BAB, Inc.

What they do

The company franchises and licenses bagel and muffin retail stores under the Big Apple Bagels (BAB) and My Favorite Muffin (MFM) trade names. It generates revenue primarily from ongoing royalties (5% of net retail and wholesale sales) and initial franchise fees, plus licensing fees from selling branded products like My Favorite Muffin mix and Brewster's coffee to franchisees. The company also receives marketing fund contributions and income from licensed products and other sources.

Revenue drivers

• Royalty fees — Largest revenue source; $1.984M in FY2025 (58% of total revenue), a 0.6% decrease from $1.995M in FY2024.
• Marketing fund revenues — $1.142M in FY2025 (33% of total revenue), down 3.0% from $1.177M in FY2024.
• Licensing fees and other income — $289K in FY2025 (8% of total revenue), down 9.1% from $318K in FY2024. Includes sales of branded products and other fees.
• Franchise fees — Small but volatile; $23K in FY2025, down 58.9% from $56K in FY2024, reflecting fewer transfers and store openings.

Recent performance

For the fiscal year ended November 30, 2025, total revenue decreased 3.0% to $3.439M, while net income rose to $559K (from $525K in 2024) as operating expenses fell 5.6%. Diluted EPS increased to $0.08 from $0.07. In the quarter ended May 31, 2026, revenue was $804K (down slightly from $808K) and net income was $187K (up from $154K a year ago). The company reported $2.2M in cash and total assets of $4.9M as of May 31, 2026.

Strategy

Management is leveraging the synergy of distributing muffin products in BAB units and bagel products and Brewster's Coffee in MFM units to increase efficiency. It continues to franchise and license new units, with 4 units under development at the end of 2025. The company is also focusing on licensed product sales and nontraditional distribution channels. No acquisitions have been made to date, and the company has no company-owned stores.

Risks

• Franchisee success and growth — Revenue depends on franchisee sales and the ability to attract new franchisees; a decline in either could reduce royalties and fees.
• Food service industry risks — Changes in consumer tastes, economic conditions, and competition could adversely affect franchisee store results and the company's revenue.
• Supply chain and cost pressures — Inflation, food and labor costs, and supply shortages could impact franchisee profitability and the company's licensed product sales.
• Concentration in limited number of units — The small base of 63 operating units makes revenue vulnerable to closures or underperformance of individual units.

Outlook

Management expects continued efficiencies from the combined BAB and MFM base and ongoing development of new units. In the first six months of 2026, system-wide revenues grew to $20.3 million from $20.0 million a year earlier. The company maintains a strong cash position with no long-term debt, but faces ongoing industry risks. The 10-Q notes no material changes in financial condition through May 31, 2026.