Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Chili’s Grill & Bar Franchise Costs (2016 FDD)

by Franchise Chatter on January 9, 2015

in Casual-Dining Restaurant Franchise, Franchise Costs



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Chili's Restaurant Photo by carlossalinas

This post was updated on December 4, 2016 to reflect information from Chili’s 2016 FDD (Item 7).

Detailed Estimates of Chili’s Grill & Bar Franchise Costs Based on Item 7 (Estimated Initial Investment) of Chili’s 2016 Franchise Disclosure Document

  • The chart below provides an estimate of your initial investment for 1 Chili’s Grill & Bar Restaurant based on the company’s experience with its Prototype 16 building. Your actual costs may vary significantly from these estimates.
  • Prototype 16 is a free-standing building which includes a facility of approximately 6,028 square feet (which includes 363 square feet for a walk-in cooler/freezer). Prototype 16 has a total seating capacity of 246 seats consisting of 172 seats in the dining area and 74 seats in the bar area of the building.
  • Chili’s reserves the right to modify Prototype 16 or develop new prototypes, and all franchisees will be required to use the prototype then used by Chili’s for each of their franchised Chili’s Restaurants.
  • You must adapt the Prototype 16 plans to accommodate the particular circumstances of the proposed site for your Restaurant. Chili’s may provide suggestions on such adaptations, and you must obtain its approval of the final plans.
  • Changes in existing prototypes or development of new prototypes may increase or otherwise change the initial investment costs described below.

1.  Initial Franchise Fee:  $40,000

  • This figure represents the initial franchise fee for each restaurant and does not include the development fee.

2.  Leasehold Expense:  $8,000 to $25,000

  • Due to the cost of land acquisition, the premises for Chili’s Restaurants are normally leased. These amounts assume that you will lease the premises for the Restaurant and do not include costs of land acquisition.
  • If land for the Restaurant site is purchased, purchase costs will vary significantly depending on the market in which the Chili’s Restaurant will be located; however, these costs generally range from $500,000 to $1,500,000 based on Chili’s experience in acquiring Restaurant sites nationwide.
  • Chili’s estimates that rent payments typically range from $14,000 to $25,000 per month based on a build to suit lease and from $8,000 to $21,000 per month for a ground lease based on its experience in leasing restaurant sites nationwide.
  • Land and site preparation costs will vary substantially depending on the lot size, geographic area, and market conditions. Costs related to evaluation of the Restaurant site are not included in this estimate.

3.  Pre-Construction:  $90,000 to $400,000



  • This estimate includes pre-construction costs for architectural and related drawings, engineering, testing, permits, utility tap fees, and other fees. Costs may vary significantly if you lease an in-line site for the Restaurant, and utility tap fees can vary substantially from location to location.

4.  Construction Costs:  $1,090,000 to $1,425,000

  • This estimate includes foundation, slab, materials, hardware, roof, plumbing, electrical, HVAC equipment, and labor. Costs may vary significantly based on the site and regional construction costs.

5.  Site Work:  $150,000 to $500,000

  • This work includes the cost to cover the extension of utilities to the building from a point on the site where the landlord/developer has delivered them, paving of parking areas, pouring sidewalks and curbs, and installation of outdoor lighting. If the property is a pad site, the cost would be between $90,000 and $105,000 for pad development plus $25,000 to $40,000 for landscaping, and up to $500,000 for a full site (based on between $90,000 and $105,000 for the cost of the pad plus $1,800 to $3,000 per parking space constructed and $35,000 to $55,000 for landscaping).

6.  Exterior Signage:  $20,000 to $80,000

  • The range given includes exterior graphics and door signage. The low end of the range includes standard building signage of 2 exterior building signs; the high end of the range also includes a to-go sign, a free-standing pole sign, and a free-standing monument sign.

7.  Furniture/Fixtures/Sound System/TVs:  $135,000 to $190,000

  • Chili’s requires you to purchase benches, chairs, stools, decor, decorative items, and tables that meet Chili’s specifications. The franchisor is an approved supplier of certain furniture and decor packages.

8.  Kitchen/Bar/Equipment:  $300,000 to $400,000

  • The estimate given covers the cost of kitchen and bar equipment, hood ventilation, and refrigeration equipment. Chili’s requires you to purchase certain kitchen equipment that meets its specifications.

9.  Opening Advertising:  $5,000 to $10,000

  • The advertising you may need to purchase before opening the Restaurant includes geo-targeted digital and social media, direct mail, and/or radio.

10.  Initial Training:  $60,000 to $350,000

  • Chili’s provides initial training for up to 5 of your representatives (in addition to your Managing Owner and Operating Partner). This is an estimate of the costs that you will incur for transportation, lodging and food, and wages for attendees of Chili’s initial training program.
  • The low end of the estimate assumes that your Managing Owner, Operating Partner, and 1 other representative will attend initial training, and the high end of the estimate assumes that your Managing Owner, Operating Partner, and 5 other representatives will attend initial training.
  • The actual cost will depend on the distance the attendees must travel and the type of accommodations you choose.

11.  Opening Team Costs:  $65,000 to $100,000

  • The figures given include the cost of an opening crew provided by the franchisor.

12.  Working Capital:  $12,000 to $22,000

  • The estimate for working capital is for organizational expenses.

13.  Inventory:  $15,000 to $20,000



  • Chili’s estimates that the range given will be sufficient to cover your inventory needs for the first month of operation.

14.  Bar/Kitchen Accessories:  $40,000 to $50,000

  • The estimate includes restaurant smallwares, like cooking, serving, and other utensils for food preparation.

15.  Liquor License:  Varies

  • License fees will vary significantly, depending on the locale and the requirements of the applicable state, county, or municipal liquor licensing laws and related liquor licensing authorities, so Chili’s cannot provide an accurate estimate.
  • In some states, liquor licenses must be purchased at costs ranging from $5,000 to $500,000.

16.  Computer POS System/Kitchen Display System/Installation:  $40,000 to $55,000

  • This estimate is for the cost of a computerized point-of-sale system, kitchen display system, and Table Top Devices, including installation.

17.  Additional Funds (3 months):  $450,000 to $600,000

  • This is Chili’s estimate of the amount needed to cover your expenses for the start-up phase of the business, including lease payments, inventory (including restaurant equipment and food), payroll, facility expenses like utilities, insurance, pest control, security, repairs and maintenance, and complimentary sales and other costs.
  • The range provided also includes Chili’s best estimate of the cash requirements including Builders Risk insurance (at preferred months of operations).
  • These figures are estimates and Chili’s cannot assure you that you will not have additional expenses starting the Restaurant.

18.  Total:  $2,520,000 to $4,267,000

  • The numbers above are representative of costs expended for construction of a Chili’s Restaurant in the State of Texas. You should consult a construction standard index to determine whether these costs accurately reflect the costs of construction in the area in which you will develop.


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{ 1 comment… read it below or add one }

Sid October 8, 2015 at 9:10 am

Hi.
Interested in Master Franchisee rights for Pakistan as having experience of International brands launching in Pakistan.

Looking forward for quick and positive response.
+92-321-8550109

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