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

• Section I – Background information on the Pokéworks franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Pokéworks franchise, based on Item 7 of the company’s 2019 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Pokéworks franchise, based on Items 5 and 6 of the company’s 2019 FDD

• Section IV – Number of franchised and company-owned Pokéworks 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 Pokéworks’ financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:

• 2018 average, median, high, and low gross sales; average cost of goods sold, labor cost, and gross rent for the 14 company-owned and franchised Pokéworks Restaurants that had been open and operating for a minimum of 12 months as of December 31, 2018 and had been operated continuously during the period between January 1, 2018 and December 31, 2018

• 2018 average, median, high, and low gross sales; average cost of goods sold, labor cost, and gross rent for the 4 franchised Pokéworks Restaurants that had been open and operating for a minimum of 12 months as of December 31, 2018 and had been operated continuously during the period between January 1, 2018 and December 31, 2018

• 2018 average, median, high, and low gross sales; average cost of goods sold, labor cost, and gross rent for the 10 company-owned Pokéworks Restaurants that had been open and operating for a minimum of 12 months as of December 31, 2018 and had been operated continuously during the period between January 1, 2018 and December 31, 2018

Section I – Background Information

17 Things You Need to Know About the Pokéworks Franchise

Continues National Expansion as Consumer Appetite for Hawaiian-Inspired Poké Grows

1.  As consumer obsession with poké bowls continues to climb and shows no signs of slowing, Pokéworks – one of the nation’s largest and fastest-growing poké franchises – remains the category’s front-running fast-casual poké brand, with its growth in 2018 and the first half of 2019 a reflection of the nation’s insatiable desire for healthy, sustainable eating options.

2.  Since poké requires lower startup costs compared to other fast-casual options (as there are no hood requirements and it does not require investment in deep fryers), Pokéworks’ simple, smaller footprint kitchen and easy-to-execute menu make it an appealing investment for multi-brand franchisees seeking to expand their portfolio.

3.  According to Michael Wu, CEO of Pokéworks, “The poké trend is at an all-time high right now with an annual growth rate of 25 percent. The trend will only continue to explode as more consumers turn to fresh, sustainable food options that fuel a healthy lifestyle.”

4.  Below are a few highlights indicating a solid footing and positive outlook for Pokéworks:

• In 2018, Pokéworks reached its 40th restaurant milestone, more than doubling the brand’s national footprint since launching its franchise opportunity in 2016.

• The brand has a total of 180+ new Pokéworks locations in the pipeline – putting the brand on track to meet its goal of opening more than 100 units by 2020. Some of the new franchise agreements are in new, dynamic markets such as San Francisco, Washington DC, and Nashville.

• Last summer, Pokéworks joined forces with Toridoll Holdings Corporation, a $1.6 billion Tokyo-based restaurant giant, allowing the brand to leverage Toridoll’s expertise in investing and operations and place strong focus on high standards and authentic guest experiences.

• Pokéworks signed its first international franchise agreement – a master deal in Mexico with restaurant investment group OPERADORA RAU of Credian, a prominent global financial institution. The agreement targets emerging cities such as San Luis Potosi, Monterrey, Ciudad de Mexico, Guadalajara, and the Bajio region of West North-Central Mexico.

5.  Because of the company’s positive growth and outlook, Pokéworks was recently named one of Entrepreneur’s Top Food Franchises of 2019, ranking No. 7 in the list containing 200 food concepts. The list evaluates franchises based on costs and fees, size and growth, franchisee support, brand strength, and financial strength and stability.

6.  The brand also took the No. 2 spot on Fast Casual’s Top 100 Movers and Shakers, which recognizes and celebrates brands that go above and beyond positive sales, emphasizing employee training, quality ingredients, technology upgrades, brand culture, and a passion for giving back.

7.  In 2019, Pokéworks plans to open 30 locations and is targeting high-growth markets like Miami, Austin, and Atlanta. To reach its goal of opening 100 locations by 2020, Pokéworks is seeking experienced multi-unit partners looking to invest in a turnkey franchise with minimal restaurant and labor costs.

8.  The opportunity provides comprehensive training programs and dedicated support teams to assist in on-boarding, development, opening, and ongoing operations. The initial franchise fee for Pokéworks is $35,000 with the total single-unit investment ranging from $250,000 to $850,000.

9.  Wu added, “Our proven franchise model, brand mission and values as well as the high-demand for poké globally has primed Pokéworks for tremendous growth and in 2019 we are committed to finding the right franchise partners worldwide to continue driving the brand forward.”

Introduces New Volcano-Inspired “Lava Bowl”

10.  At the end of February 2019, Pokéworks announced that it had collaborated with award-winning alumnus of Bravo’s Top Chef and owner of Tin Roof in Maui, Chef Sheldon Simeon, to launch the brand’s newest menu item, the Lava Bowl. Inspired by the Hawaiian Goddess of volcanoes and fire and the creator of the Hawaiian Islands, the Lava Bowl celebrates both Chef Sheldon Simeon’s and Pokéworks’ Hawaiian roots.

11.  The fiery dish features ultra-hot ghost peppers – with a Scoville spice rating of more than 1,000,000 units – alongside Sriracha over your favorite poké and topped with an extra kick of Thai Chili and Chili Threads. To add to the eruption of heat and flavor, customers are encouraged to “build the burn” of their dish by choosing one of three house-made Lava sauce levels – mild (light), medium, or lava (heavy).

12.  According to celebrity chef-collaborator, Sheldon Simeon, “Now that we are in the final stretch of the colder winter months, we wanted to create something that would heat things up in preparation for spring. Inspired by Hawaiian traditions and the goddess of volcanoes, we are thrilled to share the fresh, fiery flavors of the Lava Bowl with guests across the nation.”

13.  Dedicated to offering a fresh take on Hawaiian-inspired poké bowls and burritos with high-quality, flavorful ingredients at an affordable price, Pokéworks has an ongoing partnership with Chef Sheldon Simeon. As part of this collaboration, Simeon handcrafts a series of Signature Works for Pokéworks with ingredients that draw inspiration from the mix of cultures that he grew up with in Hawaii.

14.  Pokéworks’ customizable menu allows consumers to customize Chef Sheldon’s expertly curated creations to fit any diet – ranging from gluten-free, nut-free, vegetarian, vegan, and cooked or raw protein diets.

Company History

15.  Pokéworks was founded in 2015 by Kevin Hsu, his brother Kasper, and his college friends Peter Yang and Michael Wu. The group was inspired to open their own poké bowl place after eating the dish many times during trips to Hawaii. After eating so much poké, the group of friends began throwing in household snacks for added flavor and texture, which was how the brand’s “Poké Your Way” motto was born. They decided that they wanted to bring this Hawaiian food staple, mixed with their own creativity, back to the mainland United States.

16.  The first Pokéworks opened to much fanfare and within a few weeks lines had become so long that people were waiting over 45 minutes to try poké for the first time. In addition to introducing poké to many people who had never had it before, Pokéworks is also responsible for creating the first viral sushi burrito. Pokéworks used this attention to fuel the company’s growth. Franchising began in 2016 and Pokéworks now has a mix of company-owned and franchised stores around the U.S.

Entrepreneur’s Franchise 500

17.  Pokéworks did not rank on Entrepreneur’s 2019 Franchise 500 list. However, Pokéworks was No. 7 out of 200 on Entrepreneur’s list of the Top Food Franchises of 2019.

Section II – Estimated Costs

• Please click here for detailed estimates of Pokéworks 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 Pokéworks’ 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:  0
• Outlets at the End of the Year:  2
• Net Change:  +2

2017

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  4
• Net Change:  +2

2018

• Outlets at the Start of the Year:  4
• Outlets at the End of the Year:  21
• Net Change:  +17

Company-Owned

2016

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

2017

• Outlets at the Start of the Year:  5
• Outlets at the End of the Year:  11
• Net Change:  +6

2018

• Outlets at the Start of the Year:  11
• Outlets at the End of the Year:  11
• Net Change:  0

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

• As of December 31, 2018, Pokéworks had a total of 21 franchised Pokéworks Restaurants.

• Of that total number, 4 franchised Pokéworks Restaurants met both of the following criteria (“Reporting Criteria”): the Pokéworks Restaurant had been open and operating for a minimum of 12 months as of December 31, 2018 and had been operated continuously during the period between January 1, 2018 and December 31, 2018.

• The franchised Pokéworks Restaurants that met the Reporting Criteria are located in Annandale, Virginia; Somerville, Massachusetts; The Heights in Houston, Texas; and El Paso, Texas. The remaining franchised Pokéworks Restaurants did not satisfy one or both of the Reporting Criteria.

• As of December 31, 2018, Pokéworks had a total of 11 company-owned Pokéworks Restaurants, each operated by one of its Affiliates. Of that total number, 10 company-owned Pokéworks Restaurants met both of the Reporting Criteria.

• The company-owned Pokéworks Restaurants that met the Reporting Criteria are located in New York, New York; Chicago, Illinois; Seattle, Washington; Bellevue, Washington; Mountain View, California; Irvine, California; and Riverview in San Jose, California. The remaining Affiliate-owned Pokéworks Restaurants did not satisfy one or both of the Reporting Criteria.

• Part 1 includes the combined data for the 14 total Pokéworks Restaurants the met both of the Reporting Criteria. Part 2 includes the data for the 4 franchised Restaurants that met both of the Reporting Criteria. Part 3 includes the data for the 10 company-owned Pokéworks Restaurants that met both of the Reporting Criteria.

• Sales will vary from Restaurant to Restaurant. In particular, the sales and expenses of your Pokéworks Restaurant will be directly affected by factors which include the Pokéworks Restaurant’s geographic location; competition in the market; the quality of both management and service at the Pokéworks Restaurant; contractual relationships with lessors and vendors; the extent to which you finance the operation of your Pokéworks Restaurant; your legal, accounting, and other professional fees; federal, state, and local income taxes, gross profits taxes, or other taxes; cost of any automobile used in the business; and other discretionary expenditures.

• The locations of these Restaurants are in densely-populated, affluent urban and suburban areas that may not be similar to the market in which your Restaurant will be located.

Part 1 – 2018 Financial Performance of All Locations (Company-Owned and Franchised)

Financial Performance of All Pokéworks Company-Owned and Franchised Restaurants Open During the Full 12-Month Period From January 1, 2018 Through December 31, 2018

• This information covers the 14 Pokéworks Restaurants that met the Reporting Criteria. All performance figures listed below cover the 12-month period beginning January 1, 2018 and ending December 31, 2018.

Number of Restaurants:  14