In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the McAlister’s Deli franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a McAlister’s Deli 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 McAlister’s Deli franchise, based on Items 5 and 6 of the company’s 2020 FDD
- Section IV – Number of franchised and company-owned McAlister’s Deli 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 McAlister’s Deli’s financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:
- 2019 average net sales by quartile for the 383 franchised Traditional McAlister’s Deli Restaurants that operated throughout all of Fiscal Year 2019
- 2019 average net sales for the 23 affiliate-owned and 383 franchised Traditional McAlister’s Deli Restaurants that operated throughout all of Fiscal Year 2019
- 2019 average total gross sales, cost of goods sold, personnel expenses, advertising, operating expenses, occupancy expenses, general and administrative expenses, and EBITDA from operations for the 301 franchised Traditional McAlister’s Deli Restaurants that operated throughout all of Fiscal Year 2019
Section I – Background Information
16 Things You Need to Know About the McAlister’s Deli Franchise
Parent Company Launches Franchise Development Webinar Series
1. In mid-May 2020, Focus Brands, parent company of McAlister’s Deli, launched a webinar series to help educate area developers and prospective franchisees on post-COVID-19 growth plans. Beginning on May 12 with McAlister’s Deli, attendees were able to gather key insights into growth opportunities and operational adjustments made to meet the restaurant industry’s new normal. New target markets and development incentives were also announced.
2. The first presentation was led by Focus Brands’ COO and President Kat Cole, CDO Tim Muir, and McAlister’s President Joe Guith. With an average unit volume of nearly $1.7 million, McAlister’s Deli was presented first followed by Jamba and Moe’s Southwest Grill. Each one-hour webinar included a 15-minute Q&A session.
3. According to Jim Holthouser, CEO of Focus Brands, “We know those in franchising are being inundated with information, so we’re providing an uninterrupted opportunity for prospects to hear why our brands offer an exponential growth opportunity. Each webinar will be guided by key members of the leadership team and will give attendees the chance to learn new information and hear our brand stories and vision. The time to plan for the future is now and we’re excited to share our strategy with prospects.”
Parent Company Appoints New Brand Executives and Names Chief People Officer
4. In mid-December 2020, Focus Brands, parent company of McAlister’s Deli, Auntie Anne’s, Carvel, Cinnabon, Jamba, Moe’s Southwest Grill, and Schlotzsky’s, announced newly-appointed executive brand management and marketing leadership to oversee the strategic direction of some of its brands and continue to drive brand relevance and market share.
5. The appointments include the following: Kendall Ware, chief brand officer for Carvel and Cinnabon; Alisa Gmelich, chief brand officer for Auntie Anne’s; Cynthia Liu, vice president of marketing for Auntie Anne’s; and Danielle Porto Parra, vice president of marketing for McAlister’s Deli. Additionally, with the company’s continuing focus on recruitment, retention, and company culture, Melissa Smith, SPHR, MBA took the helm as chief people officer for Focus Brands.
6. Jim Holthouser, CEO of Focus Brands, said, “This year has been about refining our structure and our brands to accelerate performance and prepare us for the future. As we end 2020, I know we have the right talent, with the right strategies in place to take our brands and our business to the next level.”
Partners with Meals on Wheels America for “Warming Up the Community” Campaign
7. At the beginning of November 2020, McAlister’s Deli announced that it was partnering with Meals on Wheels America, the leadership organization supporting the more than 5,000 community-based programs across the country that are dedicated to addressing senior isolation and hunger, for the second year of its “Warming Up the Community” campaign.
8. From November 1-30, 2020, McAlister’s donated 10 cents for every soup sold, starting with a minimum donation of $100,000 to Meals on Wheels America to support their efforts to reduce hunger and senior isolation. To help support the effort, customers could order one of McAlister’s soups in a cup, bowl, bread bowl, or as part of a Choose 2 at participating locations. All soups can be ordered in-restaurant, online, or via the McAlister’s app for to-go and curbside pickup. McAlister’s Delivery is also available at serviceable locations.
9. Joe Guith, president of McAlister’s Deli, said, “Since McAlister’s was founded in 1989, the brand has been committed to supporting our local communities and now with more than 470 restaurants across the country, we still live up to that promise. Through our partnership with Meals on Wheels, the McAlister’s brand is pledging to donate a minimum of $100,000 to help provide meals and companionship for seniors in our local communities.”
10. In the wake of COVID, food insecurity has been on the rise and one group in particular has been hit extra hard – seniors. Before the pandemic took hold, more than 9.7 million seniors across the country were threatened by hunger and that number has gone up significantly in the past few months. McAlister’s “Warming Up the Community” campaign aimed to raise funds to help provide warm meals and comfort to seniors around the holidays.
11. According to Kristine Templin, chief development officer of Meals on Wheels America, “This year is unlike any we have ever experienced, and we are seeing our nation’s seniors encountering food insecurity at a growing rate. In fact, Meals on Wheels programs are serving, on average, 77 percent more meals and 47 percent more seniors than they were prior to COVID-19. Together with McAlister’s Deli, we hope to help raise awareness of how people can help provide support to seniors in their local communities with a warm meal and a friendly smile when they need it most.”
12. McAlister’s employees also had the opportunity to volunteer in two ways during the campaign. First, they could create handmade cards that contained personalized notes and well wishes for Meals on Wheels seniors. These cards were delivered to clients to help foster invaluable human connection during the holiday season. Second, McAlister’s locations also had the option to host a day of service with their local Meals on Wheels program to support local efforts during this difficult time.
13. McAlister’s Deli was founded in 1989 by Don Newcomb in Oxford, Mississippi. Newcomb, who was a dentist at the time as well as a Sonic and Danver’s franchise owner, opened McAlister’s in a renovated gas station that was turned into a diner for a movie. McAlister’s was a big hit with college students and Newcomb opened additional locations in nearby college towns. In 1994, Newcomb started franchising the McAlister’s Deli concept and by the end of the 1990s, there were several dozen locations opened.
14. In 1999, Newcomb sold McAlister’s Deli to CEO Michael J. Stack and executive Philip Friedman for an undisclosed amount. Newcomb remained with the company as a board director and as an exclusive franchisee for Kentucky. At the time of the sale, McAlister’s Deli had 45 franchised and company-owned locations in the Southeast.
15. Over the next few years, McAlister’s Deli continued to grow around the U.S. and in 2005, the company was acquired by Roark Capital Group. McAlister’s Deli is still owned and operated by Focus Brands, an affiliate of Roark Capital Group. Today, there are McAlister’s Deli locations all across the United States.
Entrepreneur’s Franchise 500
16. McAlister’s Deli ranked No. 47 on Entrepreneur’s 2021 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of McAlister’s Deli 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 McAlister’s Deli’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
- Outlets at the Start of the Year: 355
- Outlets at the End of the Year: 381
- Net Change: +26
- Outlets at the Start of the Year: 381
- Outlets at the End of the Year: 415
- Net Change: +34
- Outlets at the Start of the Year: 415
- Outlets at the End of the Year: 438
- Net Change: +23
- Outlets at the Start of the Year: 32
- Outlets at the End of the Year: 28
- Net Change: -4
- Outlets at the Start of the Year: 28
- Outlets at the End of the Year: 29
- Net Change: +1
- Outlets at the Start of the Year: 29
- Outlets at the End of the Year: 31
- Net Change: +2
Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis
Part 1 – Statement of Average Net Sales by Quartiles for Franchised Traditional Restaurants (Fiscal Year 2019)