In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Nathan’s Famous franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Nathan’s Famous 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 Nathan’s Famous franchise, based on Items 5 and 6 of the company’s 2018 FDD

• Section IV – Number of franchised and company-owned Nathan’s Famous 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 Nathan’s Famous’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:

• 2017 average, median, high, and low gross sales for all domestic Nathan’s Famous restaurants, including franchised and company-owned restaurants, in enclosed malls, transportation hubs, entertainment venues, freestanding restaurants, amusement parks, and limited menu restaurants that were in operation for the company’s full fiscal year ended March 25, 2018

• 2017 average food costs, paper costs, and direct labor costs for three of the franchisor’s company-owned Nathan’s Famous restaurants that were operated for the company’s entire fiscal year ended March 25, 2018

Section I – Background Information

13 Things You Need to Know About the Nathan’s Famous Franchise

Launches New Restaurant Design

1.  In early August 2018, Nathan’s Famous introduced a contemporary new restaurant design that captures both the youthful energy and deep history of the brand. The new design, which touches everything from interiors, kitchen layout, and exteriors to menu boards, paper products, and crew uniforms, was formally unveiled on August 11. The new design was revealed at the grand opening of the new freestanding store at 1897 Del Prado Boulevard South in Cape Coral, Florida.

2.  Scott Harvey, executive vice president of Nathan’s Famous, said, “Nathan’s has spent the past 18 months working on a dynamic new rebranding effort that will appeal to our core customers and to a younger generation of guests. The new design honors our 102-year history while also expressing the excitement and future of the brand.”

3.  The color palette featured in the new design retains the trademark Nathan’s Famous green, but adds lighter tones of green that are complemented by more glass, chrome, and steel fixtures, and white brick. The newly-redesigned menu boards are fresh, clean, and contemporary, highlighting images of food to simplify the ordering process. Nathan’s will now serve its products on all-new branded paper products that focus on the brand message of “It’s our food that makes us famous” and mirror the new look.

4.  The new Cape Coral restaurant, a 3,000-square-foot freestanding unit with a drive thru, will offer the full Nathan’s Famous menu, including its world-famous beef hot dogs, crinkle-cut French fries, burgers, chicken, cheesesteaks, as well as Arthur Treacher’s seafood and more. Tables and seating areas will have charging stations for the convenience of customers, and the restaurant’s kitchen design has been updated to increase the speed of service within the restaurant and at the drive thru.

5.  The Cape Coral restaurant is also the first Nathan’s Famous location to feature the brand’s new team member uniforms, which match the contemporary look and feel of the restaurant. General Managers will wear button-down shirts, managers will wear golf shirts, and the crew will wear T-shirts with new hats and aprons to match today’s desire for comfort on the job.

Teams Up With Major League Baseball to Celebrate All-Star Week for Second Year

6.  In mid-July 2018, for the second consecutive year, Nathan’s Famous, the Official Hot Dog of Major League Baseball (MLB), joined MLB at All-Star Week for a wide range of baseball-themed festivities in Washington, D.C., including a special All-Star Hot Dog Exhibition at FanFest, the Nathan’s Famous Mobile Tour at PLAY BALL Park, and more.

7.  Nathan’s Famous helped close-out GEICO All-Star FanFest on Tuesday afternoon with the brand’s exclusive All-Star Hot Dog Exhibition, featuring former MLB stars and current MLB Network personalities Cliff Floyd and Kevin Millar. Floyd and Millar ate side-by-side with some of Major League Eating’s (MLE) most awarded competitive eaters, including Hot Dog Eating World Champion Joey Chestnut and Women’s Hot Dog Eating Champion Miki Sudo.

8.  Just like the MLB All-Stars, the eaters were divided into National League and American League teams and went head-to-head to prove which team could consume more of Nathan’s Famous franks. In the end, it was the American League Eaters who were named the exhibition’s All-Stars, finishing 81 and a half hot dogs in just five minutes, to top off the day.

9.  Joey Chestnut, MLE’s reigning hot dog eating champion, said, “I was thrilled to participate in the Nathan’s Famous All-Star Hot Dog Exhibition again this year during FanFest. Getting to compete with a couple of MLB’s most popular personalities was a true treat for me as a fan. There’s no better way to enjoy a baseball game than with a premium quality hot dog like Nathan’s Famous, and the same goes for All-Star Week, too!”

6.  During All-Star Week, Nathan’s Famous also hosted the Yellow Color Zone during The Color Run MLB All-Star 5K, presented by Nike. Additionally, Nathan’s Famous Mobile Tour provided hot dogs to PLAY BALL participants at the opening night of PLAY BALL Park and sampled their all-natural beef franks to PLAY BALL Park attendees throughout the week.

7.  Michael Paribello, senior director of marketing for Smithfield Foods, parent company of Nathan’s Famous, said, “As the Official Hot Dog of MLB, Nathan’s Famous is thrilled to be back at one of the most fun and iconic celebrations of the season, MLB All-Star Week. Baseball and hot dogs go hand in hand, and after their big win at Tuesday’s exhibition, no one knows that better than the eight Major League Eaters!”

Company History

8.  Nathan’s Famous was started in 1916 as a nickel hot dog stand in Coney Island, New York by Polish immigrant Nathan Handwerker and his wife Ida Handwerker. Ida created the hot dog recipe, which is still used today, and seasoned it with her grandmother’s secret spice blend.

9.  Before opening the first Nathan’s Famous stand, Handwerker had worked at Feltman’s German Gardens restaurant, which also sold hot dogs. When Handwerker started Nathan’s Famous, he undercut Feltmans by selling hot dogs for 5 cents instead of the 10 cents that Feltmans was charging.

10.  Nathan’s Famous was immediately popular with many locals and celebrities. Over the next few decades, the popularity of Nathan’s Famous increased and more items were added to the menu, including a clam bar in 1946. Despite its immense success, Nathan’s Famous did not open a second location until 1955. A third restaurant was opened a decade later in Yonkers, New York.

11.  In 1972, Nathan’s Famous’s annual Fourth of July hot dog eating contest was held for the very first time. A year before that, a fourth Nathan’s Famous store opened in Times Square, New York City. With the four locations opened and succeeding, the Handwerker family sold Nathan’s Famous to a group of private investors in 1987.

12.  The group began franchising the Nathan’s Famous concept not long after and several new locations opened in New York and other states. Since then, Nathan’s Famous has continued to grow around the world and the company even sells branded products in major grocery stores across the U.S., Puerto Rico, the U.S. Virgin Islands, Guam, the Cayman Islands, and in 12 foreign countries.

Entrepreneur’s Franchise 500

13.  Nathan’s Famous did not rank on Entrepreneur’s 2018 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Nathan’s Famous 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 Nathan’s Famous’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

Franchised

2015

• Outlets at the Start of the Year:  139
• Outlets at the End of the Year:  133
• Net Change:  -6

2016

• Outlets at the Start of the Year:  133
• Outlets at the End of the Year:  129
• Net Change:  -4

2017

• Outlets at the Start of the Year:  129
• Outlets at the End of the Year:  123
• Net Change:  -6

Company-Owned

2015

• Outlets at the Start of the Year:  4
• Outlets at the End of the Year:  4
• Net Change:  0

2016

• Outlets at the Start of the Year:  4
• Outlets at the End of the Year:  4
• Net Change:  0

2017

• Outlets at the Start of the Year:  4
• Outlets at the End of the Year:  4
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis

• Please note that the information disclosed in this Item 19 only relates to Nathan’s Famous Restaurants, and not to Branded Menu Program Operations or Nathan’s Famous Co-Branded Operations within Miami Subs restaurants.

• You should not consider this information at all in deciding whether to establish a Branded Menu Program Operation or a Nathan’s Famous Co-Branded Operation (or a smaller-format Nathan’s Famous Restaurant, such as a Kiosk or a Mobile Unit) or in a Miami Subs restaurant.

Part 1 – Average Gross Sales for Domestic Restaurants

• Part 1 below provides the average gross sales, based on the reported sales, for all domestic Nathan’s Famous restaurants, including franchised and company-owned restaurants, but excluding: (a) Branded Menu Program Operations and Nathan’s Famous Co-Branded Operations with Miami Subs restaurants; and (b) restaurants that first opened for business after March 26, 2017 (i.e. restaurants that were not in operation for the company’s full fiscal year ended March 25, 2018).

• For the purpose of providing the information in Part 1, the franchisor divided the system of domestic Nathan’s Famous restaurants into the following six distinct categories:

• (1) restaurants located within enclosed shopping malls;
• (2) restaurants located within transport hubs (such as airports, train stations, and travel plazas);
• (3) restaurants located within entertainment venues (such as hotel casinos and game room establishments);
• (4) traditional freestanding restaurants;
• (5) restaurants located in amusement parks; and
• (6) limited-menu restaurants, co-branded or otherwise, located within another concept (other than Branded Menu Program Operations and Nathan’s Famous Co-Branded Operations with Miami Subs restaurants) and seasonal restaurants.

• The sales numbers for franchised restaurants are based on sales reporting provided to the franchisor by its franchisees for the purposes of making royalty payments and marketing development fund contributions. The franchisor has not audited these figures and cannot verify their accuracy.

• The gross sales numbers in Part 1 are for the franchisor’s fiscal year ended March 25, 2018.

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