in class,” Malloy said. “Our early franchisees are having success. The business model is working for them.”
Travis Miller can attest to that. The South Dakota native encountered Profile while working as director of sales for another health-related franchise.
He and college friends were looking to partner in a business, and it made sense, said Miller, who is based in Nebraska.
“With weight loss and diet, there’s just a lot of junk out there, and it’s really unfortunate,” he said. “I knew this was created by a hospital system, and it had that going for it, but I didn’t know if I even wanted to be in the field because there’s so much junk. I had my guard up, but it blew me away.”
Miller said he appreciated how Profile eased clients back into eating food from the grocery store and educated them about a sustainable lifestyle. His group, Sioux Falls-based Bison Capital, now has the franchise rights to six markets with 20 licenses.
Since opening in Omaha in September 2016, they have eight locations open, including four in Omaha, two in Des Moines and two in Kansas City. They have one more coming in both Des Moines and Kansas City and are opening three in Indiana.
“We’re opening more and more stores,” he said. “Everything is going very well. I would say we definitely exceeded our expectations with how quickly we would grow and how many markets we would have.”
While stores in markets outside Sanford’s health care footprint don’t enjoy the same immediate brand recognition, the health care foundation still provides a big advantage, he said.
Profile’s business development team reaches out to area physicians and holds lunch-and-learns similar to pharmaceutical representatives.
“We ask what they’re doing for patients who need or want to lose weight, and we educate them, and they start sending us people, and we send progress reports on how they’re doing,” Miller said.
One Omaha physician lost more than 120 pounds on the Profile plan and now has referred more than 170 patients.
“We don’t do any advertising at all,” Miller said. “Our best referral source is our members. Our members are literally walking billboards. You can’t not notice someone losing 20 to 50 pounds over four months. People ask.”
Miller estimates he talks to most, if not all, prospective Profile franchisees. That has meant a lot more conversations in the past year.
“I did not know the company was capable of growing like that, and the group that sells our franchise has never had anything grow like that either,” he said.
Tom Grady and fellow investors opened their first Profile location about 15 months ago in the Twin Cities.
He works for a company that specializes in financing medical equipment and learned about Sanford Health through that.
“I started digging into it and learned more about the program and discovered Minneapolis was still available,” he said. “And we jumped on it. We opened at breakneck speed.”
They plan to open their sixth store in March in Maple Grove, Minn. Opening a half-dozen stores in a fairly short time allows them to take advantage of scale, he said. The group has licensing for up to a dozen stores.
“It’s pretty aggressive, but we know Sanford has a brand name here, and we had an advantage as the largest metro area close to Sioux Falls, so we made the decision rather than go slow to go quickly,” Grady said.
“It’s a very, very competitive market. There are probably five major competitors in this space that have been here a long time with huge marketing budgets and well-known brand names. It’s tough to compete with that kind of brand ID, but we’re going at it one store at a time.”
Each store has grown month-over-month, he said.
“Really, it’s a credit to the program. It totally works. We’ve had some great success stories and testimonials, and we’re finding most of our leads are coming from satisfied members who are telling friends and family about it.”
The franchisee group as a whole embraces Profile’s ability to make a significant impact on customers’ lives, he added.
“The franchisees I’ve spoken to are super excited and very fired up. It’s a very entrepreneurial group. It’s a for-profit enterprise, but while you’re doing it, you’re helping a lot of people. They’re not pushing burgers and shakes and fries. They’re actually providing a product and a service that’s helping people. When I talk to franchisees, that’s the underlaying core of why they got into it.”
Profile’s 60-person staff, which is based in Sioux Falls, continues to hone the concept. The food line always is evolving, with a new low-carb pizza crust among the latest offering.
Two new wafer bars just launched, including one Malloy calls his favorite Profile product so far.
“I’m told it tastes like a Nutty Bar. It’s delicious,” he said. “We’re bringing back ice cream at some point this year and other cool things like cauliflower thins, almost like a pita made out of cauliflower, and several frozen entrees that we’ll launch this year as well.”
The programming also is growing to include protocols geared for pregnant and breastfeeding women, as well as a new one for women trying to lose weight before becoming pregnant.
“And we’re working internally to continue to advance our ability to use genetic testing to help individualize people’s plans,” Malloy said. “Today, we focus on one genetic marker to determine how people metabolize carbohydrates, and we have been working closely with Imagenetics to develop other components to our genetic tests that I think will be a game-changer for all our members.”
Profile also isn’t done growing in Sioux Falls, he added.
“We’re looking at adding a location in Sioux Falls, so more to come on that, but I expect by the end of 2019 we’ll have opened or we’ll be preparing to open an additional location here.”
Sanford’s leaders envision Profile becoming a $1 billion business. If growth like this keeps up, it will be.