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FDD Talk 2016: The Erbert & Gerbert’s Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on August 30, 2016

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



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Erbert & Gerbert Photo by lammoreaux

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

  • Section I – Background information on the Erbert & Gerbert’s franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for an Erbert & Gerbert’s franchise, based on Item 7 of the company’s 2016 FDD
  • Section III – Presentation and analysis of Erbert & Gerbert’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:
  • 2015 average revenues for the top tier, mid tier, and low tier of the 56 franchised Erbert & Gerbert’s restaurant businesses that were open for all 12 months during the 2015 calendar year
  • 2015 average food costs for the top tier, mid tier, and low tier of the 54 franchised Erbert & Gerbert’s restaurant businesses that were open for all 12 months during the 2015 calendar year and who delivered financial reports to the franchisor showing food costs

Section I – Background Information

History

Kevin and Beth Schippers founded Erbert & Gerbert’s Sandwich Shop in 1987. The restaurant’s first official location opened in 1988 in Eau Claire, Wisconsin. Franchising of Erbert & Gerbert’s began in 1992 and the company has had slow but steady growth since.

In 2003, the Schippers sold the company to investors led by Eric Wolfe, who is now the CEO and majority owner of Erbert & Gerbert’s. Kevin did not completely leave the company and he still owns the original Eau Claire location.

As of 2016, Erbert & Gerbert’s Sandwich Shop has over 90 locations throughout the U.S.

Family-Friendly Charm

The restaurant’s fun and unique name comes from stories Kevin’s father made up for him as a child. The adventures of brothers Erbert and Gerbert are not only the inspiration for the restaurant’s name, but also the source of the names of their core sandwich lineup.

Some of the whimsical sandwich names include Bornk (Tuna Salad), Halley’s Comet (Roast Beef), Bony Billy (Turkey), Narmer (Turkey and Avocado), and Girf (Turkey and Ham). The cute storybook names are just one part of the restaurant’s success.

Accessible Menu Helps Erbert & Gerbert’s Stand Above Competition

Erbert & Gerbert’s commitment to providing offerings that meet different dietary needs is one of the things that make this sandwich shop special.

In 2012, the restaurant started offering gluten-free options to meet the growing needs of the public. They collaborated with Udi’s Gluten Free Foods and made their menu accessible to more people. Most of their sandwiches have gluten-free fillings and all of them can be made with Erbert & Gerbert’s gluten-free bread.

Erbert & Gerbert’s goes above and beyond just offering gluten-free food, they ensure that gluten-free orders are prepared safely and separately to avoid cross contamination. The Celiac Center of Minnesota recognized them for their outstanding safety practices in 2015.

In addition to gluten-free offerings, Erbert & Gerbert’s offers vegetarian items. They have the Jacob Bluefinger (Avocado) and the Pudder (PB&J). There are also gluten-free and vegetarian soups available, including Vegetarian Black Bean, Garden Vegetable, Chicken Tortilla, and Chunky Beef and Bean Chili.

Meet Mr. Guts

Another stand out practice of Erbert & Gerbert’s is how they hollow out their bread to accommodate for more fillings. This is something not often seen in mainstream sandwich shops and mostly practiced by artisanal restaurants. Erbert & Gerbert’s serves the scooped out bread on top of their sandwiches to ensure minimal waste.

They have personified the bread insides and dubbed it Mr. Guts. The restaurant’s website has a whole page dedicated to Mr. Guts with free ringtones, desktop wallpapers, and videos of his adventures.

College Campuses Hold Key to Future Success

In the past, Erbert & Gerbert’s Sandwich Shop has not had a big push toward expansion. Things have changed in recent years and Eric Wolfe hopes to open 200 new locations in the coming years.

Part of this new push comes from the company’s successful openings across U.S. colleges and universities. Their new campus locations are being dubbed E&G Bistro and they offer a different menu from their traditional locations. E&G Bistros have a smaller cold sandwich menu, a smaller selection of soups, and the addition of hot sandwiches, which aren’t offered at their regular restaurants.

Over the summer of 2015, Erbert & Gerbert’s opened E&G Bistros in 8 new campus locations. With their new success in a non-traditional location, Erbert & Gerbert’s hopes to open E&G Bistros in hospitals, airports, military bases, and stadiums in the near future.

On the Pulse of Consumer Needs

Though the company never intended to open locations on college campuses, they’ve come to embrace the college student demographic. In summer 2015, Erbert & Gerbert’s launched their EasyGo program, a grab ‘n’ go style concept aimed at college students.

The company developed sandwiches and salads that were easy to package and would hold up well in cold display cases. In addition to sandwiches and salads, the EasyGo coolers will offer Erbet & Gerbert’s cookies and chips.

Though the company encourages interested parties to invest in its branded cooler, locations can re-brand existing coolers that meet the company’s specifications. The University of Tennessee – Health Science Center was the first to implement the EasyGo, but other colleges are quickly joining the program.

First Year on Entrepreneur Magazine’s Franchise 500

Though Erbert & Gerbert’s Sandwich Shop has been around for more than 20 years, it’s been a small operation with less than 100 total locations. 2016 was the first time in at least 6 years that Erbert & Gerbert’s has ranked on Entrepreneur Magazine’s Franchise 500 list. They had a decent showing on the list, landing at No. 335.

Section II – Estimated Costs

  • Please click here for detailed estimates of Erbert & Gerbert’s 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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