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FDD Talk 2.0: Estimated Initial Investment for an Einstein Bros. Bagels Restaurant (2012 FDD)

by Franchise Chatter on October 18, 2012

in Bagel Franchise, Franchise Earnings

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(Ambrosio’s note:  Welcome to FDD Talk 2.0, a more comprehensive version of our flagship content, featuring not only the Item 19 financial performance representations of select franchises, but their estimated initial investment, unit growth, and other key items of their 2012 FDD as well.)

Highlights of Einstein Bros. Bagels’ 2012 Franchise Disclosure Document – Part 1

Estimated Initial Investment for an Einstein Bros. Bagels Restaurant

1.  Construction Costs:  $200,000 – $290,000

  • You will need to construct improvements, or “build out,” the premises at which you will operate the Restaurant. Generally, you will take the premises in “warm vanilla box” condition (that is, a heated and air conditioned space with primed drywall ready to be painted, but without improvements).
  • Among other things, you will need to arrange for proper wiring and plumbing, floor covering, wall covering, partitions, heat, air conditioning, lighting installation, storefront modifications, painting, cabinetry, bathroom facilities, etc. (The HVAC system may not have been designed for a restaurant use, so it may have to be enhanced for your use.)
  • You will need to hire a qualified architect and qualified licensed builder.
  • Costs are likely to vary and may be much higher if you wish to establish your Restaurant in an area where special requirements of any kind will apply (such as historical, architectural, or preservation requirements).
  • Landlords sometimes provide tenant improvement allowances. Tenant improvement allowances are not included in this section because if they are offered, the terms vary widely.
  • These estimates are for traditional locations, primarily in strip type shopping center end cap locations. If you develop non-traditional locations or free-standing buildings with extensive parking areas and landscaping, you may experience significantly increased construction costs.
  • If you develop a Restaurant at a Non-Traditional Facility or Captive Market Location, you may experience different construction costs that range outside the bottom and top ranges, depending on the site, landlord requirements, other related and unrelated construction done at the same time, and the size of the premises occupied.
  • Some projects developed at municipal or government facilities (and elsewhere) may require compliance with labor standards that could increase your costs.

2.  Computer Equipment and Electronics:  $26,000 – $34,000

  • The estimate is for the electronic equipment you will need to operate the Restaurant, such as a point-of-sale (POS) system, software, phone system, and music system.
  • The amount spent for equipment will vary for each Restaurant depending upon the Restaurant’s size, style, whether the store has a Drive-Thru window, and the volume of products to be offered in the Restaurant.

3.  Furniture, Fixtures, and Equipment:  $155,000 – $200,000

  • The estimate is for the furniture, fixtures, and equipment you will need to operate the Restaurant, such as baking equipment, proofers, refrigeration, freezers, sandwich lines, and lighting.
  • You will need to obtain these items and other fixed assets from approved or designated vendors.

4.  Signage and  Graphics:  $30,000 – $50,000

  • The cost of signage and graphics will vary from location to location depending on lease requirements, local ordinances and restrictions, store frontage, and related factors.

5.  Professional Fees (including architectural or engineering fees and permit and impact fees):  $30,000 – $35,000

  • The estimate is for legal, accounting, administrative, permitting, traffic studies, demographic studies, brokerage and miscellaneous other professional fees that you may incur before you open for business, including (among other things) to assist you in reviewing the Franchise Agreement.

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