Updated January 20, 2021.
Detailed Estimates of McAlister’s Deli Franchise Costs Based on Item 7 (Estimated Initial Investment) of McAlister’s Deli’s 2020 Franchise Disclosure Document
Traditional Restaurant at an End-Cap or Inline Shopping Center Location Without a Pickup Window
1. Initial Franchise Fee: $35,000
2. Construction and Build Out Costs: $397,800 to $492,000
- This estimate includes fees paid to a general contractor you engage to build out the Restaurant to meet McAlister’s Deli’s standards and to obtain a site selection analysis from an Approved Supplier.
- Leasehold improvements include but are not limited to HVAC, electrical, carpentry, floor covering, and painting.
- This estimate does not include leasehold improvements for buildings with a drive-thru, as the costs for this format may vary significantly.
- You may be able to negotiate tenant improvement allowances from your landlord. The estimate is presented net of estimated tenant improvement allowances.
- For the low estimate, McAlister’s Deli estimated a tenant improvement allowance of $72,000, which is approximately the average tenant improvement allowance that franchisees have reported to McAlister’s Deli and its affiliates for similar units. For the high estimate, McAlister’s Deli assumed that a tenant improvement allowance was not available.
3. Permitting: $2,400 to $3,200
- This estimate includes the cost of acquiring construction permits, including permit fees. Your costs will vary depending upon your Restaurant’s location. In some markets, the costs of required permits may significantly exceed McAlister’s Deli’s estimates
4. Equipment Package: $162,500 to $176,500
- You must purchase or lease from an Approved Supplier certain equipment (like kitchen equipment) and machinery that comply with McAlister’s Deli’s standards.
- These amounts do not include the costs of any owned, hired, or leased delivery motor vehicles that you may utilize in the operation of the Restaurant.
- If you offer delivery and catering services under the terms of the Franchise Agreement, you may need to purchase at least one branded catering vehicle equipped per McAlister’s Deli’s specifications, which will cost approximately $25,000 to $35,000 if purchased, or $500 to $700 per month if leased, although leased costs may vary significantly.
5. Millwork: $43,800 to $73,000
- You will incur expenses for millwork at the Restaurant, which may include the cost of purchasing and installing cabinets and counters.
6. Furniture: $14,200 to $27,000
- You must purchase furniture such as tables, chairs, and office furniture from an Approved Supplier that meets McAlister’s Deli’s standards.
7. Menu Board, Graphics, and Interior Signage: $25,500 to $27,100
- This estimate includes the cost of digital and/or static menu boards and interior signage. The cost will vary based on the size of your Restaurant.
8. Exterior Signage: $82,500 to $87,500
- The cost of your exterior sign will vary depending on the size, color, quantity, and back-lite channel letters of the sign and other specifications as McAlister’s Deli requires.
9. Computer System and Software Training: $39,400 to $56,400
- You must purchase, lease, and/or license and install at the Restaurant the POS System, computer systems, mobile hardware, software, online ordering platform, associated computer hardware, telephone lines, network connections, communications equipment, high speed internet access (e.g. DSL or cable), credit card, gift card and loyalty card processing equipment, and other equipment that McAlister’s Deli requires from time to time (collectively, the “Computer System”).
10. Smallwares: $13,200 to $18,300
- This estimate includes the cost of purchasing cooking utensils and supplies, cleaning supplies, and other smallwares.
11. TV/Music: $400 to $500
- McAlister’s Deli may require you to install televisions and audio equipment in the Restaurant and to enter into subscriptions for television and audio services.
12. Architect/Engineer: $15,000 to $33,000
- You must engage licensed architects and engineers (for mechanical, ethical, plumbing, and structural) to draft standard construction plans for your Restaurant.
13. Rent: $6,200 to $12,000
- The figures in the table reflect McAlister’s Deli’s estimates for leasing the Restaurant premises and include only one month of rent. A typical Traditional Restaurant occupies about 3,200 to 3,600 square feet of space and may be located in either a free-standing building or in an in-line retail plaza space.
- The Restaurant requires ample parking, good visibility, and availability of prominent signage.
- For a Traditional Restaurant at an end-cap or inline location, McAlister’s Deli estimates that rent will typically range between $23 to $40 per square foot, including pass-through costs such as common area maintenance, real estate taxes, and property insurance.
14. Grand Opening Marketing: $25,000 to $27,000
- You must conduct a grand opening advertising campaign with the opening of your Restaurant. You must pay all costs of the grand opening, including publicity costs, promotional costs, plus the full cost of any price reductions or other customer inducements.
- Costs may vary depending on your market and the type of advertising used; however, you must spend a minimum of $25,000 during the period beginning four weeks before and ending eight weeks after the opening of your Restaurant.
15. Legal and Accounting Fees: $3,000 to $10,000
- This estimate includes the cost of legal and accounting fees that you may incur in establishing your business. Such expenses may include fees payable to attorneys and accountants that you will need to use for the review of the Disclosure Document and the related agreements, as well as for entity formation and lease negotiation.
16. Insurance: $2,500 to $15,000
- You must obtain and maintain during the term of your Franchise Agreement, at your expense, a comprehensive business insurance program, including property, commercial general liability, automobile liability, business property, umbrella, workers’ compensation, employment practices liability, cyber liability, and (if you serve alcohol) dram shop liability insurance.
17. Miscellaneous Opening Costs/Security Deposits: $7,500 to $15,000
- This estimate includes the cost of deposit expenses to obtain utility services, which include deposits to initiate telephone, gas, electricity, water, and other services. These deposits are generally refundable depending on the provider’s policies.
- This estimate does not include any security deposit under any lease for the Restaurant.
18. Travel and Living Expenses During Training: $15,000 to $30,000
- This estimate is for the cost of four people for a Traditional Restaurant traveling to attend the Management Training Program in an approved training restaurant in a location that McAlister’s Deli designates for approximately five to six weeks.
- You are responsible for the travel and living expenses, wages, and other expenses incurred by your trainees during the program.
19. Opening Inventory: $12,000 to $18,000
- You must purchase an opening inventory of food and paper products, which will vary in cost based on the size, location, and projected sales of your Restaurant.
20. Additional Funds for 3 Months: $25,000 to $50,000
- This estimates the additional funds you may need to cover expenses you will incur before your Restaurant opens and in its first three months of operation.
- McAlister’s Deli has based these figures on its experience franchising Restaurants, and its affiliate’s experience opening and operating Restaurants. You may incur other categories of expenses or expenses in excess of this estimate.
21. Total Initial Investment: $927,900 to $1,206,500
Newly-Constructed Freestanding Traditional Restaurant Without a Pickup Window
- The total estimated initial investment necessary to begin operation of a newly-constructed freestanding Traditional Restaurant without a pickup window ranges from $1,559,100 to $2,094,200 (does not include real estate costs).
- The total estimated initial investment necessary to begin operation of an Express Restaurant ranges from $398,000 to $607,850 (does not include real estate costs).