In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Teriyaki Madness franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Teriyaki Madness franchise, based on Item 7 of the company’s 2020 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Teriyaki Madness franchise, based on Items 5 and 6 of the company’s 2020 FDD
- Section IV – Number of franchised and company-owned Teriyaki Madness outlets at the start of the year and the end of the year for 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD
- Section V – Presentation and analysis of Teriyaki Madness’ financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:
- 2017 to 2019 average, median, high, and low gross sales for the franchised Teriyaki Madness restaurants that have been in operation for at least two years, were larger than 1,350 square feet (which match the footprint required of new Teriyaki Madness restaurants), were in traditional locations, have had no change of ownership within the two-year period, and are not for sale
- 2019 total sales, cost of goods sold, gross profit, payroll and labor, occupancy, direct operating expenses, and operating income for the 15 franchised Teriyaki Madness restaurants (including 4 affiliate-owned restaurants owned by the franchisor’s predecessor) that have been open for a minimum of 24 months, are larger than 1,350 square feet, have not changed ownership in the last two years, are in traditional locations, and provided their profit and loss statements to the franchisor
Section I – Background Information
19 Things You Need to Know About the Teriyaki Madness Franchise
Closes Banner Year 2019 with Nearly 100 Franchise Units Awarded
1. At the beginning of January 2020, Teriyaki Madness (TMAD) highlighted its accomplishments from 2019, which included: launching a new loyalty program; hosting its first-ever annual conference; opening a flagship corporate headquarters shop that serves as a hybrid R&D center/training facility; expanding into seven new states and two countries; rolling out a completely new shop design; a dramatic reduction in prime costs through national agreements with Pepsi and Sysco; and myriad other franchisee profit initiatives.
2. Michael Haith, CEO of Teriyaki Madness, said, “We are always investing in ways to create additional profitability for our franchise partners while reviewing ways to expand brand awareness and the TMAD community. This year alone, we’ve taken huge strides toward both by unveiling a reimagined, digital-first store model in our downtown Denver shop; taking steps to reduce the cost of goods sold through a refined menu and new packaging; investing in building stronger relationships with our customers through amplified mobile convenience; pursuing smart international expansion and more. TMAD’s future is bright and we couldn’t be more excited for 2020!”
3. After seeing a 48% increase to 65 shops in 2019, Teriyaki Madness is extremely well-positioned to further build on this momentum in the year ahead, especially considering its incredible efforts on the development front. TMAD has awarded 90 new franchise locations in 2019 alone.
4. The year’s growth was made possible by TMAD’s three-year investment into the building of its leadership team, products, and processes to help the brand evolve to the point where it could bring on a number of experienced staff to coach and train its franchisees to success. By putting in the work to form a capable community with a common goal, TMAD more than doubled in size internally so it could competently do so externally through franchising, as well.
5. Haith added, “We have been able to recruit great, great people with relevant, applicable experience at other fast-growing brands, something that has had a direct effect on the incredible development of our franchise system. The recognition that we have one of the best margins in restaurant franchising has dramatically increased interest from franchise candidates, and the addition of 90 units to our community is not only gratifying, but also lays the groundwork for even more growth in our pursuit of becoming one of the next great international franchise brands with all of the benefits of brand awareness for the franchisees.”
6. In addition to kicking off broad expansion efforts in Florida, Illinois, Colorado, and Arizona, TMAD is set to open new shops in Illinois, Utah, Texas, Delaware, California, and Hawaii early in 2020 as well. As the brand continues aggressively yet thoughtfully pushing forward, a team mentality and culture of collaboration will continue to be an integral component to Teriyaki Madness’ systemwide success in 2020.
7. On a final note, Haith said, “From the bottom up, we’re pursuing greatness. We’ve established ourselves in the marketplace as an extremely competitive, forward-facing opportunity that is as savvy and strategic as it is innovative and exciting. Our leaders have assembled the best of the best at every level of our organization, and we’re ready to take on 2020 with our ever-growing franchise family.”
Introduces New Loyalty Program
8. In early July 2019, TMAD rolled out a new loyalty program, which rewards loyal TMAD customers for purchases. After accruing points, loyalty members can redeem them for free drinks, sides, and bowls of all kinds.
9. Jodi Boyce, VP of marketing for Teriyaki Madness, said, “As we continue to grow, we knew we needed to invest in building stronger relationships with our customers through the type of mobile convenience they expect of their favorite restaurants today. The first step was partnering with Punchh to develop our mobile app last summer. Now, we’re introducing a loyalty program that will reward our fans for choosing to satisfy their cravings with Teriyaki Madness.”
10. In addition to earning a free bowl with the purchase of another bowl and two drinks just for signing up on the app, TMAD’s new loyalty program also features special offers and sprint deals that reward customers for earning a certain number of points in a given month with a discount or free item, starting with offering double points for all orders through July 31. The brand also has plans to incorporate a donation feature where customers can donate the points they’ve earned to a charity to provide meals for others rather than use the points themselves. Plus, rewards members get a free bowl on their birthday.
11. Boyce added, “We’re excited to roll out our Loyalty program as a way to thank our regular customers while also attracting new ones thanks to its strong value proposition. Punchh has a stellar reputation and the type of partner integration we needed to deliver for our loyal fans, and we can’t wait for them to experience the added convenience and stellar rewards this new platform offers.”
Launches Pay-It-Forward Campaign to Support Healthcare Workers
12. At the beginning of April 2020, as the COVID-19 pandemic continues, Teriyaki Madness introduced a pay-it-forward campaign, through which everyday people can help provide free meals to healthcare workers. All across the country, healthcare teams at hospitals, doctor’s offices, and coronavirus testing sites have been working like “wok-stars” to ensure the health and safety of our most vulnerable communities during the COVID-19 outbreak. Heroes have to eat, and Teriyaki Madness’ pay-it-forward campaign is helping to ensure that the healthcare workers on the front lines of the COVID-19 crisis are well fed with high-protein, delicious, and healthy meals.
13. Teriyaki Madness partnered with its customers to match the contribution for the cost of meals for healthcare workers. Customers could visit https://catering.teriyakimadness.com/ and select the “Healthcare Teriyaki Bar” to have a fully loaded teriyaki spread delivered to the healthcare location of their choice (within 5-6 miles of a Teriyaki Madness location). Every Teriyaki Bar feeds giant, hot, and healthy teriyaki bowls for up to 10 people.
14. Michael Haith, CEO of Teriyaki Madness, said, “Every day we are inspired by the healthcare workers who are going above and beyond to make sure our communities are healthy and safe. We believe everyone has a role to play in overcoming this crisis, and we couldn’t be more excited to offer our customers an easy way to lend a hand by providing a hot, delicious meal for our doctors, nurses and healthcare professionals.”
15. In addition to the pride that comes with sponsoring our healthcare heroes, Teriyaki Madness customers who are already MadRewards members will earn extra points for each Wok-Star Healthcare bar purchased.
16. Teriyaki Madness was founded in 2003 by Alan Arreola, Rod Arreola, and Eric Garma in Las Vegas, Nevada. Garma and the Arreolas were originally from Seattle, Washington where teriyaki bowls were commonly offered throughout the city. In addition to bringing a bit of home with them to a new city, the Arreolas and Garma wanted to offer consumers a healthier fast-food option – teriyaki bowls are made with fresh ingredients and typically come with a side of vegetables.
17. The first Teriyaki Madness restaurant was a hit with Las Vegas locals and the Arreolas and Garma started franchising in 2005. After a few years of gradual growth in the Las Vegas area, the business partners brought in experienced franchisor Michael Haith in 2012. With Haith’s help, Teriyaki Madness launched national franchising and new locations were opened outside of Nevada.
18. Haith continued to fuel Teriyaki Madness’ growth and in 2017, he acquired the company from the Arreolas and Garma. Haith is now CEO of Teriyaki Madness.
Entrepreneur’s Franchise 500
19. Teriyaki Madness ranked No. 461 on Entrepreneur’s 2020 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Teriyaki Madness franchise costs, based on Item 7 of the company’s 2020 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Teriyaki Madness’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2020 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 33
- Outlets at the End of the Year: 41
- Net Change: +8
- Outlets at the Start of the Year: 41
- Outlets at the End of the Year: 42
- Net Change: +1
- Outlets at the Start of the Year: 42
- Outlets at the End of the Year: 60
- Net Change: +18
- Outlets at the Start of the Year: 2
- Outlets at the End of the Year: 1
- Net Change: -1
- Outlets at the Start of the Year: 1
- 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
Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis
Part 1 – Average, Median, High, and Low Gross Sales
- The information in the Gross Sales table below contains Gross Sales information obtained from franchisees’ Profit and Loss Statements and is a historical financial performance representation for the United States franchised Teriyaki Shops that met the following criteria: (a) have been in operation for at least two years; (b) were larger than 1,350 square feet (which match the footprint required of new Teriyaki Shops); (c) were in traditional locations; (d) that have had no change of ownership within the two-year period; and (e) are not for sale (“Conditions”).
2019 Reporting Group