In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Another Broken Egg Cafe franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for an Another Broken Egg Cafe 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 Another Broken Egg Cafe franchise, based on Items 5 and 6 of the company’s 2019 FDD
- Section IV – Number of franchised and company-owned Another Broken Egg Cafe 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 Another Broken Egg Cafe’s 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 for the 40 franchised Another Broken Egg Cafe restaurants that had been open for at least 12 months as of December 31, 2018
- average and median gross sales percentage increase for franchised Another Broken Egg Cafe restaurants that had been open for at least 12 months as of January 1, 2017 and were in operation for the entire 24-month comparison period ended December 31, 2018
- 2018 average and median cost of goods sold and labor cost for the 52 franchised Another Broken Egg Cafe restaurants that were in operation continuously for the entire reporting period and submitted full and complete financial information for the entire reporting period
Section I – Background Information
16 Things You Need to Know About the Another Broken Egg Cafe Franchise
Growth Strategy Focuses on Multi-Unit Franchisees
1. At the beginning of December 2019, Another Broken Egg Cafe announced that it had begun execution of its 2020 growth strategy, which includes a focus on targeting experienced, multi-unit franchisees, development in hot new geographies, and further brand expansion in existing markets that are seeing solid growth. The brand’s strategic growth plans are designed to further capitalize on the continued and projected future growth of the breakfast and brunch dayparts in the years ahead.
2. In the press release, Another Broken Egg Cafe said that it had plans to open seven new cafes by May 2020. This growth is backed by the brand’s time-tested new cafe opening strategy designed to leverage the sales opportunities surrounding each new location, while working together with multi-unit restaurant franchisees looking to expand their portfolio of brands into breakfast and brunch. Another Broken Egg Cafe is eager to work with these newly signed franchisees, several of whom have experience with other historically successful growth concepts like McDonald’s, Buffalo Wild Wings, and Five Guys.
3. With plans for 300 cafes by 2025, it is no surprise that Another Broken Egg Cafe is continuing to target its development initiatives toward experienced multi-unit restaurant franchisees looking to expand into breakfast and brunch.
4. The brand’s recent development efforts have been very successful and will help to get 2020 off to a strong start with unit growth in 3 new states, namely Arizona, Kansas, and Pennsylvania. The brand is looking to expand into priority growth markets like Chicago, Detroit, Las Vegas, Minneapolis, and suburban D.C., where the competitive daytime cafe penetration is low and while consumer demand for breakfast and brunch is continuing to grow.
5. To wrap up a very successful development year in 2019, Another Broken Egg Cafe opened a new corporate-owned cafe in the upscale Destin Commons retail center located in the heart of Destin, Florida. The location for this cafe was an easy choice as the brand has enjoyed ongoing success in nearby Sandestin and Miramar Beach.
6. With leases to be signed before the end of 2019, Another Broken Egg Cafe plans to continue its corporate-owned cafe expansion into Columbia, South Carolina, a new market for the brand, and additional corporate expansion is planned for Jacksonville and Orlando in 2020.
Appoints New President and CEO
7. Near the end of November 2019, Another Broken Egg Cafe announced the appointment of Paul M. Macaluso as its new president and chief executive officer, effective immediately. According to Chris Artinian, managing director for The Beekman Group, “Since The Beekman Group acquired the brand in late 2017, we have dedicated our efforts to assisting Another Broken Egg Cafe in strengthening its leadership team and making strategic and meaningful investments. After a comprehensive nationwide search, during which we identified and evaluated a number of highly-qualified candidates, Paul emerged as the clear choice to become our new President and Chief Executive Officer.”
8. Macaluso is an enthusiastic, hands-on leader with experience in a variety of executive and senior positions and a 25+ year reputation for driving results at respected brands throughout the restaurant industry. He brings a diverse breadth of experience to Another Broken Egg Cafe, including operations, franchising, and marketing. “We are excited to work together with Paul and the other talented members of our executive team to continue our strong growth momentum from both existing cafes and new franchise development into the upcoming decade and beyond,” Artinian added.
9. Macaluso began his career as a restaurant general manager with the Taco Bell Corporation and went on to hold various operations and marketing roles within that company. After 10 years at Taco Bell, Macaluso progressed to various brand strategy, menu development, and product marketing positions for both the Burger King Corporation and Sonic Drive-Ins.
10. From there, Macaluso joined FOCUS Brands and held a variety of senior marketing and brand strategy positions in which he leveraged his talents to grow sales and guest relevance for a portfolio that included McAlister’s Deli, Moe’s Southwest Grill, Schlotzsky’s, Carvel, Auntie Anne’s, and Cinnabon. In 2016, Macaluso was promoted within FOCUS Brands to become president of McAlister’s Deli, where he led the brand to record setting EBITDA and new restaurant openings.
11. Macaluso’s most recent role prior to joining Another Broken Egg Cafe was as president and CEO of The Krystal Company, where he led a brand revitalization effort including rebuilding aged restaurants, achieving positive same-store sales, improving unit-level profitability, and restarting the franchise sales pipeline.
12. Macaluso commented on his excitement to join the Another Broken Egg Cafe team, stating that he was initially attracted to the brand by its incredible menu, industry-leading business model, and the opportunity to be part of a team that will achieve accelerated and monumental growth. “I have tremendous respect for the brand and our owners at The Beekman Group,” added Macaluso. “I look forward to joining the passionate and talented executive team at Another Broken Egg Cafe, successfully collaborating with existing franchisees and continuing to leverage the strong new franchise growth momentum the brand has enjoyed for the past few years.”
13. Another Broken Egg Cafe was founded in 1996 by Ron Green in Old Mandeville, Louisiana. Originally, the restaurant was called Broken Egg Cafe, but Green decided to change the company’s name when he opened a second location in 1998 and called it Another Broken Egg Cafe.
14. Over the next few years, Green grew Another Broken Egg Cafe slowly and started franchising the concept in 2004. By the next decade, Another Broken Egg Cafe grew to 34 restaurants in operation, primarily in the Southeastern United States, and another 75 scheduled for development by the end of 2019.
15. In 2017, Beekman Investment Partners III LP, a New York-based private equity firm made a majority investment in Another Broken Egg of America. Following the investment, Chris Artinian, managing director of Beekman, took over as company president, a role previously held by founder Ron Green. Today, Another Broken Egg Cafe has expanded to other parts of the U.S.
Entrepreneur’s Franchise 500
16. Another Broken Egg Cafe did not rank on Entrepreneur’s 2020 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Another Broken Egg Cafe 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 Another Broken Egg Cafe’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
- Outlets at the Start of the Year: 49
- Outlets at the End of the Year: 56
- Net Change: +7
- Outlets at the Start of the Year: 56
- Outlets at the End of the Year: 64
- Net Change: +8
- Outlets at the Start of the Year: 64
- Outlets at the End of the Year: 60
- Net Change: -4
- Outlets at the Start of the Year: 3
- Outlets at the End of the Year: 2
- Net Change: -1
- Outlets at the Start of the Year: 2
- Outlets at the End of the Year: 2
- Net Change: 0
- Outlets at the Start of the Year: 2
- Outlets at the End of the Year: 6
- Net Change: +4
Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis
- Under Part 1 below, Another Broken Egg Cafe has provided the unaudited average, median, high, and low Gross Sales of Cafes operating in 2018. Under Part 2 below, Another Broken Egg Cafe has provided information on the average Gross Sales percentage increase for Cafes comparing the 2018 and 2017 calendar years.
- The data below does not include Cafes owned and operated by Another Broken Egg Cafe’s affiliates during the measurement period of January 1, 2017 to December 31, 2018 (“Measurement Period”).
- The data also does not include the 2 Cafes that operated under a license agreement, which operated using the System and the Marks, but which did not operate under a franchise agreement similar to that offered in the Disclosure Document.
- Furthermore, hurricanes impacted many of Another Broken Egg Cafe’s locations in 2018 which led to extended closures. Another Broken Egg Cafe has excluded the Cafes that were forced to cease operations for four or more days during these events.
- All Cafes offer substantially the same products and services to the public. New franchisees will receive substantially the same services as those offered to existing franchisees.
- Another Broken Egg Cafe obtained these historical financial results from the information submitted by its franchisees. Neither Another Broken Egg Cafe nor an independent certified public accountant independently audited or verified the information.
Part 1 – Statement of Average, Median, High, and Low Gross Sales for 2018
- The table below provides information on the average, median, high, and low Gross Sales of Cafes operating during the 12-month period starting January 1, 2018 and ending December 31, 2018.
- The Cafes are limited to Cafes operated by franchisees during the Measurement Period and are divided into quartiles.
- The term “Gross Sales” is defined as all products and services sold in or from the Cafes, including off-premises catering and delivery, but excluding comps, discounts, excise or sales taxes.
- As of December 31, 2018, there were 60 Cafes operated by franchisees and 6 Cafes that were operated by Another Broken Egg Cafe’s affiliates as corporate locations.
- Of the 66 Cafes, 50 Cafes operated by franchisees and 5 Cafes operating as corporate locations had been open for at least 12 months as of January 1, 2018.
- Of those 55 Cafes, 5 Cafes were excluded since they were Cafes operated as corporate locations during the Measurement Period.
- Of those 50 Cafes, 10 Cafes were excluded since they were Cafes that were forced to cease operations for four or more days due to the impact of hurricanes in 2018.
- Of the 40 Cafes referenced in the below table, all reported sufficient financial performance information to be included in this financial performance representation.