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FDD Talk 2015: The McAlister’s Deli Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on July 24, 2015

in FDD Talk 2017: Food Franchises, Franchise Earnings, Sandwich Franchise

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McAlister's Deli Photo by 10outofsomething

In this FDD Talk 2015 post, you’ll learn the following:

  • Section I – Background information on the McAlister’s Deli franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a McAlister’s Deli franchise, based on Item 7 of the company’s 2015 FDD
  • Section III – Presentation and analysis of McAlister’s Deli’s financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:
  • 2014 average net sales by quartile for 258 franchised Traditional McAlister’s Deli Restaurants
  • 2014, 2013, 2012, and 2011 average net sales for company-owned and franchised Traditional McAlister’s Deli Restaurants
  • 2014 average net sales for 30 franchised Traditional McAlister’s Deli Restaurants opened between the beginning of Fiscal Year 2011 and end of Fiscal Year 2014 and open at least one year
  • 2014 average total revenue; cost of sales; gross profit; labor and benefits; advertising expenses; telephone, utility, and professional expenses; other operating expenses; occupancy expenses; total operating expenses; and EBITDA from operations for the 42 company-owned Traditional McAlister’s Deli Restaurants that operated for the trailing 12 months ended December 28, 2014 (Fiscal Year 2014)

Section I – Background Information

This fast-casual deli chain got its start back in 1989 in Oxford, Mississippi, when retired dentist Don Newcomb established his first restaurant in a renovated gas station. The privately-held chain, with headquarters in both Ridgeland, MS and Alpharetta, GA, now has more than 340 locations in 24 states.

The chain still honors its humble beginnings in current décor at many of its locations, including garage-style doors and retro black-and-white tile.

Perhaps best known for its McAlister’s Famous Sweet Tea (available by the glass or by the gallon), here’s how McAlister’s keeps finding the sweet spot in the deli segment:

Industry Accolades

McAlister’s has done well recently in the awards department. Technomic has recognized it twice – in 2014 as the #1 kid-friendly fast-casual chain and in 2013 as the #1 fast-casual chain for food and beverage.

Nation’s Restaurant News named McAlister’s the #1 limited-service sandwich chain in its 2014 Consumer Picks Survey.

2014 was also the year that QSR Magazine called McAlister’s Deli one of the Best Franchise Deals and put it on their QSR 50 list.

FastCasual.com also put the chain on its Top 100 Movers and Shakers list for 2014.

Free is Sweet and Sweet is Free

McAlister’s wowed everyone with Free Tea Day on July 24, 2014. In this sixth occurrence of Free Tea Day, McAlister’s was prepared to give away more than 350,000 32-ounce glasses of tea. That’s a sweet deal for all those sweet-tea lovers out there.

Seasonal Offerings

In a day and age when people expect to get the food they want regardless of whether it’s in season or not, McAlister’s brings a note of realism by having seasonal offerings.

Its loyal fans look for the annual return of its Pecanberry Salad and flavored beverage line-up as a sign that spring has finally arrived. April 16 was the day in 2015 that both spring/summer offerings became available, along with a special “Berry Stylish” photo contest.

Customers could put on a favorite spring outfit, snap a picture with McAlister’s Pecanberry Salad or a flavored beverage, and be entered for a chance to win a $250 McAlister’s gift card and a $250 Visa gift card.

New Leadership

In November 2014, McAlister’s Deli named Carin Stutz the new president, succeeding Frank Paci, who left in September of that year to become president and CEO of Einstein Noah Restaurant Group (the nation’s largest operator of bagel shops, including Einstein Bros. Bagels, Noah’s New York Bagels, and Manhattan Bagel).

Stutz comes to McAlister’s from her position as president/CEO of Cosí, a counter-serve chain known for sandwiches and pizzas made with hearth-fired flatbreads. Stutz also gained valuable insights into the restaurant industry in previous positions with such brands as Applebee’s and Wendy’s.

She notes that what makes for a great restaurant has everything to do with the menu, the people, and the culture. She thinks McAlister’s genuine hospitality is the chain’s greatest strength. Her plan is to take the chain from regional awareness and make it a truly national brand.

Section II – Estimated Costs

  • Please click here for detailed estimates of McAlister Deli franchise costs, based on Item 7 of the company’s 2015 FDD.

Section III – Financial Performance Representations (Item 19, 2015 FDD) and Analysis

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