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FDD Talk: The Saladworks Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on March 16, 2016

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

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Chicken Caesar Salad from Saladworks

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

  • Section I – Background information on the Saladworks franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Saladworks franchise, based on Item 7 of the company’s 2015 FDD
  • Section III – Presentation and analysis of Saladworks’ financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:
  • 2014 average net sales for the 85 franchised Saladworks restaurants that were in operation during the entire 2014 calendar year and were open 7 days a week during typical operating hours, grouped according to level of net sales ($1,000,000 and above; $850,000 to $1,000,000; $700,000 to $850,000; $550,000 to $700,000; and $550,000 and below)
  • 2014 average food and paper costs, hourly labor costs, rent, utilities, and insurance (as a percentage of average net sales) for the “A,” “B,” and “C” franchised Saladworks restaurants that were in operation during the entire 2014 calendar year and provided cost information to the franchisor for the full 12-month period

Section I – Background Information

Saladworks Returns to NJ Roots for Latest Expansion Plans

2015 was a busy year for Saladworks, as the company filed for Chapter 11 bankruptcy protection in February amid a bitter feud between the company’s founder and former CEO, John Scardapane, and Commerce Bank founder Vernon Hill, an investor in Saladworks. Scardapane owned 70 percent of the company at the time.

New York investment firm Centre Lane Partners purchased Saladworks LLC for $16.9 million in June 2015 and paid Saladworks’ $2 million debt. The Chapter 11 plan for the Saladworks LLC estate was finally confirmed in October, following a judge-ordered mediation in September to resolve issues between Scardapane and Hill.

Looking Ahead

Paul Steck was president prior to the sale of the company, and during the tumultuous feud between Scardapane and Hill, Steck focused on keeping the company in place. With the sale, Steck was elevated to CEO of the company he loves.

In 2016, Steck and Saladworks are looking to both get back to the chain’s roots and move forward. The company has more than 110 restaurants in the United States and overseas. Among growth plans is a large expansion in New Jersey, where the chain began, with five to 10 new locations expected.

“It’s really the epicenter of Saladworks,” Steck told the Courier Post of New Jersey in January. “We started 29 years ago in Cherry Hill Mall. We’re pretty comfortable in South Jersey. We’ve got a lot of happy franchisees there who have made a lot of money. I will tell you, it’s going to be a prime area of focus for us. We have locations in Texas and North Carolina and elsewhere…but the strategy for us going forward is ‘let’s grow from a position of strength.’ South Jersey really likes Saladworks, so let’s concentrate there.”

Design Changing From Bright to Natural

Customers will start to notice design changes as well, Steck said, with bright primary colors scrapped in favor of more natural, organic tones with softer lighting. Current franchisees will have the opportunity to decide whether they want to keep the current design or to remodel to incorporate the redesigned elements.

A new company logo is planned, and restaurants will be getting wireless Internet and mobile charging stations.

Menu changes are among the plans, too, as the franchise looks to balance favorite dishes with new products designed to entice younger customers. An example is the new Farmhouse Salad with quinoa, roasted Brussels sprouts, butternut squash and goat cheese paired with an apple-cider vinaigrette. Brussels sprouts are among the ingredients the chain intends to boost as the menu grows. Seasonal offerings are also planned.

Vision Started in Cherry Hill, NJ

Scardapane developed his vision for Saladworks while working as a chef in a country club in 1986. In its first year, the new salad restaurant outsold all the other quick-service restaurants in Cherry Hill Mall in Cherry Hill, New Jersey, where the first Saladworks store opened.

Saladworks continued to grow locally and later started franchising, growing to 30 locations by 2002. The 100th Saladworks opened in 2008. The franchise went international in 2013 and would find homes in countries such as Canada, Singapore, the United Arab Emirates and Qatar.

50 Salad Ingredients: Create Your Own

The menu continues to include a wide variety of signature salads and a create-your-own-salad feature, with soups and sandwiches also available. Signature salads have fewer than 500 calories, and 50 salad ingredients and 17 dressings are available.

Section II – Estimated Costs

  • Please click here for detailed estimates of Saladworks 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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