In this exclusive Franchise Chatter FDD Talk post, you’ll learn the following:
Section I – Estimated initial investment (franchise costs) for a Dunn Brothers Coffee franchise, based on Item 7 of the company’s 2023 FDD
Section II – Initial franchise fee, royalty fee, and marketing fee for a Dunn Brothers Coffee franchise, based on Items 5 and 6 of the company’s 2023 FDD
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Section III – Number of franchised and company-owned Dunn Brothers Coffee outlets at the start of the year and the end of the year for 2020, 2021, and 2022, based on Item 20 of the company’s 2023 FDD
Section IV – News updates on the Dunn Brothers Coffee franchise opportunity
Section V – Presentation and analysis of Dunn Brothers Coffee’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2023 FDD, including information on the:
- 2022 average, median, highest, and lowest total sales for the top 50%, bottom 50%, and all 18 franchised Dunn Brothers Coffee shops with a drive-thru and the full menu offering, and operated for the full 2022 calendar year
- 2022 average, median, highest, and lowest total sales %, discount %, gross sales %, COGS %, gross margin %, labor costs %, and prime margin % for the 13 franchised Dunn Brothers Coffee shops with a drive-thru and the full menu offering, operated for the full 2022 calendar year, and submitted financial statements to Dunn Brothers Coffee for the fiscal year ended December 31, 2022
Section VI – Key ratios, comparables, computations, and analyses for the Dunn Brothers Coffee franchise opportunity (exclusive content for Platinum subscribers)
Section I – Dunn Brothers Coffee Franchise Costs
- Dunn Brothers Coffee franchise costs, based on Item 7 of the company’s 2023 FDD:
- Initial Franchise Fee: $40,000
- Launch Fee: $10,000
- Architecture Design, Approval, and Permit Fees: $5,000 to $26,000
- Leasehold Improvements: $187,500 to $300,200
- Sewer and Water Access Charge: $0 to $10,000
- Prepaid Rent, Security Deposit, Utility Deposits, Business Licenses, and Attorney Fees: $5,000 to $16,000
- Furniture, Fixtures, and Equipment: $224,500 to $292,560
- Roaster and Associated Leasehold Improvements for Venting: $27,100
- Travel Expenses While Training: $500 to $4,400
- Opening Inventory: $9,000 to $12,000
- Grand Opening Expenses: $10,000
- Insurance Premiums: $2,800 to $6,700
- Additional Funds for 3 Months: $14,500 to $54,000
- Total Estimated Dunn Brothers Coffee Franchise Costs: $535,900 to $808,960
Section II – Dunn Brothers Coffee’s Initial Franchise Fee, Royalty Fee, and Marketing Fee
- Dunn Brothers Coffee’s initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2023 FDD:
- Initial Franchise Fee: $40,000
- Continuing License Fee: 5% of your Gross Sales
- National Marketing Fund Contribution: 3% of your Gross Sales (subject to increase up to the Marketing Expenditure Cap of 6% of your Shop’s Gross Sales)
- Local Marketing Expenditure: 1% of your Shop’s monthly Gross Sales
- Local Advertising Cooperative: currently not charged; will vary based on the size, needs of the Local Co-Op but will be subject to the Marketing Expenditure Cap
Section III – Number of Franchised and Company-Owned Dunn Brothers Coffee Outlets
Franchised
2020
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- Outlets at the Start of the Year: 67
- Outlets at the End of the Year: 59
- Net Change: -8
2021
- Outlets at the Start of the Year: 59
- Outlets at the End of the Year: 58
- Net Change: -1
2022
- Outlets at the Start of the Year: 58
- Outlets at the End of the Year: 53
- Net Change: -5
Company-Owned
2020
- Outlets at the Start of the Year: 6
- Outlets at the End of the Year: 4
- Net Change: -2
2021
- Outlets at the Start of the Year: 4
- Outlets at the End of the Year: 3
- Net Change: -1
2022
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- Outlets at the Start of the Year: 3
- Outlets at the End of the Year: 3
- Net Change: 0
Section IV – News Updates on the Dunn Brothers Coffee Franchise
Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Dunn Brothers Coffee Franchise (Item 19, 2023 FDD)
- Upon the closing of the acquisition described in Item 1, GCP DBC acquired 55 franchise agreements for Shops. Subsequently, 2 out of 55 Shops ceased operations, and Dunn Brothers Coffee acquired 53 franchise agreements for the Shops from GCP DBC on December 31, 2022.
- For purposes of the disclosures made in Part 1 below, Dunn Brothers Coffee excluded 35 of the 53 Shops because (i) they either had not commenced operations or permanently ceased operations prior to January 1, 2022 (and, thus, did not operate for the full calendar year), or (ii) were allowed to operate without drive-thrus and/or without the full menu offering (and, thus, operated differently than the Shops for which Dunn Brothers Coffee is currently granting franchises).
- Part 1 below reflects information regarding the Total Sales during calendar year 2022 of the remaining 18 franchised Shops (the “Part 1 Data Set”). In this chart, Dunn Brothers Coffee has provided the information for the entire Part 1 Data Set and also shows the information by top 50% and bottom 50%.
Part 1 – Average Total Sales for Part 1 Data Set During Calendar Year 2022
Top 50%
- Number of Shops: 9
- Average Total Sales: $797,698
- Number and Percentage That Met or Exceeded the Average: 5 (56%)
- Median Total Sales: $799,981
- Highest Total Sales: $952,527
- Lowest Total Sales: $619,085
Bottom 50%
- Number of Shops: 9
- Average Total Sales: $464,682
- Number and Percentage That Met or Exceeded the Average: 4 (44%)
- Median Total Sales: $461,326
- Highest Total Sales: $553,734
- Lowest Total Sales: $332,359
All Qualifying Franchised Shops
- Number of Shops: 18
- Average Total Sales: $631,190
- Number and Percentage That Met or Exceeded the Average: 8 (44%)
- Median Total Sales: $586,410
- Highest Total Sales: $952,527
- Lowest Total Sales: $332,359
Part 2 – Certain Other Performance Data Points for the Part 2 Data Set During Calendar Year 2022
- In Part 2 below, Dunn Brothers Coffee has excluded from the Part 1 Data Set an additional 5 franchised Shops because they did not submit financial statements to it for the fiscal year ended December 31, 2022, and it was otherwise unable to gather from them the information disclosed in Part 2.
- The remaining 13 franchised Shops comprise the “Part 2 Data Set” on which the information disclosed in Part 2 is based. Dunn Brothers Coffee determined the average and median using the same methodology as was used for Part 1 but used the relevant percentages instead of dollar amounts.
Total Sales %
- Average: 100%
- Median: 100%
- Number and Percentage That Met or Exceeded the Average: 13 (100%)
- Highest: 100%
- Lowest: 100%
Discount %
- Average: 4%
- Median: 3%
- Number and Percentage That Met or Exceeded the Average: 5 (38%)
- Highest: 8%
- Lowest: 1%
Gross Sales %
- Average: 96%
- Median: 97%
- Number and Percentage That Met or Exceeded the Average: 8 (62%)
- Highest: 99%
- Lowest: 92%
COGS %
- Average: 30%
- Median: 29%
- Number and Percentage That Met or Exceeded the Average: 6 (46%)
- Highest: 36%
- Lowest: 24%
Gross Margin %
- Average: 70%
- Median: 71%
- Number and Percentage That Met or Exceeded the Average: 7 (54%)
- Highest: 76%
- Lowest: 64%
Labor Costs %
- Average: 32%
- Median: 27%
- Number and Percentage That Met or Exceeded the Average: 7 (54%)
- Highest: 46%
- Lowest: 23%
Prime Margin %
- Average: 38%
- Median: 40%
- Number and Percentage That Met or Exceeded the Average: 7 (54%)
- Highest: 50%
- Lowest: 24%
- Total Sales means Gross Sales (as used in the Franchise Agreement and on which you will calculate royalties) but before any discounts are deducted. Dunn Brothers Coffee collected Total Sales data from the Shops’ point of sale system and has not audited or independently verified the information.
- Discount means the sum total of refunds, credits, or discount given by the Shops in good faith to their customers in a manner consistent with Dunn Brothers Coffee’s System Standards.
- Gross Sales means the aggregate regular advertised price of all products and services sold at, from, or in connection with the operation of the Shops, whether or not authorized by Dunn Brothers Coffee (including any delivery, catering, and/or any other off-site services), regardless of the manner in which the price was paid by the purchaser of such products or services (including payments by cash, check, credit or debit card, barter exchange, trade credit, or other credit transactions) and any other revenue derived from or attributed to the operation of the Shop, but excluding:
- (1) all federal, state, or municipal sales, use, or service taxes collected from customers and paid to the appropriate taxing authority,
- (2) the amount of any documented refunds and credits the Shop in good faith gives to its customers, and
- (3) the amount of any discounts from the advertised price that are given at the point of purchase and that are reasonable and, if applicable, are consistent with any discount policies that Dunn Brothers Coffee may announce from time to time as part of the System Standards.
- Revenue from the purchase or redemption of gift certificates, gift cards, loyalty or similar programs is calculated as part of Gross Sales in accordance with Dunn Brothers Coffee’s then-current guidelines for such programs.
- Gross Sales also includes all insurance proceeds that you may receive to replace revenue loss arising from the interruption of your Shop due to a casualty or other event covered by your Shop interruption or similar insurance coverage.
- This is the definition used in the Franchise Agreement on which you will calculate royalties and certain other fees. Dunn Brothers Coffee collected Gross Sales data from the Shops’ point of sale system and has not independently audited or verified the information.
- Cost of Goods Sold (COGS) is the cost of coffee beans, dairy, food items, syrups, tea, cups, lids, paper products, freight, and other direct products associated with the products sold by the Shops. Dunn Brothers Coffee obtained the Cost of Goods Sold data from the financial statements for the Shops that were submitted to it by franchisees and has not independently audited or verified the information.
- Gross Margin Total Sales less Cost of Goods Sold.
- Labor Cost is the sum total of wages for in-store employees including payroll taxes for a given Shop. Some franchised Shops include a manager’s salary as part of Labor Costs while others do not because their Managing Owner acts as the manager and does not draw a salary. Dunn Brothers Coffee obtained the Labor Costs data from the financial statements for the Shops that were submitted to it by franchisees and has not independently audited or verified the information.
- Prime Margin Total Sales less Cost of Goods Sold and Labor Costs.
- Except the number of Shops that met or exceeded the systemwide average Gross Sales % and average Prime Margin %, all other data presented in Parts 1 and 2 above is based on numbers rounded up to the nearest whole.
- Some Shops have earned this amount. Your individual results may differ. There is no assurance that you will earn as much.
Section VI – Dunn Brothers Coffee Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️
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