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Franchise Costs: Detailed Estimates of McAlister’s Deli Franchise Costs (2016 FDD)

by Franchise Chatter on July 19, 2015

in Franchise Costs, Sandwich Franchise

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McAlister's Deli Photo by 10outofsomething

This post was updated on June 21, 2016 to reflect information from McAlister’s Deli’s 2016 FDD (Item 7).

Detailed Estimates of McAlister’s Deli Franchise Costs Based on Item 7 (Estimated Initial Investment) of McAlister’s Deli’s 2016 Franchise Disclosure Document

Traditional Restaurant at an End-Cap or Inline Shopping Center Location

1.  Initial Franchise Fee:  $35,000

2.  Real Estate:  Variable

  • The space required for a Traditional Restaurant ranges from 3,000 to 4,000 square feet.
  • The franchisor’s experience is that the rent may range from $23 to $40 per square foot, including pass-through costs such as common area maintenance, real estate taxes, and property insurance.

3.  Site Work and Parking Lot:  N/A

4.  Building and Pad:  N/A

5.  Leasehold Improvements:  $315,000 to $490,000

  • The estimates include the cost of reasonable renovation or leasehold improvements that comply with the franchisor’s standards and specifications. If you elect to go beyond the standards and specifications, your expenses may be higher.
  • Your landlord may supply the leasehold improvements in a build-to-suit transaction.

6.  Furniture, Fixtures, and Equipment:  $130,000 to $216,000

  • You must purchase or lease approved brands and models of fixtures from approved suppliers.
  • The cost of the furniture, fixtures, and equipment (including office equipment, sound systems, smallwares, menu boards, and decor) will depend on financing terms available, the size of the Restaurant, brands purchased, and other factors.

7.  Signage:  $12,000 to $30,000

  • Signage includes interior and exterior signs and awnings that bear the Marks. The cost of signage may vary depending on the type, size, and location of the signs, and may also be affected by local restrictions.

8.  Computer System:  $15,000 to $35,000

  • You must purchase or lease a Computer System for use in the Restaurant.

9.  Initial Inventory:  $12,000 to $18,000

10.  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, employment practices liability, and workers’ compensation insurance.
  • This figure estimates the cost of your insurance premiums for your first year of operation based on the franchisor’s minimum requirements.
  • The lower figure assumes 25% down on a yearly amount. The higher figure would apply in areas prone to hurricanes or other extraordinary natural disasters.

11.  Training:  $10,000 to $25,000

  • You must arrange transportation and pay the expenses for meals and lodging for you and your employees attending the Initial Training Program.
  • The estimate contemplates attendance by 4 people for a Traditional Restaurant traveling to the franchisor’s headquarters or other location that the franchisor designates for approximately 5 to 6 weeks.

12.  Prepaid Expenses:  $7,500 to $15,000

  • These costs include utility deposits, installation of telephones, business licenses, security deposits, and other prepaid expenses. These estimates reflect the typical cost of these types of expenses.
  • However, these expenses can vary dramatically depending on the location of the Restaurant and may substantially exceed these estimates.

13.  Grand Opening Advertising:  $15,000

14.  Additional Funds (3 months):  $25,000 to $50,000

  • This includes the additional funds needed to operate the Restaurant during the initial period including working capital and pre-opening expenses.
  • The franchisor projects the working capital estimate as sufficient to cover operating expenses, including employees’ salaries and utility expenses, for the first 3 months of operation. However, the franchisor cannot guarantee the sufficiency of this amount.

15.  Totals:  $579,000 to $944,000 (does not include real estate costs)

Newly-Constructed Freestanding Traditional Restaurant

  • The total estimated initial investment necessary to begin operation of a newly-constructed freestanding Traditional Restaurant ranges from $922,500 to $1,475,500 (d0es not include real estate costs).

Express Restaurant

  • The total estimated initial investment necessary to begin operation of an Express Restaurant ranges from $183,000 to $397,000 (d0es not include real estate costs).

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