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

• Section I – Background information on the Charleys Philly Steaks franchise opportunity, including relevant news updates

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

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

• 2019 average gross sales, median gross sales, and range of gross sales for the 520 franchised and company-owned Charleys Philly Steaks Restaurants that were open during the entire 2019 calendar year, grouped according to venue type (military bases, airport, mall food court, strip center, and all)

• 2019 average gross sales, median gross sales, and range of gross sales for the 466 franchised Charleys Philly Steaks Restaurants that were open during the entire 2019 calendar year, grouped according to venue type (military bases, airport, mall food court, strip center, and all)

• 2019 average gross sales, median gross sales, and range of gross sales for the 54 company-owned Charleys Philly Steaks Restaurants that were open during the entire 2019 calendar year, grouped according to venue type (mall food court, strip center, and all)

Section I – Background Information

14 Things You Need to Know About the Charleys Philly Steaks Franchise

Offers Support to Franchisees During Ongoing COVID-19 Pandemic

1.  In mid-April 2020, amid the ongoing COVID-19 pandemic, Charleys Philly Steaks discussed the company’s future as well as how the company was supporting stores that have remained open. With preventative measures in place to ensure the safety and health of both employees and customers, there were still 166 Charleys Philly Steaks locations open (at the time) for takeout and delivery services only. These franchise owners were becoming more creative with ways to engage consumers.

2.  Suyong Yi, an operator in Milwaukee, Wisconsin, has increased the store’s social media presence. “Social media gives our customers a chance to share their genuine experience. That’s even more important now because seeing good experiences and comments can help other people feel better about choosing to eat with us,” said Yi.

3.  Julie Vulcain, a multi-unit franchise owner in Florida, viewed the shift in business as an opportunity to serve the community by offering a discount to first responders who order from Charleys Philly Steaks. Additionally, she has been utilizing third-party delivery services to offer promotions to customers. Per Vulcain, “the reactions from guests have been absolutely incredible. Customers are very excited to still eat Charleys.”

4.  Along with finding ways to support the stores that remained open, Charleys Philly Steaks helped stores that were temporarily closed. All corporate hourly team members were offered Care Pay to soften the impact, and management continued to receive pay. Many franchised Charleys Philly Steaks locations received a reduced royalty fee and additional support is being considered as the COVID-19 situation continues to unfold.

5.  Looking ahead, the Charleys Philly Steaks corporate team worked on several exciting initiatives. The brand launched a new app and online ordering platform to improve the customer experience online and to give customers a chance to earn rewards. The team also prepped menu updates and promotions to relaunch the brand post-COVID.

Launches Customer of the Year Program

6.  At the end of December 2019, Charleys Philly Steaks launched its Customer of the Year program. The inspiration for the Customer of the Year program began at a corporate-owned store. It was discovered that longtime Charleys patron, Esther Wrightsel, traveled several times each week to Charleys Philly Steaks, with her commute often equating to over 50 miles roundtrip.

7.  However, these frequent trips established more than just a customer satisfying their Cheesesteak cravings; a relationship formed. The general manager and store employees came to know her by name and have her “usual” order memorized. Esther refers to the store manager as her “buddy” and knows store employees by their first names, developing a friendship atypical from the standard customer and restaurant transaction.

8.  Upon learning about Esther’s story, Charleys Philly Steaks knew it had discovered something special and wanted to recognize this top customer. Moreover, the brand realized that there are other customers like Esther and stores that are willing to go the extra step to make these lasting impressions. It was time to recognize and celebrate these dedicated supporters around the world, while also acknowledging the stores who helped create such memorable experiences for their customers.

9.  The Customer of the Year program kicked off on December 5, 2019 at Esther’s preferred Charleys Philly Steaks store at 6975 E. Broad St., Columbus, Ohio. Several district managers, corporate employees, and company owner and founder Charley Shin joined in celebrating the brand’s first inductee.

10.  Esther was presented with branded gifts as well as a special award recognizing her as 2019’s Customer of the Year. The location also displayed prominent signage within the store that featured Esther’s custom Philly of choice – the Chicken Buffalo with bacon and extra Ranch. A plaque also went up at the store to further commemorate her 20+ years of patronage to the brand.

Company History

11.  Charleys Philly Steaks was founded as Charleys Steakery in 1986 by Charley Shin in Columbus, Ohio. At the time, Shin was still in college studying real estate and he tasted his first Philly cheesesteak sandwich the year before. Shin immediately fell in love with the sandwich and experimented with making his own version. After he was satisfied, Shin knew that he could sell his sandwich to his fellow students at Ohio State University.

12.  With the support of his mother, who already owned a Japanese/Korean restaurant, Shin opened the first Charleys near the Ohio State University campus. Shin’s sandwiches, along with gourmet fries and all-natural lemonades, were an immediate hit with the college crowd.

13.  After a few more years of successfully running the first Charleys, Shin was ready to expand; he launched franchising in 1991. The brand went through several name changes before settling on Charleys Philly Steaks in 2012. Today, there are Charleys Philly Steaks locations in 46 states and 17 countries.

Entrepreneur’s Franchise 500

14.  Charleys Philly Steaks ranked No. 126 on Entrepreneur’s 2020 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Charleys Philly Steaks 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 Charleys Philly Steaks’ 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:  435
• Outlets at the End of the Year:  455
• Net Change:  +20

2018

• Outlets at the Start of the Year:  455
• Outlets at the End of the Year:  471
• Net Change:  +16

2019

• Outlets at the Start of the Year:  471
• Outlets at the End of the Year:  492
• Net Change:  +21

Company-Owned

2017

• Outlets at the Start of the Year:  55
• Outlets at the End of the Year:  55
• Net Change:  0

2018

• Outlets at the Start of the Year:  55
• Outlets at the End of the Year:  57
• Net Change:  +2

2019

• Outlets at the Start of the Year:  57
• Outlets at the End of the Year:  57
• Net Change:  0

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

• The following tables present information about the historic annual sales of 520 Charleys Restaurants that were open during the entire 2019 calendar year.

Part 1 – Statement of Average Gross Sales for Franchised and Company-Owned Restaurants 2019

• There were 57 company-owned Restaurants and 492 franchised Restaurants as of December 31, 2019.

• The Statements of Average Gross Sales for 2019 consist of the average annual Gross Sales of 54 company-owned Restaurants and 466 franchised Restaurants that were open during the entire 2019 calendar year.

• The Statements of Average Gross Sales exclude the results from 3 company-owned Restaurants and 26 franchised Restaurants that were not open during the entire 2019 calendar year.

• The term “Gross Sales” means the aggregate amount of all sales of food, beverages, and other products sold and services rendered in connection with a Restaurant, including monies derived from sales at or away from the Restaurant, whether for cash or credit, but excluding: (1) all federal, state, or municipal sales or service taxes collected from customers and paid to the appropriate taxing authorities; and (2) all customer refunds and adjustments and promotional discounts made by the Restaurant.

• The Gross Sales of franchised Restaurants were derived from unaudited financial reports submitted by franchisees for the purpose of computing royalty fees.

• The franchisor compiled the Gross Sales of company-owned Restaurants on the basis of generally accepted accounting principles consistent with those included in its annual audited consolidated financial statements, consistently applied. The information presented is unaudited. All company-owned Restaurants use the same accounting methods and system and are not materially different from the Restaurant that you will operate.

• Some Restaurants have sold this much. Your individual results may differ. There is no assurance that you’ll sell as much.

• The franchisor has not included the costs of sales, operating costs, or other costs and expenses for the Restaurants.

Military Bases