In this FDD Talk 2017 post, you’ll learn the following:
- Section I – Background information on the BGR The Burger Joint franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a BGR The Burger Joint 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 BGR The Burger Joint franchise, based on Items 5 and 6 of the company’s 2017 FDD
- Section IV – Presentation and analysis of BGR The Burger Joint’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
- 2016 actual and average revenue for the 18 BGR The Burger Joint restaurants (10 affiliate-owned and 8 franchised) that were open and operating during the entire 2016 calendar year and were open as of the Issue Date of the 2017 Disclosure Document
- 2016 actual and average cost of goods sold and labor expenses for the 18 BGR The Burger Joint restaurants that were open and operating during the entire 2016 calendar year and were open as of the Issue Date of the 2017 Disclosure Document
- 2016 average, high, and low occupancy cost per square foot for the 18 BGR The Burger Joint restaurants that were open and operating during the entire 2016 calendar year and were open as of the Issue Date of the 2017 Disclosure Document
Section I – Background Information
16 Things You Need to Know About the BGR The Burger Joint Franchise
Rebranding and Redesign
1. Since Chanticleer Holdings’ acquisition of BGR The Burger Joint in 2015, the brand has been heading in a new direction, including a new brand name (BGR – Burgers Grilled Right), a completely new restaurant design, and an enhanced menu that retains BGR’s premium quality.
2. All new BGR restaurants will open under the new name and feature the updated design, while existing BGR locations will eventually be remodeled and transitioned to the new branding. While BGR undergoes its rebranding, some existing BGR The Burger Joint restaurants will serve the new menu before remodeling starts.
3. The redesigned restaurants will feature an open flame grill that will serve as the centerpiece of each location where customers can watch their burgers being made. Each location featuring the new design will have a “GrillMaster” who is trained in open flame, cooked-to-temperature grilling.
4. The new menu emphasizes the custom-made, grilled-to-order concept as customers can now choose the doneness of their burger – from rare to well done. BGR’s revamped menu also includes healthier options such as a scratch-made veggie burger, sushi-grade Ahi tuna filet, a turkey burger, and specialty salads.
5. BGR is expanding its footprint, with the following markets currently under development: Maryland, New York, New Jersey, District of Columbia, Virginia, South Carolina, Georgia, Tennessee, Utah, Kuwait, Oman, Saudi Arabia, United Arab Emirates, and Qatar.
6. In June, BGR announced that it would be opening a new location in Fairfax, Virginia (in the Washington, D.C. area) and its second New Jersey restaurant. The location in Fairfax is the first to feature BGR’s new design and will be located in the Mosaic District area of Fairfax.
7. The second New Jersey location will be opened in the town of Bloomfield and will be owned and operated by SanFam LLC, which also owns the other BGR in New Jersey.
Featured Specialties Rotated Monthly
8. To keep things fresh, BGR has a year-long rotating menu of specialty burgers and shakes, with each month featuring a different specialty item. If a specialty burger becomes popular enough, BGR might add it to the regular menu.
9. BGR’s specialty burgers include: In Gauc We Trust; The Reuben; Turkey Cobb; Hawaiian; The Gobbler; Caprese; Buffalo Blue; Red, White, and Blue; Chili Mac; AuPoivre; Sriracha Me Crazy; Triple D; and Korean BBQ.
10. The specialty milkshakes include flavors like Irish Cream, Cherry Blossom, Blueberry, Key Lime, Gingerbread, Twinkie, Pumpkin Pie, Coffee and Donuts, Apple Pie, Orange Dreamsicle, Mint Chip, Egg Nog, Pina Colada, Strawberry, Peach, and Chocolate Covered Strawberry.
11. Each location features a different special, and customers can check their local BGR menu at BGR’s website.
12. BGR The Burger Joint was founded in 2008 by Mark Bucher in Bethesda, Maryland. Bucher opened BGR because he wanted to sell gourmet, steakhouse-style burgers in a casual setting. To achieve this, Bucher worked with Danny Alahouzos, co-owner of Prime Foods, to create a custom hamburger blend for BGR.
13. Although the premium burger was a hit with critics and the public, BGR’s investors wanted to grow the brand and start franchising outside of Maryland. Bucher parted ways with Prime Foods and turned to a large beef grinding facility in New York to meet BGR’s growing needs.
14. At this time, Bucher felt that he was losing control over the quality of BGR’s burgers and in 2014 he sold the company to Chanticleer Holdings, Inc., the parent company of Hooters, Just Fresh, American Burger Company, and Little Big Burger.
15. BGR’s growth has remained moderate since the first restaurant opened in 2008. There are now 25 locations in the U.S., Kuwait, and Oman.
Entrepreneur’s Franchise 500
16. Although BGR has been operating since 2008, the company has not yet appeared on Entrepreneur’s annual Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of BGR The Burger Joint 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 BGR The Burger Joint’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
- This Item sets forth historical revenue and certain operating expense information for the 18 Restaurants that:
- (i) operate utilizing the Proprietary Marks and System in connection with a business that is substantially similar to the business being offered in the Disclosure Document;
- (ii) were open and operating during the entire 2016 calendar year (the “Measurement Period”); and
- (iii) were open as of the Issue Date of the Disclosure Document (collectively, the “Representative Restaurants”).
- Of these 18 Representative Restaurants that were open during the entire Measurement Period, please note that 10 of these locations are owned and operated by one of BGR’s affiliates (each, an “Affiliate-owned Restaurant”) and 8 of these locations are owned by BGR’s franchisees (each, a “Franchised Restaurant”) as of the Issue Date of the Disclosure Document.
- During the Measurement Period, there were 10 Affiliate-owned Restaurants and 11 Franchised Restaurants. BGR has not excluded any Affiliate-owned Restaurants. BGR has excluded the information of 2 Franchised Restaurants that were not open and operating during the entire Measurement Period, and 1 Franchised Restaurant that closed during the Measurement Period.
Part 1 – Revenue and Select Expenses for the Period From January 1, 2016 to December 31, 2016
- The table below presents the following information:
- (i) the Revenue for each of the 18 Representative Restaurants over the Measurement Period; and
- (ii) the Cost of Goods Sold and Labor Expense over the same Measurement Period, disclosed as a percentage of each Representative Restaurant’s Revenue, for those Representative Restaurants that timely provided BGR with this information.
- “Revenue” includes revenue from retail sales and catering sales achieved by each Representative Restaurant during the Measurement Period, net of sales taxes.
- “Cost of Goods Sold” is defined as the cost of food, beverages, alcohol, desserts, paper goods, and cleaning supplies. Please note that all but 4 of the Representative Restaurants offer and serve alcohol.
- “Labor Expense” includes amounts paid to employee and management personnel over the Measurement Period, but excludes any (a) payroll taxes, benefits, training, and recruiting costs, or (b) salary or draw for the owner of the Representative Restaurant at issue.
Restaurant No. 1