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

• Section I – Background information on the Culver’s franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Culver’s 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 Culver’s franchise, based on Items 5 and 6 of the company’s 2020 FDD

• Section IV – Number of franchised and company-owned Culver’s 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 Culver’s financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:

• 2019 average, median, high, and low sales for the 677 franchised Culver’s Restaurants open for the entire 12-month period ended December 31, 2019

• 2019 average sales, food cost, paper cost, gross profit, salaries and wages, employee benefits, direct operating expenses, supplies and chemicals, utilities, general and administrative expenses, repairs and maintenance, advertising royalty, local advertising, service royalty, and income as a percentage of sales, for the 6 company-owned Culver’s Restaurants open for the entire 12-month period ended December 31, 2019

Section I – Background Information

20 Things You Need to Know About the Culver’s Franchise

‘Thank You Farmers Project’ Donations Reach $2.5 Million

1.  In early October 2019, Culver’s announced that its Thank You Farmers Project has raised $2.5 million to support agricultural education since its inception six years prior. At the time of the announcement, over $400,000 had been raised so far in 2019.

2.  By 2050, the global population is expected to reach 9.8 billion, meaning we’ll have to produce 80% more food than we do today to feed everyone. Money raised through Culver’s supports programs such as FFA and others that are educating our country’s future agricultural leaders.

3.  Joe Koss, president and CEO of Culver’s, said, “We’re facing a turning point in agriculture, and the responsibility to feed a growing population falls on all of us, not just farmers. Our guests understand this, and that’s why they’ve helped us to raise money every year to support the future of agriculture.”

4.  In addition to supporting agriculture education efforts, Culver’s is joining the efforts of national organizations in support of agriculture’s future. Koss is a newly-appointed member of the U.S. Farmers & Ranchers Alliance (USFRA) board of directors. USFRA represents farmer and rancher-led organizations and food agricultural partners with a common vision to further our global sustainable food systems.

Celebrates Customer Favorite on National Cheese Curd Day

5.  In mid-October 2019, Culver’s celebrated one of its most popular menu items, Cheese Curds, on National Cheese Curd Day. All of Culver’s Wisconsin Cheese Curds come from a single family-owned dairy in Stanley, Wisconsin, where they are made with the freshest, unaged yellow and white cheddar cheese. The Cheese Curds are fried to a buttery, golden crunch in the restaurants, only after being ordered.

6.  According to Julie Fussner, vice president of marketing for Culver’s, “The Dairy State is our home, so it’s no surprise that we at Culver’s are passionate about serving delicious Cheese Curds. As we’ve expanded across 25 states, it’s been amazing to see that so many of our guests love Wisconsin Cheese Curds just as much as we do.”

7.  Culver’s sold over 28 million orders of Wisconsin Cheese Curds in 2018, and guests’ love for Cheese Curds even inspired the launch of Curdis, Culver’s Cheese Curd mascot.

8.  To make National Cheese Curd Day even more special, Culver’s gave away a year of free Wisconsin Cheese Curds during its Curdis Is in a Crunch Sweepstakes. In addition to the grand prize, Curdis swag — sweatshirts, socks, and travel mugs — was given out as daily prizes. The sweepstakes ran through October 31.

Launches ‘Name Culver’s Flavor of the Day’ Poll

9.  In late February 2020, in honor of National FFA Week, Culver’s hosted a Facebook poll to name a special Fresh Frozen Custard Flavor of the Day, as part of Culver’s Thank You Farmers Project. Guests could head to Culver’s Facebook page until 10 a.m. CST on Friday, Feb. 28 to vote for either Mooey Gooey Brownie or Brownie Caramel Cow.

10.  The newly-named flavor, which is made with Vanilla Fresh Frozen Custard, chunks of chewy brownies, and ribbons of old-fashioned salted caramel, made its debut at Culver’s restaurants on Thursday, May 7, for Scoops of Thanks Day. The proceeds from its sale throughout the year will benefit local agricultural education programs.

11.  Jessie Kreke, senior marketing manager of Culver’s, said, “We’re excited to get all of our guests involved in National FFA Week by asking for their help in naming our Thank You Farmers Project Flavor of the Day, the proceeds of which will help raise funds for their local FFA chapters. Agricultural education programs are essential in ensuring future generations are prepared to tackle the challenges facing our food supply and instill an appreciation for where their food comes from. We want to make sure students face no barriers, like cost, in receiving such an important education.”

12.  To further celebrate National FFA Week, Culver’s also launched its annual FFA Essay Contest. FFA members were invited to submit an essay responding to the prompt at culvers.com/essaycontest by April 20 for a chance to win up to $7,500 for their FFA chapters.

13.  The Thank You Farmers Project Flavor of the Day Poll and FFA Essay Contest are part of Culver’s Thank You Farmers Project. The program is focused on making sure we have enough wholesome food to serve our growing population by supporting agricultural education programs that encourage smart farming. To date, the Thank You Farmers Project has raised over $2.5 million in support of the National FFA Organization and Foundation, local FFA chapters, and a variety of agricultural education programs.

Company History

14.  Culver’s was founded in 1984 by Craig Culver, his wife Lea, and his parents George and Ruth Culver in Sauk City, Wisconsin. George and Ruth Culver had owned an A&W franchise as well as other restaurants since the 1960s, so Craig Culver grew up in the restaurant industry.

15.  After college, Craig worked at McDonald’s and even tried to run his own restaurant. He went back to work for his parents and the Culvers eventually decided to open their own restaurant based on their own family recipes.

16.  The first item on the Culver’s menu was burgers, but Craig knew that they needed their burgers to stand out from the competition. He remembered that his mother would sometimes butter the top of a bun and lightly grill it until toasted. Craig came up with the “Butter Burger,” which is now Culver’s signature item. To go along with the Butter Burgers, the Culvers served frozen custard, which was a treat the family had always enjoyed.

17.  After a few years of running the first Culver’s restaurant, the Culver family started franchising the concept in 1990. The first franchised Culver’s opened in Baraboo, Wisconsin and more locations across the state soon followed. Over the next few years, Culver’s continued to expand around the American Midwest. In the early 2000s, Culver’s started opening locations outside of the area in states like Colorado and Wyoming.

18.  In 2017, Culver’s corporation sold a minority share to Roark Capital Group, a private equity firm based in Atlanta. The Culver family retains majority ownership.

19.  Today, Culver’s has locations in more than 25 states with plans to expand even further.

Entrepreneur’s Franchise 500

20.  Culver’s ranked No. 9 on Entrepreneur’s 2020 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Culver’s 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 Culver’s 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

Franchised

2017

• Outlets at the Start of the Year:  597
• Outlets at the End of the Year:  634
• Net Change:  +37

2018

• Outlets at the Start of the Year:  634
• Outlets at the End of the Year:  680
• Net Change:  +46

2019

• Outlets at the Start of the Year:  680
• Outlets at the End of the Year:  726
• Net Change:  +46

Company-Owned

2017

• Outlets at the Start of the Year:  8
• Outlets at the End of the Year:  7
• Net Change:  -1

2018

• Outlets at the Start of the Year:  7
• Outlets at the End of the Year:  6
• Net Change:  -1

2019

• Outlets at the Start of the Year:  6
• Outlets at the End of the Year:  6
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis

Schedule of Restaurant Financial Data

• The following information discloses sales of the 677 franchised Culver’s Restaurants (“Franchised Restaurants”) and the 6 company-owned Culver’s Restaurants (“Company-Owned Restaurants”) open for the entire 12-month period ended December 31, 2019, and also selected cost percentages for the 6 Company-Owned Restaurants for the entire 12-month period ended December 31, 2019.

• This includes information about non-traditional locations (including 2 Culver’s Restaurants that do not have a drive thru window, 5 Culver’s Restaurants that share a building with a convenience store, and 1 Culver’s Restaurant that occupies an end-cap of a multi-tenant building).

• The following information does not include information from the 46 franchised Culver’s Restaurants open as of December 31, 2019, but that were not open as of January 1, 2019, and therefore did not operate for the entire 12-month period, nor does it include information from 2 franchised Culver’s Restaurants that were closed for a period of time during 2019 due to damage to the Restaurants, or 1 franchised Culver’s Restaurant that was closed for a period of time during 2019 due to a substantial remodel, rebuild, or relocation of the Restaurant, and therefore none of these Restaurants operated for the entire 12-month period.

• The Company-Owned Restaurants are located in Sauk City, Spring Green, Richland Center, Baraboo, Middleton, and Madison, Wisconsin.

• The buildings housing the Company-Owned Restaurants are single-purpose, one story, and freestanding, seating 88 to 120 guests at one time, which is comparable to the Culver’s Restaurants expected to be operated under the Franchise Agreement.

• Substantially the same services were offered to the Company-Owned Restaurants as are provided to the Franchised Restaurants. The franchisor does not, however, provide certain services to franchisees such as financing, accounting, legal, personnel, construction, management, financial, and food and labor cost systems.

• The Company-Owned Restaurants also offered substantially the same products and services to the general public as will the Culver’s Restaurants to be operated under the Franchise Agreement.

• The following tables were prepared on a basis consistent with generally accepted accounting principles and the same accounting system was used for each Company-Owned Restaurant.

• The figures used in the tables are based on an annual performance. The information presented in the tables has not been audited, and the franchisor has not independently verified that the information provided by Franchised Restaurants is correct.

Part 1 – Franchised Restaurants Open 12 Months