In this FDD Talk 2017 post, you’ll learn the following:
- Section I – Background information on the Charleys Philly Steaks franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Charleys Philly Steaks 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 Charleys Philly Steaks franchise, based on Items 5 and 6 of the company’s 2017 FDD
- Section IV – Presentation and analysis of Charleys Philly Steaks’ financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
- 2016 average gross sales, median sales, and range of gross sales for the 409 franchised and 47 company-owned Charleys Philly Steaks Restaurants that were open during the entire 2016 calendar year, grouped according to venue type (military bases, airport, mall food court, strip center, and all)
- 2016 average gross sales, median sales, and range of gross sales for the 409 franchised Charleys Philly Steaks Restaurants that were open during the entire 2016 calendar year, grouped according to venue type (military bases, airport, mall food court, strip center, and all)
- 2016 average gross sales, median sales, and range of gross sales for the 47 company-owned Charleys Philly Steaks Restaurants that were open during the entire 2016 calendar year, grouped according to venue type (mall food court, strip center, and all)
Section I – Background Information
12 Things You Need to Know About the Charleys Philly Steaks Franchise
New Menu Items
1. At the start of June, Charleys Philly Steaks introduced its seasonal summer menu item, a Sweet Heat BBQ Steak Philly. The new sandwich was offered as a value-price combo with Charleys’ famous fries for a limited time until July 30.
2. The Sweet Heat BBQ Steak Philly features a rich and sweet barbeque sauce with a cayenne-pepper kick. The steak is grilled fresh to order with melted provolone cheese, sliced onions, and crunchy pickles, and topped with more Sweet Heat BBQ sauce. Jon Quinn, VP of Marketing for Charleys Philly Steaks, said that the new Sweet Heat BBQ Steak Philly “screams summertime” and is a sandwich that customers will love.
3. Before launching the new Sweet Heat BBQ Steak Philly, Charleys unveiled its new Smoky Chipotle Fries on March 13. The limited-edition fries were available until May 14. The Smoky Chipotle Fries featured Charleys’ famous fries cooked to order, topped with bacon bits, shredded cheddar cheese, warm cheddar cheese sauce, chipotle sauce, and fresh chives.
4. According to Quinn, Charleys is finding great success with its snacking options like its Loaded and Gourmet Fries, so the restaurant is focused on offering new options in this category. While the Smoky Chipotle Fries was the brand’s first limited-time offering for 2017, its release followed the success of the Double Bacon Potato Skin Fries and Nacho Deluxe Fries in 2016.
Testing Chicken Fingers
5. Although Charleys Philly Steaks is known for its steak sub sandwiches, in late 2016, the chain began testing chicken fingers at two new freestanding test restaurants in the Columbus, Ohio area. Charley Shin, founder of Charleys Philly Steaks and CEO of its parent company Gosh Enterprises, Inc., says that the company knows that Philly cheesesteaks have a limited appeal and that the chain needed something broader to attract more customers.
6. Chicken fingers are available in combos of three, four, or six, ranging in price from $5.99 to $8.99, plus three levels of party packs, aimed at families or larger gatherings, from $17.99 to $47.99. The combos also include a side of coleslaw, fries, a piece of toast, and a choice of seven different dipping sauces.
7. At the two new restaurants, the chicken fingers have been given star billing, alongside Charleys sandwiches, on the signage out front and in the décor. Quinn said that Charleys considered adding chicken wings to the menu but noted that chicken wing prices are more volatile than tender prices and that the wing market is oversaturated.
8. Quinn believes that there is room in the chicken tender market for Charleys as its biggest chicken tender competitors Louisiana-based Raising Cane’s Chicken Fingers and Georgia-based Zaxby’s aren’t widespread. Shin is also hoping that the chicken fingers attract Millennial customers who “want meals that are clean and portable.”
9. Charleys Philly Steaks was founded in 1986 by Charlie Shin in Columbus, Ohio. After tasting a Philly Cheesesteak sub for the first time in California, Shin convinced his mother to sell her Japanese/Korean restaurant and buy “Charleys,” a small restaurant across the street from the Ohio State University campus.
10. One of the first things Shin did was to turn the grill around to face the customer so they could always see their food being cooked, which is now a trademark of the Charleys Philly Steaks chain.
11. Shin began franchising in 1991 and today there are over 550 Charleys Philly Steaks locations in the U.S. and 16 countries including Canada, Brazil, Dominican Republic, Germany, Guam, Italy, Iraq, Japan, Korea, Kuwait, Mauritius, Panama, Poland, Qatar, Saudi Arabia, United Kingdom, United Arab Emirates, and Venezuela.
Entrepreneur’s Franchise 500
12. Charleys Philly Steaks has appeared on Entrepreneur’s annual Franchise 500 list every year in the past decade. The company’s highest rank was No. 91 in 2013, while its lowest rank was No. 153 in 2008. Charleys also ranked on Entrepreneur’s 2008 Top Global Franchises list at No. 123.
Section II – Estimated Costs
- Please click here for detailed estimates of Charleys Philly Steaks franchise costs, based on Item 7 of the company’s 2017 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Charleys Philly Steaks’ 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
- The following tables present information about the historic annual sales of 456 Charleys Restaurants that were open during the entire 2016 calendar year.
Part 1 – Statement of Average Gross Sales for Company-Owned and Franchised Restaurants 2016
- There were 55 company-owned Restaurants and 436 franchised Restaurants as of December 31, 2016.
- The Statements of Average Gross Sales consist of the average annual Gross Sales of 47 company-owned Restaurants and 409 franchised Restaurants that were open during the entire 2016 calendar year.
- The Statements of Average Gross Sales exclude the results from: (1) 8 company-owned Charleys Philly Steaks Restaurants that were not open during the entire 2016 calendar year; (2) 27 franchised Charleys Philly Steaks Restaurants that were not open during the entire 2016 calendar year; and (3) one company-owned Charleys Chicken Fingers & Cheesesteaks Restaurant that was not open during the entire 2016 calendar year.
- The Gross Sales of franchised Restaurants were derived from unaudited financial reports submitted by franchisees for the purpose of computing royalty fees.
- The franchisor compiled the Gross Sales of company-owned Restaurants on the basis of generally accepted accounting principles consistent with those included in its annual audited consolidated financial statements, consistently applied. The information presented is unaudited. All company-owned Restaurants use the same accounting methods and system.
- This financial performance representation does not reflect the costs of sales, operating expenses, or other costs or expenses that must be deducted from the Gross Sales figures to obtain your net income or profit.