In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Einstein Bros. Bagels franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for an Einstein Bros. Bagels franchise, based on Item 7 of the company’s 2018 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for an Einstein Bros. Bagels franchise, based on Items 5 and 6 of the company’s 2018 FDD
- Section IV – Number of franchised and company-owned Einstein Bros. Bagels 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 Einstein Bros. Bagels’ financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:
- 2017 average gross sales for the 58 franchised and 323 company-owned Einstein Bros. Bagels Restaurants (with and without a drive-thru) that were open for the entire year during the company’s last fiscal year, which started on January 4, 2017 and ended on January 2, 2018
- 2017 average gross revenue, discounts, gross sales, cost of products sold, gross margin, labor expenses, other operating expenses, profit after operating expenses, non-operating expenses, cash flow, imputed royalties, and adjusted cash flow (after franchisee expenses) incurred at the 323 company-owned Einstein Bros. Bagels Restaurants that were open for all 52 weeks of the company’s last fiscal year
Section I – Background Information
14 Things You Need to Know About the Einstein Bros. Bagels Franchise
Celebrates Launch of New Mobile Rewards App
1. In early August 2018, Einstein Bros. Bagels celebrated the launch of its new Shmear Society Rewards program and mobile app by offering customers the chance to redeem a free bagel and shmear with purchase on August 15 to anyone who shows a different restaurant brand’s mobile app on their device.
2. Leigh Anne Snider, president of Einstein Bros. Bagels, said, “Our guests have asked us for it and the time has finally come for them to receive the added value rewards they deserve. Now, those who choose to brighten their mornings with us can take advantage of special offers and surprise and delight deals through our Shmear Society Rewards program and mobile app.”
3. Customers who showed another restaurant brand’s mobile app on August 15 to receive a free bagel and shmear with purchase were also encouraged to download the Einstein Bros. Bagels app and sign up for the Shmear Society Rewards program during their visit. Current Shmear Society Rewards members who used the app to check-in to their favorite Einstein Bros. Bagels store on offer day also received a free bagel and shmear deal in their account for future redemption.
4. Through Einstein Bros. Bagels’ Shmear Society Rewards program, members will be eligible to enjoy a free egg sandwich with purchase on their birthday and two points for every $1 spent in-store, which can be redeemed at any time for food and beverages at participating locations.
5. In addition to the Shmear Society Rewards program, Einstein Bros. Bagels’ mobile app provides maximum convenience by giving customers the freedom to pay for their order directly through the app. The Einstein Bros. Bagels mobile app is available for download from the Apple App Store and Google Play Store.
Introduces Breakfast-Themed Alarm Tones
6. At the beginning of 2018, Einstein Bros. Bagels announced the launch of Wake-Up Tones, four limited-edition, downloadable alarm tones that mimic morning breakfast essentials, to help people wake up on the right side of the bed in time for the most important meal of the day – breakfast. Einstein Bros. Bagels invited everyone to visit the company’s website and download the free MP3 alarm tones directly to their mobile device and receive a coupon for a free egg sandwich with any purchase at an Einstein Bros. Bagels location.
7. Kerry Coyne, SVP of marketing, product, and R&D for Einstein Bros. Bagels, said, “Breakfast is the most important meal of the day, but so many of us allow it to become ordinary and mundane, repeating the same meal day in and out or, worse, skipping it altogether. These alarm tones offer delicious motivation to get up on the right side of the bed and set your day up for success with a nutritious breakfast, made fresh and convenient.”
8. The downloadable Wake-Up Tones are available in four essential morning sounds that start the day off right:
- Bacon Sizzling – Nothing gets you out of bed faster than the sound of sizzling bacon in the morning. Start the day off with a sound so delicious, you can almost taste it.
- Coffee Brewing – Wake up and hear the coffee. The comforting hum of coffee brewing will make anyone a morning person.
- Eggs Frying – Start your day sunny-side up with the sizzle of fresh-cracked eggs in the skillet.
- Rooster Crowing – A rooster’s crow signifies sunrise and, more importantly, breakfast. Wake up to the rooster’s song each morning to prepare for the day ahead.
9. In conjunction with the launch of Wake-Up Tones, Einstein Bros. Bagels also rolled out two new breakfast sandwiches at participating stores, namely:
- Cheesy Wakin’ Bacon – choice of one or two cage-free eggs, thick-cut bacon, and cheddar on a six-cheese gourmet bagel
- No Yolk – cage-free egg whites, turkey bacon, tomato, avocado, and roasted tomato spread on an ancient grain Thintastic bagel
10. In the same press release, Einstein Bros. Bagels also said that it was testing new Wake-Cups at participating stores in Los Angeles, San Diego, and Dallas. The protein-packed egg cups were available in two varieties:
- Turkey Bacon, Egg White Wake-Cup – cage-free egg whites with spinach, mushrooms, and turkey bacon, with 12 grams of protein and 120 calories
- Bacon, Ham & Cheese Wake-Cup – cage-free eggs with ham and thick-cut bacon – with 18 grams of protein and 180 calories
11. Einstein Bros. Bagels was founded in 1995 by the chain restaurant corporation Boston Chicken (now Boston Market), as a way to market breakfast foods. That year, Boston Chicken acquired three of the foremost retail bagel companies located in diverse regions of the country – Offerdahl’s Bagel Gourmet, Inc. of Fort Lauderdale, Florida; Bagel & Bagel, Inc. of Kansas City, Missouri; and Brackman Brothers, Inc. of Salt Lake City, Utah.
12. The new business was called Progressive Bagel Concepts, Inc. (PBCI) and it opened the first Einstein Bros. Bagels in Ogden, Utah. By the end of the year, PBCI changed its name to Einstein Brothers Bagels, Inc. (EBBI).
13. Over the next few years, EBBI expanded the Einstein Bros. Bagels concept and acquired and converted other small bagel chains across the country. One of its largest acquisitions was Noah’s New York Bagels, Inc. of Alameda, California. Both companies merged to form Einstein Noah Restaurant Group, Inc., which was acquired by JAB Holding Company and BDT Capital Partners in 2014.
Entrepreneur’s Franchise 500
14. Einstein Bros. Bagels did not rank on Entrepreneur’s 2018 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Einstein Bros. Bagels 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 Einstein Bros. Bagels’ 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: 55
- Outlets at the End of the Year: 62
- Net Change: +7
- Outlets at the Start of the Year: 62
- Outlets at the End of the Year: 58
- Net Change: -4
- Outlets at the Start of the Year: 58
- Outlets at the End of the Year: 59
- Net Change: +1
- Outlets at the Start of the Year: 398
- Outlets at the End of the Year: 346
- Net Change: -52
- Outlets at the Start of the Year: 346
- Outlets at the End of the Year: 334
- Net Change: -12
- Outlets at the Start of the Year: 334
- Outlets at the End of the Year: 323
- Net Change: -11
Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis
- The sales and expense information that follows has been compiled using unaudited financial data from franchised and company-owned Einstein Bros. Bagels Restaurants, which represents 100% of those Restaurants that were open for the entire year during the company’s last fiscal year, which started on January 4, 2017 and ended on January 2, 2018 (“Sales Distribution”), and selected cost factors for the same period (“Cost Factors”).
- Einstein Bros. Bagels open for less than the full year were not included. There were franchised and company-owned Einstein Bros. Bagels Restaurants that were not included because they were not open for the entire fiscal year.
Part 1 – Sales Distribution (Annual Gross Sales Levels During the 52-Week Period From January 4, 2017 to January 2, 2018)
- Table 1 below organizes the information based on the sales volume of the franchised and company-owned Einstein Bros. Bagels Restaurants for the 52-week period that started on January 4, 2017 and ended on January 2, 2018.
- The number of company-owned Restaurants that achieved or surpassed the Average Gross Sales figure in Table 1 was 139 out of 323 (43.0%).
- The number of franchised Restaurants that achieved or surpassed the Average Gross Sales figure in Table 1 was 24 out of 58 (41.4%).
- Einstein Bros. Bagels has further broken down the Gross Sales volumes for company-owned and franchised Restaurants – both with and without a drive-thru.
$1,100,000 and Above