In this FDD Talk post, you’ll learn the following:
- Section I – Estimated initial investment (franchise costs) for a Teriyaki Madness franchise, based on Item 7 of the company’s 2022 FDD
- Section II – Initial franchise fee, royalty fee, and marketing fee for a Teriyaki Madness franchise, based on Items 5 and 6 of the company’s 2022 FDD
- Section III – Number of franchised and company-owned Teriyaki Madness outlets at the start of the year and the end of the year for 2019, 2020, and 2021, based on Item 20 of the company’s 2022 FDD
- Section IV – Background information on the Teriyaki Madness franchise opportunity, including relevant news updates
- Section V – Presentation and analysis of Teriyaki Madness’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2022 FDD, including information on the:
- 2016 to 2021 average, median, high, and low gross sales for the franchised Teriyaki Madness restaurants that have been in operation for at least two years, have had no change of ownership within such two-year period, were larger than 1,350 square feet and smaller than 3,000 square feet (which matches the footprint required of new Teriyaki Shops), were in traditional locations without a drive-through, and are not currently for sale
- 2021 average total sales, cost of goods sold, gross profit, payroll and labor, occupancy, direct operating expenses, and operating income for the 36 franchised Teriyaki Madness restaurants (including 4 affiliate-owned restaurants owned by the franchisor’s predecessor) that have been in operation for at least two years, have had no change of ownership within such two-year period, were larger than 1,350 square feet and smaller than 3,000 square feet, were in traditional locations without a drive-through, are not currently for sale, and provided their profit and loss statements to the franchisor
- Section VI – Key ratios, comparables, computations, and analyses for the Teriyaki Madness franchise opportunity (exclusive content for Platinum subscribers)
Section I – Teriyaki Madness Franchise Costs
- Teriyaki Madness franchise costs, based on Item 7 of the company’s 2022 FDD:
- Initial Franchise Fee: $45,000 to $150,000
- Shop Opening Assistance Fee: $27,500
- Site Investigation: $1,000
- Site Survey: $2,000 to $5,000
- Rent, Security Deposit, Utility Deposit: $7,000 to $13,000
- Permit Expeditor: $1,000 to $2,000
- Leasehold Improvements: $100,000 to $260,000
- Furniture, Fixtures, and Equipment: $90,000 to $170,000
- Architect: $11,500 to $15,000
- Initial Inventory and Supplies: $12,500 to $17,000
- Insurance: $1,500 to $5,000
- Business Licenses and Permits: $500 to $9,860
- Professional Fees: $2,500 to $4,000
- Signage: $9,000 to $23,900
- Security and Music System: $1,600 to $2,000
- Office Equipment and Supplies: $12,000 to $15,000
- Grand Opening Promotion: $10,000
- Uniforms: $600 to $1,000
- Initial and Hands-On Training Expenses: $1,200 to $4,500
- Opening Extension Fee: $0 to $3,000
- Additional Funds for 3 Months: $10,000 to $30,000
- Total Estimated Teriyaki Madness Franchise Costs: $346,400 to $768,760
Section II – Teriyaki Madness’s Initial Franchise Fee, Royalty Fee, and Marketing Fee
- Teriyaki Madness’s initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2022 FDD:
- Initial Franchise Fee: $45,000 to $150,000
- Royalty Fee: 6% of Net Sales
- Marketing Fund Contribution: 3% of Net Sales
Section III – Number of Franchised and Company-Owned Teriyaki Madness Outlets
Franchised
2019
- Outlets at the Start of the Year: 42
- Outlets at the End of the Year: 60
- Net Change: +18
2020
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- Outlets at the Start of the Year: 60
- Outlets at the End of the Year: 88
- Net Change: +28
2021
- Outlets at the Start of the Year: 88
- Outlets at the End of the Year: 100
- Net Change: +12
Company-Owned
2019
- Outlets at the Start of the Year: 2
- Outlets at the End of the Year: 2
- Net Change: 0
2020
- Outlets at the Start of the Year: 2
- Outlets at the End of the Year: 0
- Net Change: -2
2021
- Outlets at the Start of the Year: 0
- Outlets at the End of the Year: 1
- Net Change: +1
Section IV – Background Information on the Teriyaki Madness Franchise
17 Things You Need to Know About the Teriyaki Madness Franchise
Named Fastest-Growing Restaurant Chain in America by Technomic and Restaurant Business
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1. In mid-May 2021, based on data from Technomic, Restaurant Business named Teriyaki Madness as the fastest-growing big restaurant chain in the United States, beating out brands like Popeyes Louisiana Chicken, Sonic, and Wingstop for the honor. According to the Technomic Top 500 Chain Restaurant Report, while last year’s economic climate favored mega-chains, Teriyaki Madness, with just over 100 shops in its system, still managed to come out on top.
2. The brand, which specializes in Seattle-style teriyaki rice bowls, opened 30 new shops in 2020, including 25 during the pandemic. Even as the COVID-19 crisis made 2020 a daunting year for the restaurant industry, the nimble brand opened new shops at its fastest pace ever and posted impressive sales growth in its teriyaki shops throughout the country.
3. Michael Haith, CEO of Teriyaki Madness, said, “We’re proud to be recognized among the most well-known, established names in the restaurant industry by respected industry institutions like Technomic and Restaurant Business. And with the pandemic fading in the rearview mirror, we’re looking forward to increasing the momentum. We think 2021 will be even more extraordinary for us.”
4. With 89 shops across the United States at the end of 2020, the chain is ranked the number one fastest-growing big restaurant chain by Restaurant Business based on data provided in Technomic’s list of the 500 largest chains. By the end of 2020, Teriyaki Madness also put these stats up on the board:
- 30 newly-opened shops and an astounding 39% jump in sales – hitting $60 million across the system;
- 45% year-over-year increase in grand opening sales for new shops in 2020;
- 50% increase in corporate staff, bringing on 27 new hires to support system growth;
- 18%+ same-store sales through COVID-19 (Chipotle had +8.3% for context);
- 78% of franchisees pursuing additional locations.
5. Haith added, “Not only are we excited to have welcomed so many new franchise partners in 2020. The true exhibit of TMAD’s strength is in the health of the shop’s sales increases through the most challenging time in modern history for restaurants. We’re just getting started, so our enormous demand from franchisee candidates to join us on our way to becoming America’s favorite Teriyaki bowl is a welcome surprise to us.”
Launches New Catering Options
6. In late October 2021, Teriyaki Madness launched its new catering program. The Teriyaki Madness catering program is specifically designed to curb those party-planning nerves with an easy to navigate platform and menu. Customers can order Teriyaki Bars (which feed up to 10 people) and can add on a la carte trays, appetizers, desserts, and drinks. Customers can order catering online.
7. Jodi Boyce, chief marketing officer of Teriyaki Madness, said, “Always one for imperfect timing, we actually originally launched our catering program in early March 2020. Obviously, it was on the down-low for a while, but now that all those awkward family get-togethers and boozy holiday office parties are coming back, we thought it’d be a great time to remind everyone of our top-notch catering options, and even roll out some new ones!”
8. Teriyaki Madness rolled out additional catering options, including individually-portioned Bowl Packs. These Bowl Packs include some of the brand’s most popular bowls, packaged together for customers who don’t want to use shareable trays due to COVID-19. The individually-served Bowl Packs include:
- Spicy Lovers: 10 Spicy Chicken bowls, all served with white rice and veggies;
- Kid-Friendly, Mother-Approved: Five Orange Chicken bowls and five Chicken Teriyaki bowls, with white rice and veggies;
- Variety Pack: Three Chicken Teriyaki bowls, three Spicy Chicken bowls, two Steak bowls, and two Orange Chicken bowls, all with white rice and veggies;
- Power Bowl Pack: Five Spicy Chicken bowls and five Teriyaki Chicken bowls, all with veggie base and no rice or noodles;
- Tofu Fan Pack: Five Spicy Tofu bowls and five Tofu Teriyaki Bowls, all with white rice and veggies.
9. All of these delicious bowls are served in reusable trays with tight, heat-capturing lids – they are microwavable and dishwasher-safe. Teriyaki Madness also serves catering with bottles of its famous Teriyaki Sauce, which means guests can enjoy the sauce long after the event.
Closed Out 2021 with 100 New Franchise Locations Sold Among 31 New Franchisees
10. At the end of January 2022, Teriyaki Madness reported that it wrapped up 2021 with 100 new units sold among 31 new franchisees as it continued to provide its signature teriyaki bowls to a loyal and growing fan base. And it’s not just the franchise’s development efforts that saw growth. Teriyaki Madness’s system-wide sales spiked 39.5% year-over-year from 2019 to 2020. Teriyaki Madness CEO Michael Haith said, “2021 was an excellent year for our franchisees, including many new ones. We are really firing on all cylinders in terms of sensational revenue, sales and franchise development.”
11. In addition to welcoming new franchise partners, Teriyaki Madness saw five existing franchisees upgrade and add additional units, resulting in a total of 12 additional units. The brand also celebrated successful Canadian expansion with multiple locations opened in 2021.
12. Teriyaki Madness grew so fast that its Restaurant Sherpas management program officially sold out. With 55 new Restaurant Sherpa shops in the pipeline, Teriyaki Madness is pausing new applications for its Absolute Absentee ownership option so that the team can focus on supporting current franchisees.
13. Teriyaki Madness is still offering its TMAD Turnkey Program, which offers extended in-shop training of staff and management, collaborative help to hire a General Manager and Assistant General Manager, help building the relationship between franchisees and managers, facilitating of the reporting structure between management and ownership, plus monthly visits from TMAD Business Coaches.
14. The brand’s growth did not go unnoticed. Teriyaki Madness was rated the No. 1 fastest-growing restaurant chain by Restaurant Business, No. 13 on Fast Casual’s list of the Top 100 Movers & Shakers, No. 4 on QSR Magazine’s Best Franchise Deals, and received 14 other prestigious accolades in 2021. Additionally, Teriyaki Madness already has 41 new shops in the opening process for 2022 (at the time of the announcement).
Company History
15. Teriyaki Madness was founded in 2003 by Alan Arreola, Rod Arreola, and Eric Garma in Las Vegas, Nevada. The Arreolas, who are brothers, and their cousin Garma grew up in Seattle. One of the best-known food items from Seattle is teriyaki bowls. Not only did the Arreolas and Garma miss their beloved teriyaki bowls, they felt that the bowls could be a healthier fast-food option. The Teriyaki Madness bowls are modeled after those found in Seattle and feature fresh veggies and high quality proteins.
16. The first Teriyaki Madness store was a success and franchising started in 2005. The Arreolas and Garma opened a few more locations around the Las Vegas area. Then in 2015, they brought in Michael Haith, an experienced franchisor, to help Teriyaki Madness push national expansion. Two years later, Haith acquired Teriyaki Madness and remains as the company’s CEO. Today, there are Teriyaki Madness locations across the United States.
Entrepreneur’s Franchise 500
17. Teriyaki Madness ranked No. 252 on Entrepreneur’s 2022 Franchise 500 list.
Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Teriyaki Madness Franchise (Item 19, 2022 FDD)
Part 1 – Average, Median, High, and Low Gross Sales
- The information in the Gross Sales table below contains Gross Sales information obtained from Teriyaki Madness’s 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) have had no change of ownership within such two-year period;
- (c) were larger than 1,350 square feet and smaller than 3,000 square feet (which matches the footprint required of new Teriyaki Shops);
- (d) were in traditional locations without a drive-through; and
- (e) are not currently for sale (“Conditions”).
2021
- Number of Franchised Shops in the Sample: 36
- High Gross Sales: $2,275,568
- Low Gross Sales: $525,289
- Average Gross Sales (“AGS”): $1,161,201
- Number of Teriyaki Shops at or Above AGS: 17
- Percentage of Teriyaki Shops at or Above AGS: 47%
- Median Gross Sales (“MGS”): $1,101,124
- Number of Teriyaki Shops at or Above MGS: 18
- Percentage of Teriyaki Shops at or Above MGS: 50%
2020
- Number of Franchised Shops in the Sample: 22
- High Gross Sales: $1,666,686
- Low Gross Sales: $508,366
- Average Gross Sales (“AGS”): $1,079,488
- Number of Teriyaki Shops at or Above AGS: 10
- Percentage of Teriyaki Shops at or Above AGS: 45%
- Median Gross Sales (“MGS”): $1,071,902
- Number of Teriyaki Shops at or Above MGS: 11
- Percentage of Teriyaki Shops at or Above MGS: 50%
2019
- Number of Franchised Shops in the Sample: 15
- High Gross Sales: $1,564,146
- Low Gross Sales: $720,371
- Average Gross Sales (“AGS”): $1,154,180
- Number of Teriyaki Shops at or Above AGS: 8
- Percentage of Teriyaki Shops at or Above AGS: 53%
- Median Gross Sales (“MGS”): $1,183,295
- Number of Teriyaki Shops at or Above MGS: 8
- Percentage of Teriyaki Shops at or Above MGS: 53%
2018
- Number of Franchised Shops in the Sample: 13
- High Gross Sales: $1,430,790
- Low Gross Sales: $631,431
- Average Gross Sales (“AGS”): $1,134,507
- Number of Teriyaki Shops at or Above AGS: 7
- Percentage of Teriyaki Shops at or Above AGS: 54%
- Median Gross Sales (“MGS”): $1,247,256
- Number of Teriyaki Shops at or Above MGS: 7
- Percentage of Teriyaki Shops at or Above MGS: 54%
2017
- Number of Franchised Shops in the Sample: 10
- High Gross Sales: $1,338,244
- Low Gross Sales: $585,002
- Average Gross Sales (“AGS”): $1,079,140
- Number of Teriyaki Shops at or Above AGS: 6
- Percentage of Teriyaki Shops at or Above AGS: 60%
- Median Gross Sales (“MGS”): $1,126,762
- Number of Teriyaki Shops at or Above MGS: 6
- Percentage of Teriyaki Shops at or Above MGS: 55%
2016
- Number of Franchised Shops in the Sample: 9
- High Gross Sales: $1,405,107
- Low Gross Sales: $645,613
- Average Gross Sales (“AGS”): $1,148,596
- Number of Teriyaki Shops at or Above AGS: 5
- Percentage of Teriyaki Shops at or Above AGS: 56%
- Median Gross Sales (“MGS”): $1,179,139
- Number of Teriyaki Shops at or Above MGS: 5
- Percentage of Teriyaki Shops at or Above MGS: 56%
- Gross Sales means the revenues from the sale of food, beverages, services, and other items from in-store dining, carry-out, online orders, delivery, third-party voucher sales, catering, and otherwise, including the sale of food and beverages, redemption of gift cards, and merchandise and all other income and consideration of every kind and nature related to the Teriyaki Madness Business or Teriyaki Madness Business operations (including all proceeds from any business interruption insurance) whether for cash or credit and regardless of collection in the case of credit, but does not include any sales taxes or other taxes collected from customers for, and thereafter paid directly to, the appropriate taxing authority.
- The above financial performance representation figures do not reflect the cost of sales, operating expenses, or other costs or expenses that must be deducted from the Gross Sales figures to obtain your net income or profit.
- Some Teriyaki Madness Businesses have generated the sales described above. Your individual financial results are likely to differ. There is no assurance you’ll generate as much sales as these Teriyaki Madness Businesses.
Part 2 – Same-Shop Sales Growth Table
- The information in the Same-Shop Sales Growth table below contains total same-shop Gross Sales growth percentage for all Teriyaki Shops that were open for the entirety of the two years compared and the total stacked same-shop Gross Sale growth percentage for all Teriyaki Shops between the stated years that were open for the entirety of the multi-year period compared.
- The information was derived from information obtained from Teriyaki Madness’s franchisees’ profit and loss statements and is a historical financial performance representation for the United States franchised Teriyaki Shops.
- 2021 vs. 2020 (52 Shops Included): 23%
- 2020 vs. 2019 (35 Shops Included): 7%
- 2019 vs. 2018 (28 Shops Included): 4%
- 2018 vs. 2017 (21 Shops Included): 8%
- 2021 vs. 2019 (34 Shops Included): 32%
- 2021 vs. 2018 (25 Shops Included): 39%
- 2021 vs. 2017 (17 Shops Included): 46%
- The above financial performance representation figures do not reflect the costs of sales, operating expenses, or other costs or expenses that must be deducted from the Gross Sales figures to obtain your net income or profit.
Part 3 – Income Statements for Period Ending December 31, 2021
- The profit and loss statements below are for the 2021 calendar year and are reported by Teriyaki Shop owners. The profit and loss statements below are historical presentations for the 36 franchised Teriyaki Shops that met the Conditions (“2021 Reporting Group”) and that provided profit and loss statements to Teriyaki Madness, including four Teriyaki Shops of the franchisor’s Predecessor’s affiliate.
- All Teriyaki Shops represented below have been open for a minimum of 24 months, are larger than 1,350 square feet, smaller than 3,000 square feet, have not changed ownership in the last two years, are not in resale, and are in traditional locations. Teriyaki Madness has not audited these profit and loss statements.
- Note: Teriyaki Madness presented the actual profit and loss statements for each of the 36 Teriyaki Shops in the 2021 Reporting Group in its Item 19. I calculated the average expenses as a percentage of sales for COGS, Payroll and Labor, Occupancy, and Direct Operating Expenses for these 36 Teriyaki Shops and used the average sales figure of $1,161,201 to calculate the dollar amounts for these expenses.
Average (36 Teriyaki Shops)
Sales: $1,161,201 (100.0%)
COGS: $384,241 (33.09%)
Gross Profit: $776,960 (66.91%)
Operating Expenses
- Payroll and Labor: $330,129 (28.43%)
- Occupancy: $109,269 (9.41%)
- Direct Operating Expenses: $238,511 (20.54%)
- Total Operating Expenses: $677,909 (58.38%)
Operating Income: $99,050 (8.53%)
- Sales means all revenues received from the sale of food, beverages, services, and other items from in-store dining, carry-out, online orders, delivery, third-party voucher sales, catering, and otherwise, including the sale of food and beverages, redemption of gift cards, and merchandise and all other income and consideration of every kind and nature related to the Teriyaki Madness Business or Teriyaki Madness Business operations (including all proceeds from any business interruption insurance), whether for cash or credit, and regardless of collection in the case of credit, but does not include any sales taxes or other taxes collected from customers for, and thereafter paid directly to, the appropriate taxing authority, any discounts provided to customers, any bona fide refunds made to customers, any fees paid to third-party delivery services or aggregators, or any supplier rebates.
- Cost of Goods Sold includes all food and beverage items and related supplies such as utensils, take-away containers, napkins, cups, and straws.
- Gross Profit is defined as Sales less Costs of Goods Sold.
- Payroll and Labor Expenses include wages, salaries and benefits, and include the actual labor costs of all personnel in the restaurants. Locations O and R do not have defined Manager or Owner’s Salary expenses included in their reported labor costs. All others have Manager or Owner’s Salary expenses included in their reported labor cost.
- Occupancy Expenses include items such as rent and utilities.
- Direct Operating Expenses include Royalty Fee and Marketing Fund Contributions, as well as other items such as insurance, marketing, miscellaneous supplies, repairs, and bank fees.
- In some instances, owners reported Direct Operating Expenses that were extraordinary in amount for unknown reasons. The median Direct Operating Expenses for the 2021 Reporting Group was $208,142, the lowest Direct Operating Expenses for the 2021 Reporting Group was $83,264, and the highest Direct Operating Expenses for the 2021 Reporting Group was $725,572. A total of 15 Teriyaki Shops, or 42%, met or exceeded the average, and a total of 18 Teriyaki Shops, or 50%, met or exceeded the median.
- Operating Income is defined as Gross Profit less Payroll and Labor Expenses, Occupancy Expenses, and Direct Operating Expenses. It does not include interest, depreciation, amortization, business taxes, and other costs and expenses that must be deducted from Total Sales figures to obtain net income.
- The franchisor’s Predecessor’s affiliate Teriyaki Shops (locations A, C, F, I, and V) do not pay a Royalty Fee. The franchisor has added a 6% royalty to these operating income statements. The illustrative adjustments of adding a Royalty Fee (“Franchise Related Royalty Adjustment”) in the operating income statements above present financial projections. These projections are based on historical information. Certain assumptions and bases were made for these projections.
- Specifically, in making the Franchise Related Royalty Adjustments, the franchisor assumed that any additional expenses would not have a direct or indirect material effect on revenue or other expenses. Any change in these assumptions would require material alterations to the projections.
- Some Teriyaki Madness Businesses have generated the financial results described above. Your individual financial results are likely to differ. There is no assurance you’ll generate the financial results that were generated by these Teriyaki Madness Businesses.
- You should conduct an independent investigation of the costs and expenses you will incur in operating your Teriyaki Madness Business. Franchisees or former franchisees listed in the Franchise Disclosure Document may be one source of this information.
Section VI – Teriyaki Madness Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️
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