FDD Talk: Biggby Coffee Franchise Costs, Fees, Average Revenues and/or Profits (2022 Review)

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

Section I – Estimated initial investment (franchise costs) for a Biggby Coffee franchise, based on Item 7 of the company’s 2022 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a Biggby Coffee franchise, based on Items 5 and 6 of the company’s 2022 FDD

Section III – Number of franchised and company-owned Biggby Coffee 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 – News updates on the Biggby Coffee franchise opportunity

Section V – Presentation and analysis of Biggby Coffee’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, highest, and lowest gross sales for the 162 Biggby Coffee drive-thru stores and 72 Biggby Coffee non-drive-thru stores (separately stated) that were in operation for at least 13 months at the end of 2021

• 2021 average and median gross same-store sales growth (dollars and percentage) for the 158 Biggby Coffee drive-thru stores and 56 Biggby Coffee non-drive-thru stores (separately stated) that were in operation for at least 13 months at the end of 2021 and were not closed for more than 40 days in 2020 due to the COVID-19 pandemic

• 2021 average cup count, unit sales, discount amount, gross sales, cost of goods sold, gross profit, expenses (labor, operations, administration, services, marketing & fees), and EBITDA for the 92 Biggby Coffee drive-thru stores and 36 Biggby Coffee non-drive-thru stores that provided Biggby Coffee with consistent and accurate revenue and expense data and are a reasonable representation of the Biggby Coffee franchise system

Section VI – Key ratios, comparables, computations, and analyses for the Biggby Coffee franchise opportunity (exclusive content for Platinum subscribers)

Section I – Biggby Coffee Franchise Costs

• Biggby Coffee franchise costs (for a site built location), based on Item 7 of the company’s 2022 FDD:

• Initial Franchise Fee:  $20,000
• Real Property Rental:  $1,000 to $21,000
• Leasehold Improvements:  $140,000 to $205,000
• Equipment, Furniture, and Decor:  $61,500 to $71,000
• Drive-Through Equipment:  $13,500 to $14,500
• Blueprints, Plans, and Permits:  $5,500 to $11,000
• Signage (Interior/Exterior):  $4,000 to $15,000
• Initial Inventory:  $9,000 to $14,000
• Insurance – General Liability, Property, and Worker’s Compensation:  $3,500 to $4,500
• Utility Expense:  $500 to $4,000
• License Permits and Other:  $1,000 to $2,500
• Initial Advertising and Grand Opening Promotions:  $9,000
• Miscellaneous Travel and Living Expenses for Training:  $500 to $5,000
• Organizational Expenses:  $2,000 to $2,500
• Additional Funds for 3 Months:  $5,000 to $40,000
• Total Estimated Biggby Coffee Franchise Costs:  $276,000 to $439,000

Section II – Biggby Coffee’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Biggby Coffee’s initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2022 FDD:

• Initial Franchise Fee:  $20,000
• Royalty:  6% of Gross Sales; 5% of Gross Sales for certain existing operators in Michigan
• Advertising Fund Contribution:  the greater of: (a) $100 per week; or an amount specified by Biggby Coffee, not to exceed 3% of Gross Sales (currently 3% of Gross Sales)
• Minimum Local Advertising:  up to 3% of Gross Sales

Section III – Number of Franchised and Company-Owned Biggby Coffee Outlets

Franchised

2019

• Outlets at the Start of the Year:  231
• Outlets at the End of the Year:  239
• Net Change:  +8

2020

• Outlets at the Start of the Year:  239
• Outlets at the End of the Year:  245
• Net Change:  +6

2021

• Outlets at the Start of the Year:  245
• Outlets at the End of the Year:  281
• Net Change:  +36

Company-Owned

2019

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

2020

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

2021

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

Section IV – News Updates on the Biggby Coffee Franchise

• Biggby Coffee Named a Most Profitable Franchise of 2022 by Franchise Business Review

• Biggby Coffee Rounds Out Q3 With 38 New Store Openings and 59 Franchise Sales Year-to-Date

• Biggby Coffee Targets 1,000 Locations by 2028

• Biggby Coffee Named a 2022 Top Food Franchise by Franchise Business Review

• Biggby Coffee Owner Investing in Community as She Competes With Corporate America

• Biggby Coffee Co-Owner Michael McFall Provides Advice for Small Business Owners

• Biggby Coffee Ranks No. 265 on Entrepreneur’s 2022 Franchise 500 List

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Biggby Coffee Franchise (Item 19, 2022 FDD)

• Parts 1 and 2 below provide average and median annual Gross Sales information for Stores in 2021. Part 1 provides that information for Stores with a drive-thru and Part 2 provides that information for Stores without a drive-thru.

• Part 3 provides average and median Gross same-store Sales growth for drive-thru Stores for 2021. Part 4 below provides average and median Gross same-store Sales growth for non-drive-thru stores for 2021. For Parts 3 and 4, there were 20 stores that were excluded due to them being closed for more than 40 days in 2020, which caused misleading growth percentages for 2021.

• Parts 5 and 6 below provide a reasonable analysis of 2021 Store financial performance. The dataset used for the analysis is self-reported Store financial reports; it excludes kiosk Stores, Stores not open 7 days a week, and Stores closed more than 30 consecutive days in 2021. Part 5 includes only Stores with a drive-thru and Part 6 includes only Stores without a drive-thru. For Parts 5 and 6, there were 6 stores that were excluded due to non-representative data.

• The information in the charts is a historical financial performance representation based on subsets of the franchise system’s existing outlets and on the assumptions and notes described below. The financial information from Biggby Coffee’s Stores has not been audited and Biggby Coffee does not know if the information was prepared in accordance with generally accepted accounting principles (GAAP).

Part 1 – Drive-Thru Gross Sales for 2021

• As of December 31, 2021, there were 281 franchised Stores in operation.

• For Parts 1 and 2, Biggby Coffee used revenue information from a subset of 234 of its 281 franchised Stores in operation at the end of 2021 that were in operation for at least 13 months at the end of 2021, other than kiosk Stores (kiosk Stores are Stores that are housed inside another retail business operation) and Stores that were not open seven days a week.

• Part 1 includes 162 Stores with a drive-thru.

• Number of Stores:  162
• Average Gross Sales:  $748,168
• Number and Percentage at or Above Average:  73 / 45%
• Median Gross Sales:  $722,745
• Highest Gross Sales:  $1,381,549
• Lowest Gross Sales:  $327,562

Part 2 – Non-Drive-Thru Gross Sales for 2021

• Part 2 includes 72 Stores without a drive-thru.

• Number of Stores:  72
• Average Gross Sales:  $468,863
• Number and Percentage at or Above Average:  32 / 44%
• Median Gross Sales:  $437,783
• Highest Gross Sales:  $992,816
• Lowest Gross Sales:  $106,819

Part 3 – Drive-Thru Gross Same-Store Sales (SSS) Growth for 2021

• For Parts 3 and 4, Biggby Coffee used Gross same-store Sales growth information from a subset of 214 of the 234 franchised Stores included in Parts 1 and 2.

• Biggby Coffee excluded 20 Stores that were closed for more than 40 days in 2020 due to the COVID-19 pandemic and produced misleading growth percentages for 2021.

• Part 3 includes 158 Stores that have a drive-thru.

• Number of Stores:  158
• Average Gross SSS Growth %:  19.85%
• Average Gross SSS Growth $:  $115,374
• Number and Percentage at or Above Average:  72 / 46%
• Median Gross SSS Growth %:  18.21%
• Median Gross SSS Growth $:  $111,531

Part 4 – Non-Drive-Thru Gross Same-Store Sales (SSS) Growth for 2021

• Part 4 includes 56 Stores without a drive-thru.

• Number of Stores:  56
• Average Gross SSS Growth %:  32.41%
• Average Gross SSS Growth $:  $112,724
• Number and Percentage at or Above Average:  27 / 48%
• Median Gross SSS Growth %:  31.59%
• Median Gross SSS Growth $:  $104,504

Part 5 – Statement of Drive-Thru Sales, Expenses, and Earnings for 2021

• For Part 5 and Part 6, Biggby Coffee used revenue and expense information from a subset of 128 of its 281 franchised Stores in operation at the end of 2021. Biggby Coffee believes these 128 Stores provide it with consistent and accurate revenue and expense data and are a reasonable representation of its franchise system.

• The Stores represented in the charts may differ materially from a Store that may be operated by you because these Stores have been operated for a longer period of time and by a more experienced operator.

All Stores

• Store Count:  92
• Average Cup Count:  388

Unit Sales:  $875,632 (115.3%)

Less: Discount Amount:  $116,352 (15.3%)

Gross Sales:  $759,280 (100.0%)

Cost of Goods Sold:  $205,283 (27.0%)

Operating Income (Note: This is gross profit):  $553,997 (73.0%)

Expenses

• Labor:  $229,553 (30.2%)
• Operations:  $14,584 (1.9%)
• Administration:  $42,370 (5.6%)
• Services:  $56,611 (7.5%)
• Marketing & Fees:  $80,952 (10.7%)
• Total Operating Expenses:  $424,070 (55.9%)

EBITDA:  $129,927 (17.1%)

Part 6 – Statement of Non-Drive-Thru Sales, Expenses, and Earnings for 2021

All Stores

• Store Count:  36
• Average Cup Count:  264

Unit Sales:  $588,732 (116.9%)

Less: Discount Amount:  $85,121 (16.9%)

Gross Sales:  $503,610 (100.0%)

Cost of Goods Sold:  $141,074 (28.0%)

Operating Income (Note: This is gross profit):  $362,536 (72.0%)

Expenses

• Labor:  $163,931 (32.6%)
• Operations:  $11,919 (2.4%)
• Administration:  $32,514 (6.5%)
• Services:  $47,704 (9.5%)
• Marketing & Fees:  $54,982 (10.9%)
• Total Operating Expenses:  $311,051 (61.8%)

EBITDA:  $51,485 (10.2%)

• Cup Count is the average number of beverages sold per day per Store.

• Unit Sales includes all revenues from the franchise business before discounts and excludes sales tax.

• Discount Amount is the value of applied promotional discounts.

• Gross Sales is Unit Sales minus Discount Amount.

• Cost of Goods Sold is the total amount paid as a cost directly related to the sale of products.

• Operating Income is equal to Gross Sales minus Cost of Goods Sold. (Note: This is gross profit.)

• Labor includes employee, manager, management fees, hiring & training, worker’s comp insurance, and payroll taxes; and excludes officer/guaranteed payments, health insurance/retirement.

• Operations includes chemicals, smallwares, freight, maintenance, and repairs.

• Administration includes dues & subscriptions, office supplies, postage, rent, CAM, and property taxes; and excludes travel, entertainment, and miscellaneous operations.

• Services includes laundry & uniforms, bank service charges, credit card processing, insurance, license & permit fees, professional services, miscellaneous expenses, utilities, and telephone & internet.

• Marketing & Fees includes advertising, royalty fees, and technology fees.

• Operating Expenses is total of Labor, Operations, Administration, Services, and Marketing & Fees.

• EBITDA is Operating Income minus Operating Expenses, and excludes miscellaneous income, interest, taxes, depreciation, and amortization.

• Profit Margin is EBITDA divided by Gross Sales.

• 18 Stores had Gross Sales over $1,000,000 in 2021.

• EBIDTA and Profit Margin do not reflect the actual potential net income of a Store and should not be relied on in calculating profitability. There are a number of fixed and variable costs associated with a Store, not all of which are reflected in the information above and that vary among individual Stores.

• These expenses, which are likely to be significant, include, but are not limited to, the following:

• the certain costs listed above;
• costs described in Items 6 and 7 of the disclosure document;
• interest or finance charges if you finance some or all of the cost of the franchise;
• depreciation on property and equipment;
• additional occupancy costs;
• Store supplies;
• credit card fees;
• worker’s compensation and general liability insurance;
• taxes;
• accounting and legal fees and general administrative expenses;
• any pre-opening or amortization of organization costs;
• costs associated with regulatory compliance;
• fringe benefits; and
• certain repairs and maintenance.

• You should also be aware that the financial performance of any particular Store might be affected by a number of factors that may vary due to the individual characteristics of the Store. These factors include, but are not limited to:

• competition from other restaurants;
• appreciation and acceptance of the products offered by your Store in the community in which your Store is located;
• your efforts;
• your experience;
• the quality and effectiveness or your managerial skills;
• and your decisions with respect to location, additional advertising programs, personnel, and cost controls;
• geographic and socioeconomic conditions in your locality;
• business cycles;
• the performance of the local, national, and world economy.

• Some franchises have sold this amount. Your individual results may differ. There is no assurance that you will sell as much.

Section VI – Biggby Coffee Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️