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

• Section I – Background information on the Erbert & Gerbert’s Sandwich Shop franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for an Erbert & Gerbert’s Sandwich Shop franchise, based on Item 7 of the company’s 2019 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for an Erbert & Gerbert’s Sandwich Shop franchise, based on Items 5 and 6 of the company’s 2019 FDD

• Section IV – Number of franchised and company-owned Erbert & Gerbert’s Sandwich Shop outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD

• Section V – Presentation and analysis of Erbert & Gerbert’s Sandwich Shop’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:

• 2018 average, median, high, and low annual revenues for the top tier, mid tier, and low tier of the 53 Traditional Location franchised outlets that were open for all 12 months during the 2018 calendar year

• 2018 average, median, high, and low annual food cost for the top tier, mid tier, and low tier of the 47 Traditional Location franchised outlets that were open for all 12 months during the 2018 calendar year and who delivered financial reports to the franchisor showing food costs

Section I – Background Information

19 Things You Need to Know About the Erbert & Gerbert’s Sandwich Shop Franchise

Unveils New Store Prototype

1.  In early July 2019, Erbert & Gerbert’s Sandwich Shop announced that it was launching a whole new look and store prototype beginning this summer. The new store design is just one of many recent changes that Erbert & Gerbert’s is implementing. Among the changes are new mission values focusing on “Out of This World Sandwiches,” a new logo, and new TV and radio campaigns featuring the company slogan, “Bold Between the Breads.”

2.  After businessman Eric Wolfe led an investment group to acquire the company in 2004 and took over as president and CEO, Ebert & Gerbert’s took a new direction. With an ambitious long-term vision for Erbert & Gerbert’s, Wolfe has added highly-experienced professionals to oversee operations, marketing, brand opportunities, new store openings, and training. With these support systems in place, the brand is well positioned for strong growth.

3.  The team has been working for a year now toward putting superb branding and marketing in place. Newer members of the team are: Stephanie Schon (chief operating officer), Jeremy Burke (director of marketing), Jill Brenner (marketing manager), Spencer Ploessl (brand manager), and Mike Steindl (director of operations, and a former franchisee who knows the ins-and-outs of the daily operations of a store like, well, an owner).

4.  Some of Ebert & Gerbert’s latest initiatives include the launch of a Loyalty App this past spring; updates and enhancements to the company website; and limited-time offers (LTOs) that worked so well they must be brought back. One of them, the Mac & Brisket Sandwich is coming back by customer demand in the fall of 2019. Additionally, there is a new focus on catering that stars The Colossus, a giant box of sandwiches.

5.  Jeremy Burke, director of marketing for Erbert & Gerbert’s, who is spearheading much of the new innovations, said, “All in all, things are really happening here. I came from a big brand and learned all the things that worked, but more importantly what didn’t. The moves that work for our demographic and customer base are being customized now for Erbert & Gerbert’s.”

Launches New App and Rewards Program

6.  In late March 2019, Erbert & Gerbert’s Sandwich Shop launched a free mobile rewards app, giving customers more rewards when they order on-the-go at the sandwich chain. The app is designed with a robust rewards system that will send promotions and offer free items just for Erbert & Gerbert’s app users.

7.  Customers will receive 50 percent off a sandwich when they download the new rewards app. Following that, users will get one point for each dollar spent. When 50 points are reached, rewards members will receive $5 in rewards, with additional offers available for such things as members’ birthdays.

8.  And in a light-hearted jab at competitor Jimmy John’s, which does not offer a rewards program (at the time of the press release), Erbert & Gerbert’s is encouraging its app users through social media and billboards in three major markets (Minneapolis-Saint Paul, Green Bay, and Eau Claire) to tag three friends on Instagram and those users will be rewarded with a free Erbert & Gerbert’s sandwich via the rewards app.

9.  The app and supporting marketing program were created by Party Land, a Los-Angeles based advertising agency led by Matt Heath, who was the creative director and writer behind Arby’s “We Have The Meats” campaign. Heath’s partners include Matt Rogers (creative director) and David Nichols (former president of K-Swiss).

10.  Jeremy Burke, director of marketing and brand development for Erbert & Gerbert’s Sandwich Shop, said, “The app launch is just the tip of the iceberg. Over time we’re going to be gaining tremendous insights about our consumers, which we’ll be able to use to market to them in a more intelligent, personal manner. We know data-driven marketing can and will produce results for our entire E&G system.”

Brings Back Customer Favorite Mac & Cheese BBQ Brisket and Other LTO Sandwiches

11.  At the beginning of September 2019, Erbert & Gerbert’s Sandwich Shop announced that it brought back the customer-favorite Mac & Cheese BBQ Brisket Sandwich, just in time for fall. Erbert & Gerbert’s is also debuting two new taste-bud-tempting Brisket Sandwiches for a limited time: Brisket & Peppadew Ranch and BBQ Brisket, Bacon & Cheddar.

12.  Expanding on its reputation for bold innovation and flavor, the new sandwiches epitomize just that. Imagine savory brisket topped with the one-of-a-kind flavor of peppadew mustard ranch, coupled with perfectly-sliced pickles. Or brisket, topped with the Midwest tried-and-true trifecta of chipotle citrus BBQ, crispy bacon, and cheddar cheese.

13.  Jeremy Burke, director of marketing and brand development for Erbert & Gerbert’s, said, “We continue to innovate, searching for unique flavor combinations that our fans crave, while staying true to our brand mission of out of this world sandwiches. Mac & Cheese BBQ Brisket was one of our most-loved limited time sandwiches and we believe in its return along with two new brisket sandwiches this fall. In coordination with the launch, we’re releasing new branded content featuring our favorite talking sandwich, Kyle.”

14.  In the same press release, Erbert & Gerbert’s also mentioned that the company has recently expanded into two new states with the opening of additional non-traditional locations in Northern Illinois University and University of North Carolina, Charlotte. The brand will open its next traditional location at 5th Avenue North in Minneapolis, Minnesota in mid-September.

Company History

15.  Erbert & Gerbert’s Sandwich Shop was founded in 1987 by Kevin and Ben Schippers in Eau Claire, Wisconsin. The company’s unique name and the brand’s sandwiches are named after characters in stories Kevin’s father used to tell Kevin and his nine siblings when they were children.

16.  Before starting Erbert & Gerbert’s, Kevin Schippers was looking to start a restaurant business and noticed that at the time, Eau Claire didn’t have a specialty sandwich shop. The first Erbert & Gerbert’s Sandwich Shop was a success and by the end of its first year of operations, Schippers had done $210,000 in business, projecting $168,000 as the break-even point.

17.  Following the success of this first store, Schippers opened a second Erbert & Gerbert’s in St. Cloud, Minnesota in 1990. However, Schippers did not start franchising the Erbert & Gerbert’s Sandwich Shop concept until 1992. The first franchised store was awarded in Duluth, Minnesota and the second in Minneapolis.

18.  Despite the growing success of Erbert & Gerbert’s, Schippers decided to pursue a career in ministry and sold the chain to a group of investors in 2004 led by Eric Wolfe, who has been CEO of the company since then. Schippers continues to own and operate the original Erbert & Gerbert’s in Eau Claire. Today, there are Erbert & Gerbert’s Sandwich Shop locations in more than 12 states.

Entrepreneur’s Franchise 500

19.  Erbert & Gerbert’s Sandwich Shop ranked No. 343 on Entrepreneur’s 2019 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Erbert & Gerbert’s Sandwich Shop franchise costs, based on Item 7 of the company’s 2019 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Erbert & Gerbert’s Sandwich Shop’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2016

• Outlets at the Start of the Year:  86
• Outlets at the End of the Year:  93
• Net Change:  +7

2017

• Outlets at the Start of the Year:  93
• Outlets at the End of the Year:  95
• Net Change:  +2

2018

• Outlets at the Start of the Year:  95
• Outlets at the End of the Year:  88
• Net Change:  -7

Company-Owned

2016

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  4
• Net Change:  +1

2017

• Outlets at the Start of the Year:  4
• Outlets at the End of the Year:  5
• Net Change:  +1

2018

• Outlets at the Start of the Year:  5
• Outlets at the End of the Year:  3
• Net Change:  -2

Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis

• Erbert & Gerbert’s financial performance representation consists of two parts. Part 1 presents the actual 2018 annual revenues of the 53 Traditional Location franchised outlets that were open for all 12 months during the 2018 calendar year. These 53 outlets represent approximately 60% of the 88 total franchised outlets that were open as of December 31, 2018.

• Franchised outlets that were not open for the entire 12 months of 2018 have been excluded from the representation as their partial year performance is not indicative of the performance the franchisor would reasonably expect to see over an entire calendar year.

• Part 2 presents the actual 2018 food costs of the 47 Traditional Location franchised outlets that were open for all 12 months during the 2018 calendar year and who delivered financial reports to the franchisor showing food costs. These 47 outlets represent approximately 53% of the 88 total franchised outlets that were open as of December 31, 2018.

• This financial performance representation is based on the reports submitted to the franchisor by its franchisees. This information has not been audited and may not be based on generally accepted accounting principles.

• All figures are based on full-service outlets. No Non-Traditional Location outlet’s performance is included. This performance representation is no indication of what a Non-Traditional Location outlet may experience.

• The actual average annual revenue numbers do not reflect the costs of goods sold, operating expenses, or other costs or expenses that must be deducted from revenue to obtain net income or profit.

Part 1 – Annual Revenues (January 1, 2018 – December 31, 2018) for Traditional Location Franchised Outlets Open All 12 Months

Top Tier