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Franchise Costs: Detailed Estimates of Costa Vida Franchise Costs (2017 FDD)

by Franchise Chatter on January 24, 2016

in Franchise Costs, Mexican Restaurant Franchise

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Costa Vida

This post was updated on September 1, 2017 to reflect information from Costa Vida’s 2017 FDD (Item 7).

Detailed Estimates of Costa Vida Franchise Costs Based on Item 7 (Estimated Initial Investment) of Costa Vida’s 2017 Franchise Disclosure Document

1.  Franchise Fee:  $30,000

  • $30,000 is the standard non-refundable Franchise Fee for a Costa Vida franchise.

2.  Area Development Fee:  $15,000 per Costa Vida Restaurant to be developed under the Development Schedule

  • $15,000 is the Development Fee paid to Costa Vida per Restaurant contracted under the ADA. This fee will then be applied to the then-current Franchise Fee upon the signing of a Franchise Agreement for each subsequent Restaurant developed under the ADA. The development fee is non-refundable.

3.  Travel and Living Expenses While Training:  $15,000

  • You must pay for any incidental expenses that you and your manager and any other trainees incur while attending the initial training program, such as car rental, gas, airline tickets, meals, hotel room, and salaries.
  • You must also pay for any incidental expenses that Costs Vida trainers incur while assisting with your Restaurant Grand Opening as well as while assisting with restaurant site-selection or site-approval processes.
  • These expenses may include car rental, gas, airline tickets, meals, hotel room, and salaries.

4.  Tenant Improvements and Build-Out:  $300,000 to $375,000

  • These estimates include construction costs (labor and material) and construction management costs for typical tenant improvements and remodeling necessary to prepare a site for operation of a Costa Vida Restaurant.
  • The total estimated initial investment does not include real estate.
  • You will need to purchase or lease a building of approximately 2,600 to 3,600 square feet, excluding patio area, and pay for the cost of site work and/or leasehold improvements.
  • Costa Vida Restaurants are typically located in stand-alone sites and shopping center outparcels.
  • The franchisor suggests a corner or end-cap location, with at least 30 feet of minimum frontage. Additionally, your Restaurant must have access to at least 30 dedicated parking spaces if it is not located in a high-pedestrian location. Outside seating is highly recommended.

5.  Building and Design Permit and Professional Fees:  $14,000 to $49,000

  • Building and design permit and professional fees may vary depending on the consultants used and the fees charged by the municipalities. The design and permit fees do not include any impact fees which may be imposed by the municipality.
  • The permits and licenses include, for example, business licenses and beer licenses. Building permits are included in the total construction costs.

6.  Restaurant Equipment including POS and Computers:  $150,000 to $255,000

  • This estimate includes kitchen-typical furniture, fixtures, and equipment; computer, POS systems, and related software, including a digital menu system; big-screen televisions or projection system with content/programming; restaurant equipment; preparation, service, and display counters; warmers; stoves; ovens; disposal systems; refrigerators; beverage dispensers; and any other needed equipment, including costs of installation.

7.  Trade Dress, Woodwork, Furniture, Design Package, and Fixtures:  $55,000 to $90,000

8.  Opening Supplies and Inventory:  $10,000 to $15,000

  • This estimate includes a supply of initial food and beverage products for use and sale at the Restaurant, including spices, flavorings, produce, meats, dry goods, small kitchenwares, cleaning supplies, paper and packaging supplies, beverage cups, report forms, marketing, and point-of-sale materials.

9.  Smallwares:  $15,000 to $20,000

10.  Signage:  $8,000 to $33,000

11.  Grand Opening Promotion and Special Assistance:  $10,000 to $20,000

  • You must spend at least $10,000 on a grand opening advertising and promotional program approved by Costa Vida Management, and the franchisor suggests that you spend significantly more to facilitate a successful grand opening.

12.  Security and Utility Deposits:  $1,000 to $18,000

  • You might need to pay deposits for utilities and your property. Deposits for utility services and your property are typically required at the time the service is applied for, and may or may not be refundable.

13.  Insurance:  $1,500 to $5,000

  • You must maintain and keep in force the appropriate insurance coverages as described in Item 8 of the Disclosure Document, with the franchisor named as an additional insured or loss payee on each policy, as applicable.
  • You must also maintain and keep in force all workers’ compensation insurance on your employees that is required under the applicable workers’ compensation laws of the state in which your Restaurant is located.

14.  Additional Funds – 3 Months:  $50,000 to $100,000

  • This estimate includes working capital for the first three months and includes general operating expenses, such as lease payments, inventory, payroll expenses, facility expenses, insurance, pest control, security, repairs and maintenance, complimentary sales, store-level employee wages and benefits, point-of-purchase collateral, other marketing costs, maintenance, linens, cleaning and office supplies, leased equipment, occupancy expenses, credit-card processing fees, and other costs.
  • This estimate does not include salaries and expenses during training of your Operating Partner, whose training is required by the Franchise Agreement and/or the Area Development Agreement.

15.  Totals:  $659,500 to $1,025,000 (not including real estate costs)

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