In this FDD Talk 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 2018 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 2018 FDD
- Section IV – Number of franchised and company-owned Charleys Philly Steaks 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 Charleys Philly Steaks’ financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:
- 2017 average gross sales, median sales, and range of gross sales for the 422 franchised Charleys Philly Steaks Restaurants that were open during the entire 2017 calendar year, grouped according to venue type (military bases, airport, mall food court, strip center, and all)
- 2017 average gross sales, median sales, and range of gross sales for the 52 company-owned Charleys Philly Steaks Restaurants that were open during the entire 2017 calendar year, grouped according to venue type (mall food court, strip center, and all)
Section I – Background Information
11 Things You Need to Know About the Charleys Philly Steaks Franchise
Launches Combo for Charity
1. Around the end of February 2018, Charleys Philly Steaks launched its Combo Donation Program to increase its support for children in need. Through the new program, 20 cents from the sale of every combo meal will go toward supporting children through the Charleys Kids Foundation, which was founded in 2010 by the restaurant’s founder Charley Shin. The foundation partners with community-based non-profit organizations that provide at-risk children with educational resources, food, and mentorship.
2. According to Elias Moaikel, senior vice president of Charleys Philly Steaks, “The Charleys Kids Foundation gives Charleys’ employees and franchisees a platform to achieve our vision: to strengthen our neighbor. The Combo Donation Program is strongly supported by our franchise partners, which enables many lives to be touched with help from not only our stores, but also our customers. They can enjoy a Combo Meal at Charleys and feel good that a portion of their everyday purchase is supporting efforts that will be cycled back into their local community.”
3. The new Combo Donation Program will allow the Charleys Kids Foundation to increase support of local organizations supporting at-risk children and youth. The foundation’s 2018 goal is to raise $3 million through the Combo Donation Program and existing counter coin boxes.
Adds New Sandwich to Core Menu
4. For the first time since 2012, Charleys Philly Steaks has added a new sandwich to its core offering with the debut of the Jalapeno Cheesesteak in early May 2018. The Jalapeno Cheesesteak adds a kick to Charleys’ classic Philly Cheesesteak and features 100 percent USDA choice steak, grilled with onions and diced jalapenos, and topped with melted all-natural provolone. The new sandwich is now available at all domestic Charleys Philly Steaks locations, as well as Army and Air Force Exchange base locations around the world.
5. David Kusz, director of marketing for Charleys Philly Steaks, said, “We know that our customers, especially millennials, enjoy an added element of spice with their meal. Our Jalapeno Cheesesteak offers the perfect amount of heat without overpowering the other layers of flavor, making it an exciting addition to our already robust menu.”
Plans to Open Several Locations in the San Antonio, Texas Area
6. Charleys Philly Steaks continues to expand in new and existing markets across the United States. One of Charleys’ newest restaurants opened at the end of May 2018 at the Rolling Oaks Mall food court in Northeast San Antonio. This latest location is the first of three new Charleys Philly Steaks planned for the area.
7. Later in 2018, two more Charleys restaurants will open at the Ingram Mall and Rivercenter Mall. The three new locations will bring San Antonio’s Charleys count up to seven. The brand already operates locations at The Forum, North Star Mall, Lackland Air Force Base, and San Antonio International Airport.
8. Charleys Philly Steaks (formerly Charley’s Steakery and Charley’s Grilled Subs) was founded in 1986 by Charley Shin, a Korean immigrant who has been living in the United States since he was 13 years old, near the campus of Ohio State University in Columbus, Ohio. Shin was inspired to make his own version of the iconic Philly Cheesesteak sandwich after he first tasted the sandwich during an accidental detour to Philadelphia on his trip to New York.
9. After falling in love with the Philly Cheesesteak, Shin decided to mimic the recipe when he returned home to Columbus. It took several tries for Shin to perfect his version, but once he did, his mother agreed to loan Shin the money from her life savings to open the first Charleys at his alma mater.
10. The first Charleys was a huge hit and franchising started in 1991 to keep up with demand. Despite the restaurant chain’s success, the business did not turn a profit during its first ten years. However, Shin saw the initial losses as an investment and his persistence has paid off as Charleys has become a large international franchise. Today, Charleys continues to grow and is located in nearly every state and in over 20 countries.
Entrepreneur’s Franchise 500
11. Charleys Philly Steaks ranked No. 160 on Entrepreneur’s 2018 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Charleys Philly Steaks 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 Charleys Philly Steaks’ 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: 400
- Outlets at the End of the Year: 423
- Net Change: +23
- Outlets at the Start of the Year: 423
- Outlets at the End of the Year: 435
- Net Change: +12
- Outlets at the Start of the Year: 435
- Outlets at the End of the Year: 455
- Net Change: +20
- Outlets at the Start of the Year: 51
- Outlets at the End of the Year: 48
- Net Change: -3
- Outlets at the Start of the Year: 48
- Outlets at the End of the Year: 55
- Net Change: +7
- Outlets at the Start of the Year: 55
- Outlets at the End of the Year: 55
- Net Change: 0
Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis
- The following tables present information about the historic annual sales of 474 Charleys Restaurants that were open during the entire 2017 calendar year.
Part 1 – Statement of Average Gross Sales for Company-Owned and Franchised Restaurants 2017
- There were 55 company-owned Restaurants and 455 franchised Restaurants as of December 31, 2017.
- The Statements of Average Gross Sales consist of the average annual Gross Sales of 52 company-owned Restaurants and 422 franchised Restaurants that were open during the entire 2017 calendar year.
- The Statements of Average Gross Sales exclude the results from: (1) two company-owned Charleys Philly Steaks Restaurants that were not open during the entire 2017 calendar year; (2) 33 franchised Charleys Philly Steaks Restaurants that were not open during the entire 2017 calendar year; and (3) one company-owned Charleys Chicken Fingers & Cheesesteaks Restaurant that was not open during the entire 2017 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.