The Story Behind Plato's Closet®
In 18 years, Plato’s Closet grew from just four stores in Ohio to more than 470 locations throughout North America today. In just the last five years, Plato’s Closet has opened more than 135 locations. It has consistently ranked as one of the best franchises by Entrepreneur and Forbes magazines. Franchisees enjoy average store sales of $963,880 and average gross profit of $591,781; the top quartile experienced on average more than $1.4 million in sales and gross profit of $883,162*.
Indeed, Plato’s Closet has come a long way since the original founders opened those four clothing resale stores that targeted teen and twenty-something consumers in 1998. Eager to see more consumers recycle gently used clothing, the founders wanted to expand Plato’s Closet to markets all over the country. But that would require an investor with some muscle to get the job done. They turned to Winmark Corporation.
Winmark Experience Pays Off
In 1993, Winmark Corporation, parent company of Winmark Franchise Partners, had purchased the franchising rights to Once Upon A Child®, the founders other resale concept that targets parents of infants through preteens. In 1999, Winmark became a valuable partner by purchasing the franchising rights to Plato’s Closet – and growth took off.
Applying their business acumen and experience that helped Play It Again Sports®, Music Go Round® and Once Upon A Child become successful franchise systems, Winmark® set out to bring Plato’s Closet to markets all over North America by improving three areas:
- Focus on Fundamentals – Winmark focused on the buying aspect of Plato’s Closet, bringing in more and higher quality inventory. Customers had improved choices at a great value. At the same time, Winmark concentrated on increasing the turn rate of products – selling items quickly to continually buy more, fresh inventory. Having updated inventory was the key to getting customers to shop at Plato’s Closet more frequently and spend more money.
“More buying equals more inventory, better buying equals higher quality and faster turns means more buying and fresh product every day,” said Steve Murphy, president of franchising at Winmark Corporation and Winmark Franchise Partners™. “That’s the winning formula.”
- Messaging Matters – Winmark also improved the brand message, stating Plato’s Closet pays cash for teen and young adult apparel, shoes and accessories. They made sure consumers understood stores would pay them on the spot with no appointment necessary, and would pay in cash.
“That’s what consumers wanted, and that’s what we delivered,” Murphy said. “No one else in the marketplace was doing that, and it caught fire with our customer base.”
- Keeping Up Appearances – Plato’s Closet was not your typical resale shop. Winmark designed the stores to look like a regular teen retailer that appealed to hip, trendy young people. Stores were well-organized, colorful and bright, and they became cool, fun places to hang out and were easy to shop in.
“We brought in design experts to help us with putting that all together,” Murphy said. “When they finished, we delivered a product that the customers loved.”
Entrepreneurs Take Notice
Those changes drove higher sales, which resulted in an excellent bottom line for the franchisees. The return on investment was obvious. The success caught the attention of entrepreneurs who joined the Plato’s Closet family as new franchisees at a rate of 25 to 40 new stores on average a year.
“That success has continued to drive our growth today,” Murphy said.
Applying the 30 years of Winmark Corporation taking brands to the next level, Winmark Franchise Partners serves as a consultant and potentially a business incubator for entrepreneurs and management teams looking into franchising as a business growth strategy.
The company is also providing support and direction to emerging brands that have begun to franchise but hit a wall in growth. Winmark Franchise Partners expands upon traditional consulting services to also offer investment capital for select proven, sustainable business models.
If you are interested in franchising your business or are an existing franchisor looking for help, contact us for more information. You can also read more about Plato's Closet's story or learn more about other franchise success stories!
*The average store numbers are the 2016 Average Gross Sales and Average Gross Profit amounts stated in Item 19 of the 2017 Plato’s Closet® Franchise Disclosure Document (as reported by 434 of the 435 stores that had been in operation at least one year as of December 31, 2016). Of the 434 reporting stores, 186 or 43% of the stores attained or exceeded the Average Gross Sales and 187 or 43% of the stores attained or exceeded the Average Gross Profit. The top quartile average gross sales and average gross profit amounts only relate to 108 of the reporting Plato’s Closet® Stores who ranked in the top 25% of the gross sales range. Of the 108 stores in the top quartile, 42 or 39% of the stores attained or exceeded the top quartile Average Gross Sales and Average Gross Profit. A new franchisee’s results will likely differ from these results.