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

by Franchise Chatter on September 14, 2016

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



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Capriotti's Sandwiches

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

  • Section I – Background information on the Capriotti’s franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Capriotti’s franchise, based on Item 7 of the company’s 2016 FDD
  • Section III – Presentation and analysis of Capriotti’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:
  • 2015 average and median unit volume for all franchised Capriotti’s Restaurants open during all of 2015, all franchised Capriotti’s Restaurants open 2 years or less as of December 31, 2015, all franchised Capriotti’s Restaurants open more than 2 years as of December 31, 2015, and all franchised Capriotti’s Restaurants open more than 10 years as of December 31, 2015, respectively
  • 2015 average and median unit volume for all affiliate-owned Capriotti’s Restaurants open during all of 2015, all affiliate-owned Capriotti’s Restaurants open 2 years or less as of December 31, 2015, all affiliate-owned Capriotti’s Restaurants open more than 2 years as of December 31, 2015, and all affiliate-owned Capriotti’s Restaurants open more than 10 years as of December 31, 2015, respectively
  • 2015 average total sales, total cost of goods sold, store level salary, store level bonus – salary, payroll and related, prime cost, operating expense, rent, management fee (royalty), marketing fees – national, marketing fees – coop, total non-controllable expense, and EBITDA for the Capriotti’s Restaurant in Las Vegas Downtown Summerlin and the 11 affiliate-owned Capriotti’s Restaurants operated for a full year in 2015, respectively

Section I – Background Information

It was 1976 when siblings Lois and Alan Margolet opened up a sandwich shop in Wilmington, Delaware that they named after their grandfather, Philip Capriotti. This was an act of bravery in the Little Italy neighborhood of Wilmington, which already had seven different sandwich shops within a three-block area.

What they needed was some kind of gimmick to set themselves apart from all the other sandwich joints. They settled on in-store roasting of whole, fresh turkeys overnight in order to pull fresh turkey meat each morning for their sandwiches.

They started franchising the concept in 1991, and then in 2008, sold the company to an investment group headed up by Ashley Morris. He had been a franchisee of the chain since 2004 in Las Vegas, which then became the company’s new headquarters.



The number of locations had its most recent peak in 2014 with 105 locations (9 of which were company-owned). That number has fallen since then and currently stands at 90, 13 of which are company-owned.

The roasting of whole turkeys overnight in each store is a tradition that continues to this day, and that very first Capriotti’s location is still there in Wilmington. Here’s how Capriotti’s keeps customers coming back for more in the highly competitive sandwich segment of fast-casual dining:

The Menu

The core offering of signature sandwiches (mostly submarine-style) includes their best-seller, The Bobbie (homemade turkey, cranberry sauce, stuffing, and mayo), Capastrami (hot pastrami, Swiss cheese, Russian Dressing, and coleslaw), Cole Turkey (slow-roasted, homemade turkey, provolone cheese, Russian dressing, coleslaw, and mayo), Slaw Be Joe (homemade roast beef, Provolone cheese, Russian dressing, and coleslaw), and the Cran-Slam Club (homemade turkey, cranberry sauce, ham, mayo, and lettuce on sliced white or wheat bread).

There are an additional 19 other cold and hot subs and sandwiches and 6 different salads that round out the menu. The coleslaw and meatballs are also made fresh daily in each store.

Signs of Struggle?

Back in 2012, when Morris was still a relatively new CEO to the company, there were 60+ locations, and he spoke of opening 500 new locations by 2015. As noted above, however, the number of locations has declined recently to only 90, which seems to stem in part from the closure of a number of locations in Orange County, CA and Dallas, TX all operated by the same franchisee, KCI Investments, with no information available as to what drove the closures.

Another troubling sign is the company website’s press page, which was formerly a busy place with lots of press releases and news postings. With recent postings being just two from the first four months of 2015, this kind of inactivity isn’t usually a good sign.

There’s also been a recent, slight uptick in the number of company-owned locations, which sometimes indicates a need to try and regain control of operations.

High-Tech Training

Capriotti’s takes a novel approach to training and learning how to improve. It utilizes Google Glass to film employee training videos from a first-person viewpoint. In addition, management trainees also use Google Glass during the busiest times so they can review the footage later and see where improvements can be made.

Section II – Estimated Costs

  • Please click here for detailed estimates of Capriotti’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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