Taco Bell Franchise Costs: Estimated Initial Investment (Item 7, 2021 FDD)

The different types of facilities for which Taco Bell grants franchises include free-standing, permanent buildings of various sizes and configurations that offer the full Taco Bell menu. The buildings include a kitchen facility where food is prepared and assembled, a counter where orders are placed, paid for and food is delivered, tables and seats for customers and, frequently, an automobile drive thru (“Traditional Units”).

Franchises are also granted for buildings with several of the above features that share a facility with a gas and convenience store (“Power Pumpers”) and for in-line locations (“In-Lines”) with or without a drive thru that also include the other above features.

This table lists average costs for a traditional unit and the restaurant portion of a power pumper. Note, however, that it does not take into consideration restaurant parking configurations, which may differ at a gas and convenience store location. Nor does it include any of the costs of development of the gas and convenience store portions of the power pumper building, as those portions are separate and distinct from the power pumper Unit.

Certain security deposits may be refundable. None of the other expenditures are refundable.

1. Background Check Fee: $350 to $600 per person

2. Initial Franchise Fee: $45,000

Franchisees of Traditional Units who qualify for the National Incentive Program will benefit from a number of incentives, one of which is the waiver of what would otherwise be an initial franchise fee of $45,000.

Franchisees of KT Units who qualify for the De-Coupling Incentive Program may benefit from a number of incentives, one of which is the waiver of what would otherwise be a successor fee of $22,500.

3. First Unit Construction Services: $27,250

4. Optional Real Estate Services: $0 to $37,250

For the first Unit that you open, Taco Bell requires that you enter into a Development Services Agreement with YRSG for construction services to be provided by YRSG (or its designee) at a cost of $25,000. You must also pay YRSG directly for ADA inspection costs (which are estimated to cost $2,250, as reflected in the above $27,250 estimate for the cost of First Unit Construction Services). YRSG (or its designee) also provides real estate services, which are optional, at a cost of $10,000.

For your second and subsequent Units, you are not required to, but may, sign a Development Services Agreement with YRSG for construction and/or real estate services to be provided by YRSG (or its designee), at the costs provided above, or you may use an approved third-party construction management firm.

For additional on-site visits, beyond the construction management phase of the development services, due to circumstances beyond YRSG’s control and necessary to complete the project, you will be charged $1,600 per day on site if YRSG has two weeks’ prior notice, or $2,000 per day on site if YRSG has less than two weeks’ prior notice.

5. Permits, Licenses, Security Deposits: $74,000 to $125,000

This amount includes costs for a required Preferred National A&E Consultant to do the A&E work as described in Item 5, geotechnical services, material testing, architectural services, civil services, permit processing, inspection, utility fees, special impact fees, etc.

You will need to adjust your projected costs based on the location where you plan to build, as actual costs vary considerably according to local building and zoning ordinances, prevailing construction costs in the geographic region, and size and condition of the site.

This figure is an estimate, and Taco Bell cannot guarantee that you will not have additional expenses starting the business.

6. Real Property: $175,000 to $1,400,000

Land costs vary, depending on size and location and whether you purchase or lease the site. The estimates given are for purchased sites.

Base rent may range from $20,000 to $135,000 or more per year for a ground lease; costs will be higher if the lease includes percentage rent. Base rent does not include taxes, insurance, and other applicable fees associated with leasing the site.

These figures are estimates, and Taco Bell cannot guarantee that you will not have additional expenses starting the business.

7. Building/Site Construction: $550,000 to $1,200,000

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The building and site construction cost estimates are based on development in Dallas, Texas. You will need to adjust your projected costs based on the location where you plan to build, as actual costs vary considerably according to local building and zoning ordinances, prevailing construction costs in the geographic region, and size and condition of the site.

These figures are estimates, and Taco Bell cannot guarantee that you will not have additional expenses starting the business.

8. Equipment/Signage/Decor/POS: $375,000 to $460,000

9. Initial Inventory: $7,000 to $10,000

Opening inventory figures are based on costs for the first week of operation. Costs will vary depending on your actual sales.

10. Grand Opening Expense: $5,000

You must spend $5,000 within the first 6 months of opening in advertising and promoting the restaurant in accordance with Taco Bell’s opening procedures although you may spend more. Provided that all paid invoices or other proofs of expenditure are submitted to Taco Bell within 9 months of the opening date, Taco Bell will reimburse you for amounts not to exceed $5,000.

Currently, this $5,000 expenditure is neither required nor reimbursable should Taco Bell enter with you into a Successor Franchise Agreement or should Taco Bell issue a Franchise Agreement for a Unit that “flips” from a License Agreement to a Franchise Agreement.

11. Additional Funds for 3 Months: $40,000 to $60,000

The Additional Funds category includes an estimate of the funds needed to cover incremental operating expenses for the initial three months of business, i.e., costs and expenses that generally occur in the startup period of the business above and beyond the standard costs of operation. These figures are estimates, and Taco Bell cannot guarantee that you will not have additional expenses starting the business.

Both operating costs and incremental costs associated with the startup phase of the business depend on many factors, including your management skill, experience and business acumen, the developing experience and efficiency of the crew members, local economic conditions, local market conditions, prevailing wage rates in your community, competition, and the sales level reached in the period covered.

Additionally, you are responsible for all costs and expenses associated with the required training, including travel and living expenses, etc. for your employees.