FDD Talk 2016: The Steak Escape Sandwich Grill Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

In this FDD Talk 2016 post, you’ll learn the following:

Section I – Background information on the Steak Escape franchise opportunity, including relevant news updates

Section II – Estimated initial investment for a Steak Escape franchise, based on Item 7 of the company’s 2016 FDD

Section III – Presentation and analysis of Steak Escape’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:

2015 average gross sales for the 15 Steak Escape stores operating in the United States at locations other than malls (consisting of 13 franchised and two affiliate-owned restaurants), which were open for all of 2015

2015 average gross sales for the 17 Steak Escape stores operating in the United States at mall locations (consisting of 16 franchised and one affiliate-owned restaurants), which were open for all of 2015

Section I – Background Information

Ken Smith and Mark Turner grew up on the eastern seaboard and were self-admitted Philly-style cheesesteak addicts. They were shocked and dismayed that most of the rest of the world had no idea what a cheesesteak even was. They took it upon themselves to start their own cheesesteak shop, which they did in Columbus, Ohio, in the city’s northern area known as The French Market.

Their first location in 1982 was only 209 square feet – little more than a closet, but it was a start. People loved their sandwiches and they quickly became a sales leader in the neighborhood. They franchised the concept beginning in 1983, mostly in shopping mall sites, college campuses, airports, and sports arenas.

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The number of locations has been in steep decline for at least the last 10 years. In 2006 there were 132, all domestic. Now there are only about 59, four of which are company-owned and seven of which are located outside the U.S.

The Struggle to Survive

Any chain with a substantial presence in shopping malls has had a tough go of it after 9/11, and rents in malls can eat up nearly a third of restaurants’ sales. But the chain is making the effort to turn things around, beginning with establishing stand-alone restaurants among its store models. There’s also a big re-branding effort underway that includes a whole new menu.

The Old Menu

The old menu included 7 signature sandwiches – Grand Escape (cheesesteak), Wild West BBQ, French Onion, Grand Chicken, Cajun Chicken, Buffalo Chicken, and Turkey Club. Any sandwich can be had as a salad, wrap, or stuffed/smashed potato. The old menu, still available at most locations, is rounded out with a selection of burgers, salads, and smashed potatoes.

The New Menu

The new menu available at newer locations includes three major groupings of sandwiches: Cheesesteak Nirvana (Bourbon and Bacon, Original Philly, Triple Cheesesteak, Steakhouse Sirloin, Grand Escape, and Smokin’ BBQ); Awe-Subs (Italian Hottie, Cubano, The Hangover, Black and Bleu, Delirious Dagwood, and the Primo Double Steak Burger); and Chicken (Simply Chicken, Chicken Bacon Club, Ragin’ Cajun, Crispy Buffalo, and the Grandest Chicken).

As before, any sandwich can be had as a salad, wrap, or stuffed/smashed potato. The big new addition are the five different kinds of French fries now available: Totally Loaded Fries, Buffalo Chicken Fries, Sriracha Fries, Cajun Bleu Fries, and Naked Fries.

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Going Global

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The chain is also pushing for international expansion. It already has locations in Saudi Arabia, Mexico, Pakistan, and the Sultanate of Oman. Last year it inked deals to start opening locations in Russia, Eastern Europe, Ghana, and Lebanon.

Section II – Estimated Costs

Please click here for detailed estimates of Steak Escape franchise costs, based on Item 7 of the company’s 2016 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis

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FDD Talk 2016: The Steak Escape Sandwich Grill Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)