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Franchise Costs: Detailed Estimates of Popeyes Louisiana Kitchen Franchise Costs (2017 FDD)

by Franchise Chatter on May 3, 2014

in Chicken Franchises, Franchise Costs

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Popeyes Franchise Photo by Vodoxus

This post was updated on May 15, 2017 to reflect information from Popeyes Louisiana Kitchen’s 2017 FDD (Item 7).

Detailed Estimates of Popeyes Louisiana Kitchen Franchise Costs Based on Item 7 (Estimated Initial Investment) of Popeyes’ 2017 Franchise Disclosure Document

For Free-Standing Restaurants

1.  Development Fee:  $22,500

  • Except as described in Item 5, you must sign a Development Agreement regardless of the number of Restaurants you develop. When you sign a Development Agreement (or Amendment to Franchise Agreement for Single Unit), you must pay a Development Fee of $22,500 for each Restaurant to be developed under the Development Agreement.
  • The Development Fee is not credited against any other fee.

2.  Franchise Fee:  $22,500

  • You must pay the $22,500 Franchise Fee prior to commencement of construction of the Restaurant.
  • You may be eligible to pay a reduced franchise fee ranging from $5,000 to $15,000 if you qualify for one of the franchisor’s Veterans, Women and Minorities, Multi-Unit, or Market Specific – Free Standing Drive-thru Restaurant Development Incentive Programs.

3.  Real Estate:  Variable

  • The franchisor cannot estimate your initial investment for acquiring or leasing real estate for the Restaurant; however, the following factors will bear on these costs.
  • Restaurants range in size from 1,600 to 3,500 square feet.
  • Free-Standing Restaurants in suburban locations will require from 28,000 to 38,000 square feet of land for the Restaurant and adequate parking facilities.
  • Security deposits should not exceed an average of two months’ rent.

4.  Soft Costs:  $25,000 to $182,237

  • The estimate is for legal, accounting, administrative, permitting, architectural, design, 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.

5.  Site Work:  $159,507 to $566,000

  • This estimate covers site improvement costs such as sewer, electrical, water, paving, striping, concrete, landscaping, grading and excavation, and site accessories.

6.  Building:  $450,000 to $746,340

  • This estimate includes the costs of constructing improvements, or “building out” the premises at which you will operate your Restaurant. 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., as outlined in architectural Mechanical, Electrical, and Plumbing (MEP) drawings.
  • You will need to hire a qualified licensed general contractor. Free Standing Restaurants are ordinarily of masonry or frame construction.

7.  FF&E, Signage, and Technology:  $239,000 to $442,675

  • You must purchase certain items of furniture, fixtures, equipment, signage, smallwares, and a technology package (point-of-sale and back-of-house computer systems and firewall) for your Restaurant. The Manual contains a complete list of the needed items. The cost of equipment and signage varies depending on the size and location of the Restaurant.

8.  Initial Training:  $17,200 to $24,200

  • In connection with the initial training, you will need to arrange and pay for transportation, lodging, food, proper uniforms, and incidental expenses for you and your designated management employees. You must also pay the salaries and benefits of your designated management employees.
  • The franchisor may require that you send a certain minimum number of employees that the franchisor determines to training.
  • In addition, if PTP (as more particularly described in Item 11) is completed at a Popeyes Restaurant that is owned by another Popeyes franchisee, you will have to reimburse that franchisee for certain training costs as described in Item 11.

9.  Opening Supplies:  $11,500 to $23,000

  • The franchisor estimates that this amount will be sufficient to cover a supply of food, paper products, uniforms, and required training materials for the first one to two weeks of Restaurant operations.

10.  Insurance:  $9,000 to $18,000

  • This item includes amounts that must be paid before the opening of your Restaurant and may not include amounts payable after the Restaurant opens.
  • Required insurance includes:  general liability, employers’ liability, workers’ compensation, auto liability (if you own, hire, or lease automobiles for use in your business), and property insurance. Your costs will vary according to the risks associated with your business and your location. The cost of workers’ compensation insurance will vary according to the number of employees of the Restaurant and the requirements of state law.

11.  Utility Deposits:  $3,000 to $50,000

  • You may need to provide deposits for utilities. The amount of these deposits and utility costs will vary depending upon the location of the Restaurant and the practices of the lessor and the utility companies.

12.  Business Licenses:  $300 to $600

  • Local, municipal, county, and state regulations vary on what licenses and permits are required to operate a Restaurant. For example, you may need city and county occupational licenses and a city food handlers’ license. These fees are paid to government authorities before commencing business.

13.  Additional Funds – 3 Months:  $20,000 to $30,000

  • You will need capital to support ongoing expenses, such as payroll, uniforms, supplies, and miscellaneous expenses. The franchisor estimates that this amount will be sufficient to cover ongoing expenses for 3 months. This is only an estimate, however, and there is no assurance that additional working capital will not be necessary whether during this initial phase or later.

14.  Total Investment:  $979,507 to $2,128,052

  • This is the franchisor’s best estimate of your total investment, excluding the cost of real estate, assuming that you will establish only one Restaurant.
  • The franchisor relied upon the many years of experience of its executives, its experience in developing company-operated Restaurants, and reports from its franchisees in preparing these figures.

For In-Line Restaurants

  • The total estimated initial investment necessary to begin operation of an in-line Popeyes Restaurant, excluding the cost of real estate, ranges from $605,500 to $992,474.
  • In-Line Restaurants include Restaurants located in or at “strip-style” retail shopping centers, premises with convenience stores, travel plazas (or similar locations that sell gasoline), shopping malls, and other food court locations.

For Conversion Restaurants

  • The total estimated initial investment necessary to begin operation of a conversion Popeyes Restaurant, excluding the cost of real estate, ranges from $737,184 to $1,605,000.
  • Conversions refer to existing buildings usually between 1,800 and 3,500 square feet in size that can be remodeled and re-imaged to Popeyes’ standards. Conversion buildings are typically free-standing and built for restaurant use, but can also include in-line buildings and other previous uses such as bank buildings and coffee shops.

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