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Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Tony Roma’s Franchise Costs (2014 FDD)

by Franchise Chatter on February 3, 2015

in BBQ Franchise, Franchise Costs, Restaurant Franchise

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Tony Roma's Photo by Media Cookery

Detailed Estimates of Tony Roma’s Franchise Costs Based on Item 7 (Estimated Initial Investment) of Tony Roma’s 2014 Franchise Disclosure Document

For New Construction of a Tony Roma’s Free-Standing Full Service Restaurant (4,900 to 5,600 Square Feet)

1.  Development Fee:  $20,000

2.  Franchise Fee:  $20,000

3.  Architect/Engineering and Survey Costs:  $55,000 to $80,000

  • Fees may vary based on the scope of the work being undertaken to construct the Full Service Restaurant. The amount of structural, electrical, mechanical, plumbing, landscaping, and kitchen design work required may cause the fee to vary.
  • The architect/engineering fees are normally sufficient to provide the necessary plans that Tony Roma’s and local government agencies require. These costs may vary due to the choice of architect/engineer, scope of work, and quality of work.

4.  Permits/Impact Fees:  $5,000 to $65,000

5.  Building, Landscape, Lighting, Millwork, and Floor Covering:  $950,000 to $1,350,000

  • The figures above do not include the cost of purchasing or acquiring real estate for the Restaurant. The cost of purchasing or leasing real estate varies greatly, depending on location, city, state, size, condition, existing improvements, market rates, and general and local economic conditions.
  • Acquisition or lease costs also may be affected by factors such as the proximity of the proposed site to commercial or residential development, population densities, access to major highways, availability and cost of financing, square footage, unusual building conditions or required site work, and other relevant factors specific to each location.
  • The Full Service Restaurant may be established either as a free-standing building on a site approximating 80,000 to 90,000 usable square feet and 125 parking spaces; or a commercial space in retail use development appropriate for a Full Service Restaurant. The site should be located on a heavily traveled thoroughfare, with easy access, in a commercial district in reasonable proximity to residences and with appropriate zoning.
  • The Full Service Restaurant itself should be in the size range of 4,900 to 5,600 square feet with seating for 175 to 230 people, including a lounge/bar area.
  • Construction and build-out costs and expenses will vary widely, some due to geographic areas, union or non-union labor, supply/demand of work, code requirements, condition of structure (if existing), free-standing or part of another building, amount of site work required, size of building, etc.
  • Often landlords will contribute money towards the construction of restaurants; this may result in increased rent expense, but will reduce the investment.
  • This does not include land cost or site work.
  • This figure includes a $1,000 estimate to obtain a required market feasibility study of the site from an approved provider of these services.

6.  Signage and Awning Package:  $30,000 to $60,000

  • These costs do not include signage over 10 feet high and may vary due to the size of the signs, the number of signs allowed, and whether they are building signs or free-standing pole signs.
  • Local codes should be checked carefully for restrictions.

7.  Kitchen/Bar Equipment:  $325,000 to $500,000

  • The cost of a Restaurant/Kitchen/Bar equipment package ranges from $325,000 to $500,000, plus sales tax, freight, and installation. Local ordinances of a particular community may result in variances in types of required equipment, which may affect the total price.
  • The cost of the POS unit used in Tony Roma’s Restaurants approximates an additional $30,000 to $50,000.
  • The average sign package may be purchased at a cost of approximately $25,000 to $60,000; this amount is for two building signs and does not include a free-standing sign.
  • Costs for new equipment will vary due to selection of supplier, brand of equipment, size of kitchen, and bar and shipping costs. This estimated cost includes the kitchen exhaust hood which cost may also vary due to code requirements.
  • Special air pollution control items are not included in this estimate.

8.  Furniture (tables, chairs, booths):  $100,000 to $200,000

  • The furniture estimate includes table tops, bases, chairs, bar stools, booths, and banquettes. There will be a slight variation in costs depending upon the actual number of dining seats and tables.

9.  Decor:  $5,000 to $25,000

10.  POS Equipment:  $30,000 to $50,000

  • This cost may vary due to the number of terminals desired, software costs, and choice of manufacturer.

11.  Tech Systems (phones, music, video, POS installation):  $20,000 to $45,0000

12.  Pre-Opening (smallwares, training of staff, advertising costs):  $100,000 to $200,000

13.  Management Training Expense:  $3,000 to $6,000

  • The figures above reflect estimated costs and expenses per person associated for your General Manager and 3 additional managers to attend initial training (based on estimated expenses of $25 per day for local transportation, meals, phone, and laundry; and $65 to $95 per day for hotel accommodations).
  • These amounts do not include any fees or expenses for training any other personnel nor do these amounts include 6 to 8 weeks compensation or travel. These costs will vary depending on your selection of salary levels, lodging, and dining facilities, and mode and distance of transportation.

14.  Insurance:  $7,500 to $17,000

  • These costs may vary widely depending on the nature of your experience and your financial condition. This estimate assumes you have strong restaurant experience, no significant history of losses, and no workers’ compensation modifier. However, there are a number of other factors which may be used by an underwriter in determining the ultimate premium for the insurance product.

15.  Opening Team Costs and Expenses:  $50,000 to $90,000

16.  Additional Funds (3 months):  $250,000 to $500,000

  • This amount is estimated to be a sufficient working capital reserve based on Tony Roma’s previous experience. It includes estimated initial inventory costs, labor costs, a market feasibility study, and working capital.
  • However, depending on your rent, security deposit, local utility deposit requirements, business volume, petty cash and register banks, license and zoning permit costs, liquor license costs, insurance costs, and financing and amortization of initial expenses, you may need more working capital.
  • Initial opening costs may vary based on the wages and salaries paid to the management and staff as well as the length of time they must be trained to acquire minimum acceptable standards of proficiency.

17.  Total:  $1,970,500 to $3,228,000

  • Tony Roma’s relied on its experience in the industry to compile these estimates.

For Conversion of Existing Restaurant or In-Line Location to Full Service Restaurant (5,400 to 7,000 Square Feet)

  • The total estimated initial investment necessary to begin operation of a conversion restaurant (from an existing restaurant or in-line location to a full service restaurant) ranges from $1,615,500 to $2,778,000.

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