In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the World of Beer franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a World of Beer 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 World of Beer franchise, based on Items 5 and 6 of the company’s 2018 FDD
- Section IV – Number of franchised and company-owned World of Beer 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 World of Beer’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:
- 2017 average sales of bottled beer; draft beer; spirits; wine; other beverages; food; loyalty, merchandise, and other items; and total sales for the 16 World of Beer Restaurants owned and operated by the franchisor’s affiliates (collectively, the “Company Restaurants”) that were open and operating for at least 12 full months as of December 24, 2017
- 2017 average, median, high, and low total sales for the 39 franchised World of Beer Restaurants, which served the brand’s food menu, that were in operation for at least 12 full months as of December 24, 2017
Section I – Background Information
14 Things You Need to Know About the World of Beer Franchise
Rebranding as Chain Gets Ready for Future Growth
1. During the first quarter of 2018, World of Beer rebranded as World of Beer Bar & Kitchen. The company’s president and CEO, Paul Avery, who purchased a controlling interest in the company in 2013, said that World of Beer needed to rebrand to stay ahead of its competition.
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2. Avery also said that as a chain that serves an extensive 500-plus beer selection, World of Beer had to make changes to survive the growing hyper-local craft beer trend. Avery harnessed the company’s resources to widen its business model and appeal to customers in ways it hadn’t before. This multi-pronged process took time to mature, and these initiatives are starting to pay off.
3. In 2017, World of Beer opened six new locations and now has restaurants in 20 states and three countries. Also last year, system-wide sales topped $100 million. At least 12 new units are expected to open by the end of 2018. At the time of the press release in April 2018, World of Beer said that it had plans to open locations in new markets such as Indianapolis; Owings Mills, Maryland; Tuscaloosa, Alabama; California; and Louisiana.
4. Internationally, World of Beer aims to open three to four additional locations in South Korea. World of Beer also signed a deal in India, and there’s commitment from a Beijing partner to build 15 locations. Shanghai also has plans to expand. Avery added, “We think World of Beer presents a significant growth vehicle for domestic and international development. We’ve defined the footprint, the investment level, and the unit economics.”
5. Twenty-one of World of Beer’s 65 locations are company operated. This includes the acquisition of five franchised units in the last two quarters. In 2018, about 30 percent of World of Beer’s growth will be company financed.
6. As the new branding suggests, World of Beer has enacted widespread changes. According to Avery, “We continue to have more people enter the craft beer world. It’s become a very crowded field. Craft beer has become quite ubiquitous in the industry. To be successful in the craft beer world, you really need to lead with quality and innovation. And if you’re not leading with those attributes, you’re just not going to be around very long.”
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7. In the past two years, World of Beer has also featured a lunch menu focusing on value and speed, including a 5-ounce snifter of beer for $2.50. There are new items, like The Cali Bowl with seared tuna, blackened steak, or beer-battered shrimp; Bibimbap; chicken wings; salads; flatbreads; burgers; and more. Avery said certain World of Beer locations actually serve a lot of beer during the lunch daypart, which is unique from other concepts he’s worked on.
8. In the first quarter of this year, the World of Beer Bar & Kitchen branding arrived in signage and digital messaging. The branding has been updated across the company’s social media platforms and is in the process of physically flipping over nationwide.
9. Avery said, “There was some brand confusion of is this a beer takeout place only. Do they serve food? By adding that bar and kitchen it more clearly identifies who we are. Customers are using us differently now. It’s not so much for happy hour drink and then they go somewhere else for dinner. They’ll come to us in a group and have happy hour drinks and then have some food while they’re there or stay for dinner afterward. It’s broadened our appeal.”
New Chief Financial Officer and Vice President of Marketing
10. In early March 2018, World of Beer Bar & Kitchen named Kevin MacCormack as the company’s new chief financial officer. In the same announcement, World of Beer said that it also appointed James Buell as vice president of marketing. MacCormack was most recently CFO at Intelident Solutions Inc., a dental technology company, and was previously a managing director at Raymond James & Associates, the investment banking firm. Buell was most recently senior director of global brand marketing at Hard Rock International.
11. Paul Avery, president and CEO of World of Beer Franchising, said, “World of Beer is thrilled to welcome both Kevin and James as valuable new members to our leadership team. We look forward to leveraging their extensive experience and skills as we continue to experience aggressive growth in the WOB business, domestically and abroad.”
12. World of Beer Bar & Kitchen, formerly just World of Beer, was founded in 2007 by Scott Zepp and Matt LaFon in Tampa, Florida. World of Beer is a chain of restaurants with each location selling 500 different types of beer as well as typical bar food like burgers, wings, sandwiches, and steaks. Zepp and LaFon wanted to create a welcoming place where friends could gather to enjoy craft beers, good food, sporting events, and live music.
13. After the success of the first World of Beer location, people kept inquiring about additional locations. In 2010, Zepp and LaFon partnered with Ben Novello, former president of Outback Steakhouse, and Jim Pollard, former executive of Outback Steakhouse, to franchise the World of Beer concept. Since then, World of Beer Bar & Kitchen has continued to grow across the United States as well as internationally.
Entrepreneur’s Franchise 500
14. World of Beer did not rank on Entrepreneur’s 2018 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of World of Beer 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 World of Beer’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: 57
- Outlets at the End of the Year: 61
- Net Change: +4
- Outlets at the Start of the Year: 61
- Outlets at the End of the Year: 57
- Net Change: -4
- Outlets at the Start of the Year: 57
- Outlets at the End of the Year: 40
- Net Change: -17
- Outlets at the Start of the Year: 8
- Outlets at the End of the Year: 17
- Net Change: +9
- Outlets at the Start of the Year: 17
- Outlets at the End of the Year: 17
- Net Change: 0
- Outlets at the Start of the Year: 17
- Outlets at the End of the Year: 22
- Net Change: +5
Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis
Part 1 – Annual Sales Information for Company Restaurants for 2017
- The following chart shows certain information regarding annual sales of 16 World of Beer Restaurants owned and operated by the franchisor’s affiliates (collectively, the “Company Restaurants”) that were open and operating for at least 12 full months as of December 24, 2017.
- “Sales” means all gross revenue derived from sales of products and services to customers of the Restaurant, but excluding sales, use, or service taxes; customer refunds, adjustments, credits, and allowances.
- The Company Restaurants that meet this criteria are located, and began offering a food menu, as follows:
- Brandon, Florida – began offering a food menu in 2014
- Pensacola, Florida (Palafox) – began offering a food menu in 2014
- Tampa, Florida (Westchase) – not offering a food menu
- Tampa, Florida (South Tampa) – began offering a food menu in 2015
- Ft. Myers, Florida (Ft. Myers II) – began offering a food menu in 2015
- Destin, Florida – began offering a food menu in 2015
- Fort Worth, Texas – began offering a food menu in 2015
- Tampa, Florida (Fowler) – began offering a food menu in 2015
- College Station, Texas – began offering a food menu in 2015
- New Orleans, Louisiana – began offering a food menu in 2015
- Fayetteville, North Carolina – began offering a food menu in 2015
- Louisville, Kentucky – began offering a food menu in 2015
- Greensboro, North Carolina – began offering a food menu in 2015
- Augusta, Georgia – began offering a food menu in 2016
- Hilton Head, South Carolina – began offering a food menu in 2016
- Tampa, Florida (International) – began offering a food menu in 2016
- The Company Restaurants receive substantially the same services as those the franchisor offers to new franchisees. However, 14 of these Company Restaurants receive centralized accounting, financial, and management services from the franchisor for a fee.
- The franchisor compiled the yearly sales information from information developed from its point-of-sale system. The sales figures presented below are based on the accrual basis of accounting and may not conform to generally accepted accounting principles. Neither the franchisor nor an independent certified public accountant has independently audited or verified the information. This information may not be representative of the sales of Company Restaurants in any other years.
- Certain fees you pay to the franchisor under the Area Development Agreement and Franchise Agreement and other differences between the expenses of Company Restaurants and franchised Restaurants are not reflected in the charts below. These fees and expenses include, for example, development fees, initial franchise fees, and royalty fees. In addition, interest expense will be incurred if you finance any part of the initial investment.
- All of the franchisor’s affiliates paid advertising contributions during the applicable periods presented below. WOB Palafox, WOB Westchase, WOB Destin, WOB New Orleans, WOB Louisville, WOB Greensboro, and WOB Hilton Head did not pay royalties during the applicable periods presented below. WOB Brandon, WOB South Tampa, WOB Ft. Myers II, WOB Forth Worth, WOB Fowler, WOB College Station, WOB Fayetteville, WOB Augusta, and WOB International did pay royalty fees.
August, GA (Opened May 2016)