Funeral director here launching national cremation franchise
By DENNIS GRUBAUGH
LEBANON — A unique franchise concept aimed at building discount cremation services across the United States is being launched in Southern Illinois.
Joe Kalmer, who owns Kalmer Memorial Services in Lebanon, Ill., and American Cremations of St. Louis, is going to launch Cypress Pointe, a franchise based on his St. Louis business model, which offers simple, affordable cremation services.
“I’ve been in discussion with a couple of different organizations that are helping me start a franchise,” Kalmer said. “The idea is to go into the large cities of the nation, where there is a minimum of a million people and help young funeral directors in business that want to pursue this part of the industry.”
Kalmer believes cremation as a sole enterprise is still an industry niche, since funeral homes that offer both services prefer the more profitable, traditional burial. That provides an opening for a professional discount provider of cremations, he said.
American Cremations of St. Louis will be renamed Cypress Pointe as part of the changeover, which could happen as early as this summer.
While the Lebanon, Ill., site primarily provides discount cremation services, the operation is more of a funeral home than what Kalmer has in St. Louis. In Lebanon, he has a chapel that seats 50 people, an embalming room and a garage. Still, 90 percent of his volume in Illinois is simple cremation.
All cremations for both locations are done at the Illinois site.
While funeral homes traditionally build their practice around community loyalty, a growing percentage of people are opting for cremation and simply “Google it” to find the most affordable choices.
“They look up ‘cheap cremations’ and come up with a company that can provide what they need for under $1,000 and they go with them,” he said.
The concept is to have these franchises set up so that search engines already have the Cypress Pointe names by the time the franchisees open their doors.
“The idea is when they open their doors, hopefully the phone will start ringing,” he said.
The name Cypress Pointe was chosen as the result of a brainstorming session with a marketer with whom Kalmer has been working, Falk-Harrison of St. Louis.
“We came up with about 50 names,” he said. “We whittled it down to what was available as far as a domain name goes. And what sounded nice. We found out the cypress tree has a lot of funeral home and death-care connotations to it.
“We’re (more than) six months into this but now were starting to gain a little traction with the building process. We’re hoping in three to four months we’ll be able to roll it out.”
Kalmer has invested around $200,000 establishing the concept, which includes the marketing, website building, federal financial disclosure documents and operations manual.
“It’s a process,” he said.
In the end, he expects to charge around $50,000 for a franchise fee. Plan A for the franchisee would be to begin with an office and basic transport equipment but not his own crematory. Plan B would be for the franchisee to purchase a cremation machine — called a retort — and find a place to operate it, but only after building up a volume of business.
Startups would have to pay someone to perform the cremations until they are more established, he said.
Kalmer has also been working with Scheffel Boyle CPAs in Metro East and Franchise Development Group in Ohio, among others.
“We have to build a business-to-business website first, where I can attract the franchisees,” he said. “Then, we have to build the website for the consumers, so the franchisee has a website where the consumer can go.”
His target groups are young funeral directors or recent graduates of mortuary school.
“It’s a three-phase process and we’re well into Phase One. Phase Two and Three may just be three to four months down the road. We’re shooting for summer,” he said.
Kalmer says he’s got the financing and the resources in place to move the process forward.
To Kalmer, the logic of wanting to franchise is simple.
“I’ve made all the mistakes,” he said. “I know what not to do.”
He wishes he’d had some of that foreknowledge back in 2009 when he left the employ of an Edwardsville funeral home to go out on his own. He had the bad timing of a down stock market and a lingering recession.
“I did it the opposite of what I should have done. I bought a machine, I bought a building and I had zero business. I learned the hard way and I barely made it, but I did. I didn’t have any financial backing and did this all on my own, and doing it that way was a very difficult process. “
He called himself “lucky enough to weather the storm” and astute enough to recognize a growing trend.
“I believed in the product more than anything, and I believed in my ability to provide it. I thought that was a good combination. Even back then, I knew cremation was on the rise.”
Kalmer was hoping to do 30 cremations in his first year and managed to do 35. He was hoping for 60 the second year and did 90.
“Now, in Illinois alone, I’m up to 160 a year. In Missouri, I’m doing 280 a year. Between the two places, our phone never stops ringing.”
Kalmer says he can conduct around three cremations in an eight-hour period.
He has one full-time funeral director besides himself.
“That helps keep my overhead low, but this business model allows that. Which means I can sell the service for less and still make money.”
Kalmer does most of the transport work, and what he can’t do he subcontracts.
“We do all the other work ourselves. The death certificates. We notify Social Security. We provide online obituaries, we help with VA benefits and life insurance,” he said. “We do everything that a funeral director does, but we do a lot more of it and a little more efficiently.”
Anyone wanting more information on his plans can contact him at joe@kalmermemorialservices.com
Cremation business now surpasses traditional burial
By DENNIS GRUBAUGH
Death will always be with us, but the particulars of post-life passage are changing quickly.
More than ever, baby boomers and millennials are opting for cremation over traditional burial when they and family members die.
“Fifteen years ago, we started seeing an increase in cremations, and the trend was gradual. But it’s more apparent now — and it’s getting a little faster,” said Joe Kalmer, owner of Kalmer Memorial Services in Lebanon, which last year handled 440 cremations at his Illinois crematory.
The Cremation Association of North America says that cremations surpassed burial as the majority of dispositions in the United States in the past year. In the year 2000, 26 percent of dispositions were cremation. By 2015 that number had risen to 48.6 percent.
The annual growth rate, based on numbers from 2010 to 2015 is 1.57 percent, the association says.
By 2020, the U.S. cremation rate is projected to reach 54.3 percent.
Cost is the big reason. People pay far less for cremation than burial.
While costs vary between markets, people in Southern Illinois can expect to pay about a minimum $9,000 to $10,000 on a funeral and only around $3,000 on a cremation.
“The rule of thumb is that cremation is basically about a third of the cost of a traditional funeral,” Kalmer said. “The level of service that goes with that is different in all markets.”
Traditional burial generally includes the cost of a casket, vault and services. Casket and vault will run $4,000 to $5,000, with the funeral services another $4,000 to $5,000 on top of that.
Cemetery expenses are extra and would include the plot, the grave opening and the tombstone or marker, which will run around $2,000 to $3,000.
Cost is not the only factor driving the trend, Kalmer said. People are simply changing their ways.
“A lot of people can afford anything they want, but they are going away from tradition. It’s not the same as it used to be,” Kalmer said. “Most folks don’t want to stand in front of a casket for four hours.”
Baby boomers, those born between 1946 and 1964, are preparing for their parents’ funerals and are bucking tradition just like the millennials following in their footsteps.
That poses an interesting question among those in the business: How long will traditional burial be business-worthy?
Kalmer may have more of an interest in the trend than most in his trade. He’s preparing to launch a franchising effort aimed at building discount cremation businesses across the country.
Kalmer runs both the Lebanon cremation service and an operation in St. Louis called American Cremations of St. Louis, which is going to be rebranded to Cypress Pointe, when the franchise endeavor formally launches later this year. All of the cremation work is done in Illinois.
“I do everything, but I concentrate on cremations, which is an unusual practice in the funeral business. Most funeral homes try to concentrate on traditional, but I want to focus on cremation, because I know that’s where this is headed. There is not just a demand for cremation, but lower-cost cremation. The only way to survive in this business, with that type of practice, is to do a lot of volume, and to do that with lower overhead, you almost have to be primarily cremation.”
According to national figures the region you live in might have more of an interest in cremation. The alternative is quite popular in, for instance, the West Coast.
“In the Northwest, they predict that by 2020, cities like Seattle and Portland will be almost 80 percent cremations,” Kalmer said.
Meanwhile, the lowest cremation rates are in the South, places like Alabama and Louisiana are still in the 30 percent ranges.
Religion, too, plays a part in a family’s thinking. Catholics, for instance, are allowed to cremate and have been since Vatican II. Orthodox Jews are not allowed to cremate.