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Franchise Costs: Detailed Estimates of Taco John’s Franchise Costs (2015 FDD)

by Franchise Chatter on October 6, 2015

in Franchise Costs, Mexican Restaurant Franchise

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Taco John's 2

Detailed Estimates of Taco John’s Franchise Costs Based on Item 7 (Estimated Initial Investment) of Taco John’s 2015 Franchise Disclosure Document

For Signature T16 Restaurants

  • The Signature T16-40 and T16-56 restaurant buildings are 1,900 to 2,100 square feet with seating for 40 to 56. They each require a lot between 22,000 to 30,000 square feet and may park 20 to 30 cars.

1.  Initial Franchise Fee:  $20,000 to $25,000

  • The Initial Franchise Fee for your first Taco John’s Restaurant is $25,000. If you are an existing franchisee of Taco John’s and want to open a second or subsequent Taco John’s Restaurant, the Initial Franchise Fee is currently $20,000.

2.  Real Estate Purchase or Lease:  Varies

  • You may either purchase or lease the land for your Restaurant. Land purchase costs generally range between $8 and $20 per square foot, but such costs may vary substantially based upon the location of the site, and are generally higher in urban/suburban areas than in rural areas.
  • Ground lease costs generally range between $1.50 and $3.00 per square foot per year and, as with land purchase costs, the square footage costs for ground leases may vary substantially based upon the location of the site.

3.  Site Preparation and Completion Costs:  $120,000 to $220,000

  • The cost of site improvements (such as site demolition and preparation, grading, curbing, gutters, sidewalks, paving, utility extensions, site lighting, landscaping, exterior trash enclosure) will vary widely based on the condition of the site, its size, local code requirements, as well as local construction costs.
  • The range of costs shown is for a 22,000 to 30,000 square foot site. There may be unusual costs associated with a site.

4.  Construction Costs:  $400,000 to $500,000

  • This estimate assumes that you will construct a freestanding wood-frame building of approximately 1,900 to 2,100 square feet, having a synthetic stucco exterior finish and commonly accepted quick service restaurant interior finishes, which may include wallpaper, painting, tile, and/or wood paneling.
  • In addition, you will be required to obtain various permits and licenses associated with the development and construction of a new restaurant or for improvements to an existing restaurant. These amounts are reflected in this chart as Miscellaneous Opening Costs.
  • In the event an existing freestanding facility is being converted to a Taco John’s Restaurant, construction costs are estimated to range between $200,000 and $500,000, but costs may vary substantially depending upon the prior use and condition of the facility.

5.  Operating Equipment:  $120,000 to $150,000

  • The estimate of your investment for operating equipment is based upon equipping a newly constructed freestanding facility with specified food preparation and storage equipment.
  • These costs will increase if you purchase additional optional equipment for the Restaurant.

6.  Furniture, Fixtures, and Decor:  $20,000 to $45,000

  • This estimate is based on a freestanding Restaurant with a range of 40 to 56 seats. Your costs may differ depending on the type of facility and the location and seating capacity of your Restaurant.

7.  Signage and Installation:  $28,000 to $42,000

  • Your investment in signage may be higher or lower depending on the size and height requirements mandated by local laws and regulations.

8.  Point of Sale System:  $25,000 to $32,000

  • You must purchase a Point of Sale System from an approved supplier. The Point of Sale System includes electronic cash registers, kitchen video monitors, receipt printers, a drive-thru speed of service timing system, and headset system.

9.  Initial Inventory:  $5,000 to $8,000

  • You must purchase all food products and supplies from distributors or suppliers that the franchisor approves, and which may include the franchisor or its affiliates.

10.  Grand Opening Marketing:  $5,000 to $8,000 (but this may go up to $20,000 in those markets the franchisor defines as underpenetrated)

  • You are required to spend an amount to be determined by you and the franchisor for grand opening local advertising and initial promotion of the Restaurant. Although not required under the Franchise Agreement, the franchisor anticipates that many franchisees will spend more than the minimum amount required to promote the opening of their Restaurants.
  • If you open a Restaurant in a market that is defined by the franchisor as underpenetrated, you must conduct up to a year-long grand opening advertising program that the franchisor will develop with you that will be designed to introduce the market to the Taco John’s concept.
  • An underrepresented market is one where there is limited awareness of the Taco John’s concept and minimal Taco John’s advertising penetration.

11.  Pre-Opening Training (Travel and Living Expenses):  $25,000 to $35,000

  • This amount includes airfare, hotel, food, and transportation expenses for three persons for four weeks of training in either a Certified Training Restaurant or a company-owned Restaurant, whichever the franchisor designates.

12.  Miscellaneous Opening Costs:  $20,000 to $60,000

  • This estimate includes the costs of permits and fees required by local governmental rules and regulations that will be associated with your project development, site preparation, and building construction.
  • It also reflects the costs for professional services you may require with architects, engineers, attorneys, and/or accountants.

13.  Additional Funds:  $25,000 to $35,000

  • This estimate reflects the funds you should have available to cover operating costs during the three month start-up period as a cash reserve for incidental costs not covered by cash flow during the start-up period and that are not included in any of the above categories.
  • This item does not include the cost of any financing, interest, or the amount of debt service obligation that you may undertake.

14.  Total Estimated Initial Investment (without real estate costs):  $813,000 to $1,160,000

  • The franchisor relied on more than 45 years of experience operating Taco John’s Restaurants to compile these estimates and on the information it has obtained from its current franchisees.

For Signature T20i Restaurants

  • The Signature T20i restaurant buildings are 2,500 to 2,700 square feet with seating for 52 to 72. They typically require a commercial building lot of 30,000 to 35,000 square feet and may park 26 to 36 cars.
  • The total estimated initial investment necessary to begin operation of a Signature T20i Taco John’s Restaurant ranges from $875,000 to $1,228,000.

For Velocity Restaurants

  • The Velocity restaurant building is 950 to 1,100 square feet with seating for seven to nine. It requires a lot between 15,000 to 26,000 square feet and may park 14 to 20 cars.
  • The total estimated initial investment necessary to begin operation of a Velocity Taco John’s Restaurant ranges from $710,000 to $1,029,000.

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