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

• Section I – Estimated initial investment (franchise costs) for an Erbert & Gerbert’s Sandwich Shop franchise, based on Item 7 of the company’s 2022 FDD

• Section II – Initial franchise fee, royalty fee, and marketing fee for an Erbert & Gerbert’s Sandwich Shop franchise, based on Items 5 and 6 of the company’s 2022 FDD

• Section III – Number of franchised and company-owned Erbert & Gerbert’s Sandwich Shop 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 Erbert & Gerbert’s Sandwich Shop franchise opportunity, including relevant news updates

• Section V – Presentation and analysis of Erbert & Gerbert’s Sandwich Shop’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2022 FDD, including information on the:

• 2021 average, median, high, and low annual revenues for the top tier, mid tier, and lower tier of the 42 franchised Erbert & Gerbert’s Sandwich Shop outlets that were open for all 12 months during the 2021 calendar year

• 2021 average, median, high, and low annual food cost for the top tier, mid tier, and lower tier of the 33 franchised Erbert & Gerbert’s Sandwich Shop outlets that were open for all 12 months during the 2021 calendar year and who delivered financial reports to the franchisor showing food costs

• actual 2021 annual revenue, food cost, wages, and EBITDA for the single affiliate Erbert & Gerbert’s Sandwich Shop outlet that was open for all 12 months during the 2021 calendar year

• Section VI – Key ratios, comparables, computations, and analyses for the Erbert & Gerbert’s Sandwich Shop franchise opportunity (exclusive content for Platinum subscribers)

Section I – Erbert & Gerbert’s Sandwich Shop Franchise Costs

• Erbert & Gerbert’s Sandwich Shop franchise costs, based on Item 7 of the company’s 2022 FDD:

• Initial Franchise Fee:  $30,000
• Leasehold Improvements:  $50,000 to $145,000
• Lease Payment and Security Deposit:  $4,000 to $14,000
• Travel and Living Expenses for You and Your Manager During Training:  $1,500 to $4,200
• Insurance Premiums – 3 Months:  $2,000 to $3,500
• Opening Inventory of Supplies, Food, and Beverages:  $3,000 to $10,000
• Uniforms, Small Wares, Office Supplies, Menus, and Other Printed Materials:  $6,000 to $8,000
• Exterior Signage and Interior Decor:  $10,000 to $18,000
• Furniture, Fixtures, and Equipment:  $40,000 to $150,000
• Computer Systems:  $8,820 to $11,070
• Professional Services:  $2,500 to $5,000
• Architectural/Design Services:  $8,500 to $16,500
• Miscellaneous Licenses, Deposits, and Permits:  $2,500 to $5,000
• Grand Opening Advertising and Promotion:  $10,000
• Additional Funds – 3 Months:  $15,000 to $30,000
• Total Estimated Erbert & Gerbert’s Sandwich Shop Franchise Costs:  $193,820 to $460,270

Section II – Erbert & Gerbert’s Sandwich Shop’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Erbert & Gerbert’s Sandwich Shop’s initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2022 FDD:

• Initial Franchise Fee:  $17,000 to $30,000 for Traditional Locations; $5,000 for Non-Traditional Locations
• Initial Advertising Fee (Non-Traditional Location):  $750
• Royalty Fee:  6% of Net Revenues for Traditional Locations; 5% of Net Revenues for Non-Traditional Locations
• Advertising Fee:  2% of Net Revenues for Traditional Locations; none for Non-Traditional Locations (other than the Initial Advertising Fee described above)

Section III – Number of Franchised and Company-Owned Erbert & Gerbert’s Sandwich Shop Outlets

Franchised

2019

• Outlets at the Start of the Year:  88
• Outlets at the End of the Year:  90
• Net Change:  +2

2020

• Outlets at the Start of the Year:  90
• Outlets at the End of the Year:  73
• Net Change:  -17

2021

• Outlets at the Start of the Year:  73
• Outlets at the End of the Year:  69
• Net Change:  -4

Company-Owned

2019

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  2
• Net Change:  -1

2020

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  3
• Net Change:  +1

2021

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  3
• Net Change:  0

Section IV – Background Information on the Erbert & Gerbert’s Sandwich Shop Franchise

15 Things You Need to Know About the Erbert & Gerbert’s Sandwich Shop Franchise

Beats Pandemic with New Menu and Store Designs

1.  In early October 2021, Erbert & Gerbert’s Sandwich Shop announced that it had seen double-digit growth through the summer, a refocused menu, new branding and shop design, store expansion, and additional operational and technical leadership. The momentum is expected to continue long-term, as the company works toward a multi-year plan to double store count, grow profit margin by double digits, and deliver best-in-class 24/7 restaurant support. Industry trends point toward strong growth in fast food and quick-service restaurants, burger/sandwich specifically, over the next six years.

2.  According to Eric Wolfe, president and CEO of Erbert & Gerbert’s, “We are pulling out of the pandemic with a game plan to accelerate growth through improved efficiency, increased quality, and enhanced customer service. We are outpacing the market recovery by 10%, thanks to our ability to be nimble, respond quickly to consumer needs, and deliver the products our loyal fans value the most. We also offer an incredible business opportunity for those seeking to pivot jobs. Many people are reconsidering priorities right now and owning a franchise is the perfect opportunity to become your own boss and start a new, rewarding career.”

3.  Wolfe said the pandemic prompted Erbert & Gerbert’s to lean into what the company does best – bold-tasting sandwiches and soups – while removing extraneous menu items. This allowed the company to simplify its operations and staffing model, while doubling down on its successful pre-pandemic quick-service order offerings: online and mobile ordering, take-out, in-store, and third-party delivery. The company is also in the process of enhancing its app, which delivers loyalty points for orders, giving customers the opportunity to customize their rewards.

4.  “The customer experience has always been important, and we learned that is still the case during the pandemic. People want the best tasting food delivered the way they want it,” said Jeremy Burke, vice president of brand development and strategy for Erbert & Gerbert’s.

5.  As Erbert & Gerbert’s prioritizes sandwiches and soups, Burke said the focus will remain on the company’s great bread and boundary-pushing, adventurous taste profiles including recent additions of hearty, hot sandwiches such as the Neuron – loaded with BBQ brisket and mac and cheese. Erbert & Gerbert’s launched limited-time-only offerings, including bold twists on its most successful LTO, The Northern Cheesesteak, in November.

6.  To aid in implementing all the changes, Erbert & Gerbert’s has added a director of operations. Tyler Schwecke comes from competitor Jimmy John’s where he was responsible for overall operations for all Las Vegas Jimmy John’s locations. Prior to that, Tyler was a franchise consultant for Jimmy John’s corporate in Champaign, where he worked directly with Jimmy John’s franchisees on innovative methods for growing sales, reducing costs, and improving in-store execution. Schwecke is responsible for streamlining and enhancing the operations of the brand in its current 78 shops, as well as the additional 18 planned to be added within the year throughout Indiana, Iowa, Minnesota, North Dakota, Ohio, and Wisconsin.

7.  “We have a labor model that works within the current climate, which is supporting our expansion. As a Midwestern company we’re excited to grow here in the Midwest with a mix of franchise and corporate stores. A dozen stores are opening in Iowa alone,” said Schwecke.

8.  A new “out of this world” store design with unique graphics reflecting the bold Erbert & Gerbert sandwich combinations was set to debut in late 2021. An entirely new shop concept that meets consumer needs would be coming soon.

Appoints New Chief Operating Officer

9.  In mid-March 2022, Erbert & Gerbert’s announced that it was expanding and with that acceleration comes a promotion in brand leadership with the naming of Jeremy Burke to chief operations officer. Burke is a creative and insightful executive leader with over 15 years of results in executing strategy and brand development in the restaurant industry. In his previous role as vice president of brand development and strategy, he focused on revitalizing and expanding the Erbert & Gerbert’s brand across the country.

10.  Previous to Erbert & Gerbert’s, Jeremy was the brand and creative lead with Buffalo Wild Wings, where he spent more than a decade building the brand as it grew from 300 locations to more than 1,000 today. Burke was key in the chain’s brand positioning and messaging through multiple touch points, driving both awareness and store traffic. He has been recognized nationally for his extraordinary brand building efforts. He aims to do the same with Erbert & Gerbert’s, now as COO.

11.  “Jeremy is a vet in the industry, and has been with our company in key roles for over four years. He has been integral to Erbert & Gerbert’s success, particularly through the challenges of the pandemic and thriving beyond. He will continue to oversee a cross-functional team that includes operations, marketing, technology, franchise development, and supply as he manages the business overall. He’ll also focus his energy on short and long-term strategic planning for the company and help further ignite brand growth. He is a valuable asset to our success and I look forward to working with him as COO,” said Eric Wolfe, president and CEO of Erbert & Gerbert’s.

Company History

12.  Erbert & Gerbert’s Sandwich Shop was founded in 1988 by Kevin Schippers and his wife Beth in Eau Claire, Wisconsin. The Schippers decided to open a specialty sandwich shop because there weren’t any in the area. The name and theme of the sandwich shop come from Kevin Schippers’ childhood. Schippers’ father made up elaborate bedtime stories called the Adventures of Erbert & Gerbert Herbert. Through the stories, Schippers’ father taught his kids about science, history, adventure, and being a good friend.

13.  The first Erbert & Gerbert’s shop was a success and the Schippers opened a second location in 1990. Franchising began in 1992, but franchises were limited to Minnesota and Wisconsin. In 2003, Kevin Schippers decided to pursue a career in ministry work and the Schippers sold the company to investors led by primary owner Eric Wolfe. However, the Schippers continue to own and operate the original Erbert & Gerbert’s.

14.  The company has remained a fairly small franchise, but it now has locations outside of Minnesota and Wisconsin. Today, there are Erbert & Gerbert’s Sandwich Shop stores in Arizona, Colorado, Indiana, Iowa, Michigan, Minnesota, Montana, Nebraska, North Dakota, South Dakota, Ohio, Texas, and Wisconsin, as well as a single location in both North Carolina and Georgia.

Entrepreneur’s Franchise 500

15.  Erbert & Gerbert’s did not rank on Entrepreneur’s 2022 Franchise 500 list.

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Erbert & Gerbert’s Sandwich Shop Franchise (Item 19, 2022 FDD)

• Erbert & Gerbert’s financial performance representation consists of three parts. Part 1 presents the actual 2021 annual revenues of the 42 franchised outlets that were open for all 12 months during the 2021 calendar year. These 42 outlets represent approximately 61% of the 69 total franchised outlets that were open as of December 31, 2021.

• Franchised outlets that were not open for the entire 12 months of 2021 have been excluded from the representation as their partial year performance is not indicative of the performance the franchisor would reasonably expect to see over an entire calendar year.

• This performance representation is no indication of what a Non-Traditional Location outlet may experience.

• Part 2 presents the actual 2021 food costs of the 33 franchised outlets that were open for all 12 months during the 2021 calendar year and who delivered financial reports to the franchisor showing food costs. These 33 outlets represent approximately 48% of the 69 total franchised outlets that were open as of December 31, 2021.

• Parts 1 and 2 of this financial performance representation is based on the reports submitted to the franchisor by its franchisees.

• Part 3 of this financial performance representation consists of the actual 2021 annual revenue of the single affiliate outlet that was open for all 12 months during the 2021 calendar year. Part 3 also reflects this outlet’s 2021 food costs and total wages as a percentage of 2021 annual revenue. Finally, Part 3 reflects this outlet’s 2021 earnings before interest, taxes, depreciation, and amortization (“EBITDA”) as a percentage of 2021 annual revenue.

• The franchisor is comfortable providing these numbers to you as this outlet was run by its affiliate and its staff did the accounting for this outlet. This outlet is run in accordance with the System and pays all the fees of a franchised outlet including, without limitation, royalties and marketing/advertising fees, and participates in and pays all loyalty programs and program fees. Finally, this outlet also pays a management fee of $6,000 that was not paid by the franchised outlets reflected herein but is reflected in this outlet’s EBITDA.

• This information has not been audited and may not be based on generally accepted accounting principles.

• The actual average annual revenue numbers do not reflect the costs of goods sold, operating expenses, or other costs or expenses that must be deducted from revenue to obtain net income or profit.

Part 1 – Annual Revenues (January 1, 2021 – December 31, 2021) for Franchised Outlets Open All 12 Months

Top Tier

• Number of Outlets:  14
• High Annual Revenue:  $1,762,194
• Low Annual Revenue:  $705,214
• Median Annual Revenue:  $893,944
• Average Annual Revenue:  $943,428
• Number At or Above Average:  6/8
• Percentage At or Above Average:  43%/57%

Mid Tier

• Number of Outlets:  14
• High Annual Revenue:  $669,537
• Low Annual Revenue:  $535,517
• Median Annual Revenue:  $582,593
• Average Annual Revenue:  $582,082
• Number At or Above Average:  7/7
• Percentage At or Above Average:  50%/50%

Lower Tier

• Number of Outlets:  14
• High Annual Revenue:  $537,649
• Low Annual Revenue:  $302,661
• Median Annual Revenue:  $360,615
• Average Annual Revenue:  $392,334
• Number At or Above Average:  5/9
• Percentage At or Above Average:  36%/64%

Part 2 – Annual Food Cost (January 1, 2021 – December 31, 2021) for Franchised Outlets Open All 12 Months

Top Tier

• Number of Outlets:  12
• Low Annual Food Cost:  23.18%
• High Annual Food Cost:  25.77%
• Median Food Cost:  24.98%
• Average Food Cost:  24.96%
• Number At or Above Average:  5/7
• Percentage At or Above Average:  42%/58%

Mid Tier

• Number of Outlets:  11
• Low Annual Food Cost:  26.10%
• High Annual Food Cost:  28.37%
• Median Food Cost:  27.77%
• Average Food Cost:  27.63%
• Number At or Above Average:  3/8
• Percentage At or Above Average:  27%/73%

Lower Tier

• Number of Outlets:  10
• Low Annual Food Cost:  29.09%
• High Annual Food Cost:  34.01%
• Median Food Cost:  30.90%
• Average Food Cost:  30.98%
• Number At or Above Average:  5/5
• Percentage At or Above Average:  50%/50%

Part 3 – Annual Revenue, Food Costs, Wages, and EBITDA (January 1, 2021 – December 31, 2021) for Affiliate-Owned Outlet Open All 12 Months

• Revenue:  $868,855
• Food Costs:  27.5%
• Wages:  30%
• EBITDA:  10.07%

• The EBITDA reflected as a percentage of revenue above has included in it a deduction of $6,000 for a management fee that was not paid by the franchised outlets reflected herein. If this outlet would not have paid that management fee, its EBITDA would have been 10.76% of total revenue for this outlet.

Section VI – Erbert & Gerbert’s Sandwich Shop Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️