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Franchise Costs: Detailed Estimates of TGI Fridays Franchise Costs (2016 FDD)

by Franchise Chatter on January 17, 2015

in Casual-Dining Restaurant Franchise, Franchise Costs, Restaurant Franchise

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This post was updated on December 27, 2016 to reflect information from TGI Fridays’ 2016 FDD (Item 7).

Detailed Estimates of TGI Fridays Franchise Costs Based on Item 7 (Estimated Initial Investment) of TGI Fridays’ 2016 Franchise Disclosure Document

For P11 Prototype (6,200 Square Foot TGI Fridays Restaurant)

1.  Initial Franchise Fee:  $50,000

2.  Furniture, Equipment, and Decor:  $825,000 to $1,000,000

  • TGI Fridays is one of the suppliers of furniture, kitchen equipment, and decor for the Restaurant.

3.  Computer Systems:  $83,500 to $100,000

  • TGI Fridays procures, on your behalf, the Information Technology Computer Systems.

4.  Opening Inventory:  $35,000 to $60,000

  • Opening inventory reflects the costs of consumable inventory items such as food, liquor, cleaning supplies, and paper goods, which are necessary on the opening day. You must promptly replenish these items as consumed.

5.  Hiring Expenses, Training:  $65,000 to $200,000

  • Hiring expenses include, among others, costs such as the expenses of utilizing social media recruitment strategies in advertising for employees, costs of interviewing activities, travel, and wages for your managers and hourly employees during pre-opening training.
  • The low amount assumes two managers transfer from existing Fridays Restaurants, with minimal travel expense for employees, managers, and trainers as they come from within the local market.
  • The high amount assumes managers and trainers will require travel and lodging during the training, and that all employees will be new hires requiring training.

6.  Liquor License:  varies

  • The cost of obtaining liquor licenses is not included in the chart. This cost varies greatly depending on the state and the licensing authority involved.

7.  Building and Improvements:  $1,300,000 to $1,585,000

  • This is an estimate for construction costs for building and improvements for a ground up Restaurant on unimproved land. Landlord allowances for improvements are sometimes available and may vary considerably, and would offset building costs.

8.  Site Improvements:  $100,000 to $350,000

9.  Developmental Costs:  $65,000 to $100,000

  • In addition to construction costs, you may incur developmental costs for engineering, architectural, design, real estate, legal, and other professional services.
  • TGI Fridays’ construction and developmental cost estimates assume that there are no unusual site conditions, and that adequate utilities are available at, or adjacent to, the building pad. The actual size of your unit may, conditioned upon TGI Fridays’ approval, be larger or smaller than the typical unit shown here.

10.  Insurance (3 months):  $12,500 to $25,000

  • Insurance costs vary by insurability of each franchisee, restaurant location, and facility type. You may be required to pay your entire premium for workers’ compensation, property, and casualty insurance in advance.

11.  Miscellaneous Costs:  $10,000 to $100,000

  • Miscellaneous costs include items like utility and service company deposits, possible transportation and/or utility impact fees, advertising and promotional expenses and material for your initial opening, and unforeseen incidental expenses.

12.  Additional Funds (3 months):  $50,000 to $100,000

  • You will need additional funds to operate the Restaurant during the start-up phase of your business. TGI Fridays based these amounts on the average first three months of operation of all company-operated restaurants that opened in 2013 and 2014.
  • There are many variables affecting these amounts such as sales volume, number of employees, rates of pay, and frequency of restaurant turnover. TGI Fridays has included operating cash flow, 4% royalty, and an advertising contribution of 4.75% on gross sales.
  • These figures are only estimates, and TGI Fridays cannot assure you that you will not have additional expenses starting the Restaurant.

13.  Total:  $2,596,000 to $3,670,000

  • The total cost does not include the cost to purchase or lease real estate for a Fridays Restaurant, These costs vary significantly by location based upon a variety of factors.
  • The franchisor has not built a TGI Fridays Restaurant using the P11 Prototype. In preparing the cost estimates, the franchisor relied upon its experience in developing and opening Fridays Restaurants, including the experience of in-house personnel developing restaurants for the past 24 years, and upon information provided to it by franchisees who constructed two Restaurants using the P11 prototype. These two restaurants are based in St. Louis, MO and Cincinnati, OH markets.

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