In this FDD Talk 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 2018 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Capriotti’s franchise, based on Items 5 and 6 of the company’s 2018 FDD
- Section IV – Number of franchised and company-owned Capriotti’s outlets at the start of the year and the end of the year for 2015, 2016, and 2017, based on Item 20 of the company’s 2018 FDD
- Section V – Presentation and analysis of Capriotti’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:
- 2017 average, median, highest, and lowest unit volume for all franchised Capriotti’s Restaurants open during all of 2017, all franchised Capriotti’s Restaurants in “mature markets” as of December 31, 2017, all franchised Capriotti’s Restaurants open more than 2 years as of December 31, 2017, and all franchised Capriotti’s Restaurants open more than 10 years as of December 31, 2017, respectively
- 2017 average, median, highest, and lowest unit volume for all affiliate-owned Capriotti’s Restaurants open during all of 2017, all affiliate-owned Capriotti’s Restaurants in “mature markets” as of December 31, 2017, all affiliate-owned Capriotti’s Restaurants open more than 2 years as of December 31, 2017, and all affiliate-owned Capriotti’s Restaurants open more than 10 years as of December 31, 2017, respectively
- 2017 average and median total sales, prime cost, cost of goods sold, store level salary, store level bonus – salary, payroll and related expenses, operating expense, non-controllable expense, rent, royalty fee, national marketing fees, local marketing cooperative fees, and EBITDA for the 8 affiliate-owned Capriotti’s Restaurants operated for a full year in 2017
Section I – Background Information
12 Things You Need to Know About the Capriotti’s Sandwich Shop Franchise
Reports Impressive Growth in 2017
1. At the beginning of 2018, Capriotti’s Sandwich Shop reported that the company closed out 2017 with impressive growth. Capriotti’s said that it signed 50 franchise agreements last year and that franchise inquiries were up 300 percent from 2016 as a result of strategic initiatives in marketing and technology investment.
2. In 2017, Capriotti’s opened locations in new markets like Indianapolis, Nashville, and the Oso Blanca area in Las Vegas and has begun to receive international interest. Capriotti’s also reported double-digit increases in delivery and catering platforms in 2017 and expects to accelerate this growth throughout this year. For 2018, Capriotti’s also plans to continue its expansion into new and mature markets nationwide, in addition to select international markets.
3. David Bloom, Capriotti’s chief development officer, said, “Our proven franchise business model allows for tremendous potential growth nationwide. We’re committed to finding the right business-savvy franchise partners who are as passionate about Capriotti’s as we are to bring this unique, high-quality dining experience to their communities. Our passion to find the best and be the best is what drives the Capriotti’s family forward each and every day.”
Celebrates 25 Years in Las Vegas
4. Although Capriotti’s Sandwich Shop started out in Delaware, the company has been headquartered in Las Vegas, Nevada since 1993. June 2018 marks the 25th anniversary of Capriotti’s move to Las Vegas and the company wanted to celebrate not only this milestone, but also the fact that Capriotti’s has become a popular Las Vegas spot. In fact, Capriotti’s was recently named the 2018 “Best Sandwich in Vegas” by Nevada Public Radio’s Desert Companion magazine. For its 25th birthday in Las Vegas, Capriotti’s offered its famous “The Bobbie” sandwich for just $4 nationwide on June 13.
5. Ashley Morris, Capriotti’s CEO, said, “We are thrilled to be celebrating 25 years in our home market. Seeing Capriotti’s establish a loyal fan-base over the years has been the driving factor in the evolution of the brand and making it what customers know and love today. We pride ourselves in staying true to our roots with classic recipes and quality ingredients while continuously innovating to create a final product that our fans love and can continue to love for years to come.”
Continues Expansion in Southern California
6. Around the beginning of April 2018, Capriotti’s Sandwich Shop announced that it had signed a development agreement to bring three new restaurants to the northern Los Angeles County area, with the first location opening in Santa Clarita sometime in late summer. The second location will open in Valencia in early 2020 and the third will open that same year in Canyon Country. The new restaurants will be owned by Brenda Torres of adep Torres Enterprises, Inc. Torres will also serve as the director of operations.
7. Torres said, “Bringing Capriotti’s to the Santa Clarita Valley will provide a unique experience with its family feel and the variety of handcrafted foods. After spending the past 12 years at home to raise my children, I knew we needed a brand whose values aligned with ours. My husband fell in love with Capriotti’s on a business trip in Reno, Nevada, and after visiting the Culver City location to see what the buzz was about, I could tell this was the perfect fit.”
8. Capriotti’s Sandwich Shop was started in 1976 by Lois Margolet and her brother Alan in Wilmington, Delaware. The siblings named their new sandwich shop after their grandfather, Philip Capriotti, and opened the first location in the abandoned building beneath their apartment.
9. The Margolets lived in the Little Italy neighborhood of Wilmington, which was already saturated with sandwich shops. In order to stand out from the competition, the Margolets roasted fresh whole turkeys overnight and used the meat in Capriotti’s sandwiches.
10. Capriotti’s continued to grow in the area over the next decade and around 1987, the Margolets’ cousin Diane Rizzo joined the business. Rizzo opened additional locations in Delaware and franchising officially started in 1991.
11. In 2008, franchisees Ashley Morris, Jason Smylie, and a group of investors from Las Vegas bought Capriotti’s; Morris continues to serve as the company’s CEO. Under the new leadership, Capriotti’s has grown into a national franchise.
Entrepreneur’s Franchise 500
12. Capriotti’s Sandwich Shop ranked No. 259 on Entrepreneur’s 2018 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Capriotti’s franchise costs, based on Item 7 of the company’s 2018 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Capriotti’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2018 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 95
- Outlets at the End of the Year: 83
- Net Change: -12
- Outlets at the Start of the Year: 83
- Outlets at the End of the Year: 84
- Net Change: +1
- Outlets at the Start of the Year: 84
- Outlets at the End of the Year: 83
- Net Change: -1
- Outlets at the Start of the Year: 10
- Outlets at the End of the Year: 13
- Net Change: +3
- Outlets at the Start of the Year: 13
- Outlets at the End of the Year: 16
- Net Change: +3
- Outlets at the Start of the Year: 16
- Outlets at the End of the Year: 11
- Net Change: -5
Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis
- This historical financial performance representation discloses the average, median, and high/low annual gross sales of all franchised (a total of 78 in 2017) and affiliate-owned (a total of 11 in 2017) Capriotti’s Restaurants in the United States that were open and operating during all of 2017.
- It also discloses the average, median, and high/low annual gross sales during 2017 of (i) the franchised (a total of 52 in 2017) and affiliate-owned (a total of 11 in 2017) Capriotti’s Restaurants that operate in “mature markets” (defined in the tables); (ii) the franchised (a total of 71 in 2017) and affiliate-owned (a total of 10 in 2017) Capriotti’s Restaurants that had been open for more than 2 full years as of December 31, 2017; and (iii) the franchised (a total of 33 in 2017) and affiliate-owned (a total of 5 in 2017) Capriotti’s Restaurants that had been open for more than 10 years as of December 31, 2017.
- This financial performance representation does not include the results of 16 Capriotti’s Restaurants: 6 franchised Restaurants that opened during 2017 (and therefore were not open for the full calendar year), 8 franchised Restaurants that closed during 2017, and 2 franchised Restaurants that operate at non-traditional locations (one of which operates only seasonally and one of which operates less than 30 hours per week).
- This financial performance representation also contains the actual average and median partial operating financial statement for 2017 for 8 affiliate-owned and operated Capriotti’s Restaurants.
- The franchisor obtained the gross sales information for franchised Restaurants from sales reports submitted by franchisees. The franchisor has not independently audited that information.
- “Gross Sales” is defined in the Franchise Agreement as the total of all revenue derived from operating the Restaurant, whether from sales for cash or credit, and irrespective of collection, including sales of merchandise, products, and services, but excluding sales tax, proceeds from the sale of equipment not in the ordinary course of business, and franchisor pre-approved promotional discounts (provided physical evidence of the promotion/coupon is retained) and food purchased by employees for their own consumption as outlined in the Manual.
Part 1 – Sales Volume Information
2017 Results for All Franchised Restaurants Open During All of 2017