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FDD Talk 2017: What You Need to Know About the Smashburger Franchise Opportunity (Financial Performance Analysis, Costs and Fees)

by Franchise Chatter on June 19, 2017

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



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Smashburger Photo by Average Jane

In this FDD Talk 2017 post, you’ll learn the following:

  • Section I – Background information on the Smashburger franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Smashburger franchise, based on Item 7 of the company’s 2017 FDD
  • Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Smashburger franchise, based on Items 5 and 6 of the company’s 2017 FDD
  • Section IV – Presentation and analysis of Smashburger’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
  • 2016 average and median gross sales for the 293 Mature Traditional Smashburger Restaurants (188 affiliate-owned and 105 franchised) that were in operation for at least one year as of January 1, 2017
  • 2016 average and median gross sales for the 16 Mature Special Venue Smashburger Restaurants (1 affiliate-owned and 15 franchised) that were in operation for at least one year as of January 1, 2017
  • 2016 average and median gross sales, cost of goods sold, gross profit, labor costs, and gross profit less labor costs for the 188 affiliate-owned Mature Traditional Smashburger Restaurants that were in operation for at least one year as of January 1, 2017

Section I – Background Information

15 Things You Need to Know About the Smashburger Franchise

Adding Turkey to National Menu

1.  In late May, Smashburger said that turkey burgers will be added to the menu alongside its existing line of burgers. The new turkey burger is the fourth protein type on the menu along with fresh, never frozen beef, all white-meat chicken, and vegetarian black bean burger options.

CEO Steps Down After Less Than a Year



2.  In December 2016, Michael Nolan stepped down as CEO of Smashburger less than a year after accepting the position. Nolan had only served as Smashburger’s CEO since April 2016 after Scott Crane resigned as President and CEO. Tom Ryan, co-founder of Smashburger, has stepped in as CEO, the fourth person to hold the title since 2013.

3.  According to a statement released by Smashburger, Ryan “is re-engaging with the company to ensure its continued passion for great food and great guest experience.” Prior to stepping in as CEO, Ryan had begun to take a more active, day-to-day role at Smashburger – he was named the company’s Chief Brand Officer in May 2016.

4.  Smashburger co-founder Rick Schaden said “there is no better person than [Ryan] to guide the evolution of the Smashburger brand as [it] enters the next phase of growth at home and abroad.”

New Franchise Agreements

5.  Over the summer of 2016, Smashburger announced new franchise deals which will bring 20 new restaurants to key markets in the East Coast over the next seven years.



6.  The franchise agreement with Robison Peck Group LLC, owned by Eric Robison and Charlie Peck, will bring 15 Smashburger restaurants to the Savanna and Atlanta, Georgia areas over the next seven years.

7.  The franchise agreement with PCM Food Services LLC, owned by Jerry Davis, will bring five restaurants to Broward County in Florida over the next four years.

Expanding Presence in Non-Traditional Locations

8.  In early 2016, Smashburger announced plans to add additional casino locations across the U.S. During the spring and fall of last year, Smashburger opened a location at the Harrah’s Laughlin Casino and another one at the Rio All-Suite Hotel & Casino Las Vegas, bringing the brand’s casino-based location count to four restaurants.

9.  Scott Crane, who was CEO of Smashburger at the time of the announcement, said that non-traditional locations such as casinos are an important part of the company’s rapid expansion across the country.

10.  Smashburger has adapted its menu at casino locations to offer variety, quality, and convenience to casino diners, including adding breakfast options to its lunch and dinner menu. Additionally, both new casino locations offer a variety of beer.

11.  Around the time of the casino locations announcement, Smashburger said the company also had plans to open two new locations at Denver International Airport in late 2016 and early 2017. The new Smashburger locations will be full-service restaurants that feature a full bar and a breakfast menu, in addition to Smashburger’s traditional lunch and dinner offerings.

Company History

12.  Smashburger was founded in 2007 in Denver, Colorado by Tom Ryan, Rick Schaden, and private equity firm Consumer Capital Partners. The restaurant was named after the technique of smashing a ball of ground beef on the grill to sear in the meat’s juices.

13.  Smashburger differs from the competition by offering localized burgers in each market — such as the Sin City for Las Vegas, Nevada — based on regional flavors.

14.  Smashburger began franchising in 2008 and today there are over 340 locations across the U.S. and abroad.

Entrepreneur’s Franchise 500

15.  Smashburger has ranked on Entrepreneur’s annual Franchise 500 list three times in the last decade. The company’s highest rank was No. 203 in 2013, while its lowest rank was No. 265 in 2012. The last time Smashburger appeared on Entrepreneur’s list was in 2014 at No. 205.

Section II – Estimated Costs

  • Please click here for detailed estimates of Smashburger franchise costs, based on Item 7 of the company’s 2017 FDD (updated).

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

  • Please click here for detailed information on Smashburger’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.

Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis



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