This post was updated on April 18, 2016 to reflect information from Pancheros Mexican Grill’s 2016 FDD (Item 7).
Detailed Estimates of Pancheros Mexican Grill Franchise Costs Based on Item 7 (Estimated Initial Investment) of Pancheros Mexican Grill’s 2016 Franchise Disclosure Document
- Except for the real estate lease and utility deposits, which are imposed and collected by third parties, which may be refundable if permitted by the third party, no expenditure in the table below is refundable.
- The figures shown below are for existing buildings only, whereas the costs may vary substantially if you choose to construct a building for your Franchised Restaurant. However, you are not required to construct a building.
1. Initial Franchise Fee: $30,000
2. Real Estate/Rent and Security Deposit: $0 to $20,000
- Franchised Restaurants typically occupy 2,000 to 2,500 square feet in an end-cap strip center location. You are responsible for renting or acquiring premises suitable for the Franchised Restaurant.
- The figures assume that you will occupy the premises according to a commercial lease, and that the rent commences on the date the Franchised Restaurant opens for business.
- The low figure assumes no security deposit, and the high figure assumes a security deposit equal to two months’ rent. However, you may incur higher security deposit expenses depending on your financial circumstances.
- Rent, taxes, and insurance vary greatly by market and other circumstances.
3. Utility Security Deposits: $0 to $4,000
- You may be required to pay deposits before the installation or start of service for telephone, gas, electric, and other utilities, as required by any utility company.
4. Leasehold Improvements: $193,000 to $500,000
- Your build-out costs will depend upon the size and condition of the premises, the nature and extent of leasehold improvements required, the local cost of contract work, and the location of the Franchised Restaurant.
- The estimates assume a standard build-out of the premises performed by the lessor, including landlord-provided HVAC, supplemented by any amounts provided by you for additional leasehold improvements made to the premises according to System specifications.
- Leasehold improvements include plumbing, electrical wiring, carpentry, and installation of furniture, fixtures, flooring, and equipment, but do not include building shell costs, exterior work to the building that may be required, or any costs associated with exterior grease-trap, impact, or hook-up fees.
- The figures in the chart represent your estimated costs, net of tenant improvement allowance, which typically ranges from $0 to $30 per square foot.
5. Furniture, Fixtures, and Equipment: $80,000 to $130,000
- You must purchase various equipment and fixtures to operate the Franchised Restaurant, as specified in the Confidential Operations Manual. You may purchase or lease approved brands and models of fixtures from approved suppliers.
- The cost of furniture, fixtures, and equipment will depend on financing terms available, the size of the facility, brands purchased, and other factors.
- If you are purchasing an operating restaurant from Pancheros’ affiliate, you may not incur an extra expense for these items.
- This estimate does not include vehicles for catering services because a new franchisee typically does not offer catering services. If you elect to offer catering services, you must purchase or lease a vehicle.
6. Initial Merchandise Purchases: $1,800 to $2,500
7. Initial Inventory: $7,500 to $15,000
- Your requirements for initial inventory are designated in the Confidential Operations Manual.
8. Insurance: $2,500 to $15,000
- You will obtain insurance coverage with the limits Pancheros requires. The lower figure assumes 25% down on a yearly premium amount.
9. Training: $5,000 to $12,500
- You are responsible for transportation and expenses of any persons attending the training program. This amount depends on the distance you must travel and the type of accommodations you choose.
- The estimate contemplates attendance by one person traveling to Pancheros’ headquarters or other location for approximately three days for an initial orientation session, and two persons traveling to a location that Pancheros designates for approximately three weeks for on-the-job training.
10. Initial Marketing Campaign: $30,000 to $50,000
- You must spend at least $30,000 to $50,000 for an initial marketing campaign, which will be paid to Pancheros’ designated advertising agency.
- You must obtain a white pages listing for the Franchised Restaurant.
11. Signage: $7,500 to $32,500
- Signage includes exterior signs that bear the Marks. Signage costs may vary depending on the type, size, and location of the signs and local restrictions.
12. Point-of-Sale System (“POS System”) and Back Office Software: $14,000 to $18,000
13. Office Equipment/Supplies: $2,100 to $6,500
- You must lease or purchase various office equipment and supplies.
14. Licenses and Permits: $425 to $5,000
- This estimate includes liquor and food licenses but excludes any building permits you need to obtain. If you request and Pancheros approves the sale of beer at the Franchised Restaurant, this is the fee you may be required to pay the local, county, or state authorities in order to obtain a license.
- The high figure is the maximum suggested expenditure for the license.
15. Professional Fees: $5,500 to $40,000
- This estimate includes architect and attorneys’ fees. Your fees will vary by market and your decisions regarding the advisory services you obtain.
16. Additional Funds (3 months): $25,000 to $50,000
- This estimates the funds needed to cover your initial expenses for the first 3 months of operation (other than the items identified separately in the table). It includes payroll costs for a manager but not any draw or salary for you.
- However, this is only an estimate, and it is possible that you will need additional working capital during your first 3 months of operation, and Pancheros cannot guarantee that your Restaurant will break even during this period or at any time.
- In compiling these estimates, Pancheros relied on its franchisees’ experience and its affiliate’s experience in operating Pancheros Restaurants.
17. Total (excluding real estate purchase and lease costs): $404,325 to $931,000