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Consumers Complain About 500-Percent Frozen Yogurt Cost Markup

LAKE SUCCESS, N.Y. (CBSNewYork) -- Drowning in frozen yogurt?

More and more shops in our area are opening every day, but some consumers are complaining that the frozen yogurt glut is bringing higher and higher prices, CBS 2's Jennifer McLogan reported Wednesday.

Dan Maunz and Rosemarie Fusco said they like to grab frozen yogurt on their lunch break and are always counting the costs.

"It absolutely is marked up. I just came back from getting two flavors, couple of toppings, and it didn't fill up the cup. It was $7.41," Fusco said.

The profit margins seem staggering -- yogurt selling for 59 cents an ounce, yet costs less than a dime to produce. Even when you subtract the expense of cups and spoons, studies show a 500-percent markup on a typical 10-ounce serving.

Robert Beer, owner of frozen yogurt franchise Red Mango in Lake Success, said don't let that 500-percent statistic fool you.

"We are paying rent, $10,000 a month, a very small profit margin at the end of the day. People would be shocked at how low the profit margin is selling yogurt," Beer said.

Beer said his profit is whittled down to 15 percent after he subtracts for rent, maintenance, refrigeration, machinery, labor, not to mention a dizzying array of toppings, crumbles, syrups, sprinkles, nuts and fresh fruits.

"They charge by the weight, and the smallest size they give you is huge, so you fill it up and it comes to $8 when you're done," said Priscilla Kam of Franklin Square.

Many chains buy frozen yogurt mix from the same handful of manufacturers. Thomas Shinick is an Adelphi University business-marketing professor.

"I'm not sure they are doing anything dishonest. They are providing a service and the people are coming in and pulling the handle down," Shinick said.

"I really like frozen yogurt, so, for me, I am willing to bite the bullet every now and then on a really hot day like today," Maunz said.

And it appears enough frozen yogurt lovers agree. So much for market over-saturation and yogurt glut -- stores are continuing to spring up everywhere.

Some frozen yogurt shop owners complain that besides their high rent, taxes and insurance expenses warrant a 500-percent markup.

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