Caribou Coffee (Chalet): $1.05M Average Sales vs. $767K-$1.22M Franchise Cost

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

Section I – Estimated initial investment (franchise costs) for a Caribou Coffee franchise, based on Item 7 of the company’s 2023 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a Caribou Coffee franchise, based on Items 5 and 6 of the company’s 2023 FDD

Section III – Number of franchised and company-owned Caribou 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 Caribou Coffee franchise opportunity

Section V – Presentation and analysis of Caribou 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, high, and low sales for the 123 active non-traditional franchised Kiosk locations as of December 27, 2022 that recorded sales for the entirety of fiscal year 2022, grouped by venue type (grocery, grocery with drive-thru, airport, all other)

• 2022 average, median, high, and low gross sales for the 99 company-owned Drive-Thru Chalet locations and 22 company-owned Cabin Coffeehouse locations that were active as of December 27, 2022 and recorded sales for the entirety of fiscal year 2022

• 2022 average cost of goods sold, labor, operating expense, marketing expense, occupancy, cash flow, royalty, marketing fee, additional franchisee-related COGS, and franchisee-adjusted cash flow for the 99 company-owned Drive-Thru Chalet locations and 22 company-owned Cabin Coffeehouse locations that were active as of December 27, 2022 and recorded sales for the entirety of fiscal year 2022

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

Section I – Caribou Coffee Franchise Costs

• Caribou Coffee franchise costs, based on Item 7 of the company’s 2023 FDD:

Kiosk

• Architecture and Design Fee:  $5,000 to $25,000
• Leasehold Improvements/Construction Costs:  $45,000 to $250,000
• Furniture, Fixtures, and Equipment:  $150,000 to $200,000
• Signage:  $5,000 to $10,000
• Initial Franchise Fee:  $15,000
• Lease:  amount not specified
• Business Licenses and Permits:  $100 to $2,000
• Initial Inventory:  $10,000 to $15,000
• Technology Costs:  $10,000 to $16,000
• New Store Opening Launch Program:  $3,000
• Professional Fees:  $5,000 to $15,000
• Initial Training Expenses:  $3,000 to $9,000
• Additional Funds for 3 Months:  $17,000 to $65,000
• Total Estimated Caribou Coffee Kiosk Franchise Costs (excluding lease):  $268,100 to $625,000

Cabin

• Architecture and Design Fee:  $15,000 to $25,000
• Leasehold Improvements/Construction Costs:  $132,000 to $236,500
• Furniture, Fixtures, and Equipment:  $154,000 to $198,000
• Signage:  $49,500 to $82,500
• Initial Franchise Fee:  $30,000
• Lease:  amount not specified
• Business Licenses and Permits:  $100 to $2,000
• Initial Inventory:  $12,000 to $20,000
• Technology Costs:  $27,000 to $32,000
• New Store Opening Launch Program:  $8,000
• Professional Fees:  $5,000 to $25,000
• Initial Training Expenses:  $3,000 to $9,000
• Additional Funds for 3 Months:  $34,000 to $110,000
• Total Estimated Caribou Coffee Cabin Franchise Costs (excluding lease):  $469,500 to $778,000

Chalet

• Architecture and Design Fee:  $30,000 to $35,000
• Leasehold Improvements/Construction Costs:  $297,000 to $561,000
• Furniture, Fixtures, and Equipment:  $280,500 to $352,000
• Signage:  $33,000 to $55,000
• Initial Franchise Fee:  $30,000
• Lease:  amount not specified
• Business Licenses and Permits:  $100 to $2,000
• Initial Inventory:  $12,000 to $20,000
• Technology Costs:  $30,000 to $36,000
• New Store Opening Launch Program:  $10,000
• Professional Fees:  $5,000 to $25,000
• Initial Training Expenses:  $3,000 to $9,000
• Additional Funds for 3 Months:  $37,000 to $94,000
• Total Estimated Caribou Coffee Chalet Franchise Costs (excluding lease):  $767,600 to $1,229,000

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

• Caribou 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:  Cabin and Chalet: $30,000; Kiosk: $15,000
• Royalty:  Cabin and Chalet: 5% of Gross Sales; Kiosk: 6% of Gross Sales (4% of Gross Sales for Kiosks located in non-traditional airport facilities)
• Minimum Royalty Fee:  $6,000 per year
• Marketing Contribution:  up to 3% of Gross Sales; currently, allocated as 2% to the Brand Fund and 1% to be spent by you on local marketing and promotion

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

Franchised

2020

• Outlets at the Start of the Year:  130
• Outlets at the End of the Year:  132
• Net Change:  +2

2021

• Outlets at the Start of the Year:  132
• Outlets at the End of the Year:  139
• Net Change:  +7

2022

• Outlets at the Start of the Year:  139
• Outlets at the End of the Year:  145
• Net Change:  +6

Company-Owned

2020

• Outlets at the Start of the Year:  317
• Outlets at the End of the Year:  316
• Net Change:  -1

2021

• Outlets at the Start of the Year:  316
• Outlets at the End of the Year:  321
• Net Change:  +5

2022

• Outlets at the Start of the Year:  321
• Outlets at the End of the Year:  339
• Net Change:  +18

Section IV – News Updates on the Caribou Coffee Franchise

• Caribou Coffee Enters Long-Term Strategic CPG License Agreement with JDE Peet’s

• Caribou Coffee Selects Toast to Support Growing Coffeehouse Footprint

• Robust Growth on Tap as Caribou Coffee Targets Non-Traditional Development

• Caribou Coffee Announces Over 300 Franchise Locations

• Caribou Coffee Wants to Become the Third-Largest US Coffee Chain

• Caribou Coffee Expands Presence in Michigan with New Battle Creek Location

• Pumpkin Is Back: Caribou Coffee Fans Rejoice with the Return of Delicious and Cozy Flavors of Fall

• Caribou Coffee Did Not Rank on Entrepreneur’s 2024 Franchise 500 List

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Caribou Coffee Franchise (Item 19, 2023 FDD)

• The information presented in this Item 19 is a compilation of financial information that has not been audited. The tables should be read together with all of the related information about the factual basis and material assumptions underlying them.

Basis and Assumptions

• The sales and expense information that follows, and other related data in this Item 19, has been compiled using data provided to Caribou Coffee by non-traditional franchised “Kiosk” locations for Caribou Coffee’s 2022 fiscal year (ended December 27, 2022), and unaudited financial data from certain types of company-owned Caribou Coffee Coffeehouse locations (Chalets and Cabins).

• The Chalet and Cabin information is provided for only Drive-Thru Chalet and Cabin Coffeehouses because these location types are the focus of development for new Coffeehouses by franchisees.

• The results in Parts 2 and 3 include results from company-owned Drive-Thru Chalet and Cabin Coffeehouses (there were no franchised Chalet Coffeehouses during these time periods). These Coffeehouses are defined as follows:

• Chalet: Caribou Coffee’s most prevalent Coffeehouse format, approximating 1,500 square feet, providing full coffee bar, food options, and dine-in space. Chalet Coffeehouses may operate with or without drive-thru capabilities, although Caribou Coffee expects new franchised Chalet Coffeehouses will include drive-thru capabilities. Coffeehouse locations include suburban, urban, central business district, office, airport, mall, and some grocery store locations.

• Cabin: Caribou Coffee’s newest Coffeehouse format, currently approximating 600 square feet, built as a drive-thru only concept equipped with a walk-up window. This Coffeehouse format provides a full coffee bar, limited food options, and an outside patio seating/dining space. Five affiliate (company-owned) Coffeehouses of this type were opened in late 2019, four were opened in 2020, 13 were opened in 2021, and 23 were opened in 2022. Additionally, Caribou Coffee’s first traditional franchised Cabin opened in late 2022.

• The tables and notes in this Item provide financial performance data that are historical, and that are based on information from existing Caribou Coffee Coffeehouses that were active as of December 27, 2022 and had sales for entire fiscal 2022, unless otherwise specified.

Part 1 – 2022 Kiosk (Non-Traditional) Gross Sales Distribution

• The results in Part 1 represent reported sales volumes for non-traditional franchised Kiosk Coffeehouses, both with and without a drive-thru. Kiosk Coffeehouses are Caribou Coffee’s only franchised Coffeehouses. There were 123 active non-traditional franchised Kiosk locations as of December 27, 2022 that recorded sales for the entirety of fiscal 2022.

• Results from new Kiosk openings in 2022 were excluded, as well as results from Kiosks that closed during, or for part of, the year. 30 Kiosk Coffeehouses that were not open for the full year were excluded from the results for that reason.

Grocery

• Number of Stores:  65
• Average Sales:  $270,362
• Number of Stores Exceeding Average:  27
• Median Sales:  $250,685
• High Sales:  $627,893
• Low Sales:  $76,781

Grocery with Drive-Thru

• Number of Stores:  28
• Average Sales:  $612,957
• Number of Stores Exceeding Average:  12
• Median Sales:  $533,151
• High Sales:  $1,329,052
• Low Sales:  $270,237

Airport

• Number of Stores:  7
• Average Sales:  $1,717,125
• Number of Stores Exceeding Average:  4
• Median Sales:  $2,232,009
• High Sales:  $3,211,770
• Low Sales:  $463,582

All Other

• Number of Stores:  23
• Average Sales:  $382,159
• Number of Stores Exceeding Average:  10
• Median Sales:  $352,370
• High Sales:  $967,032
• Low Sales:  $22,090

Part 2 – 2022 Chalet and Cabin Sales Distribution Information

• Part 2 below organizes the information based on the sales volume of the company-owned Drive-Thru Chalet and Cabin Coffeehouse locations for the 52-week period that started on December 29, 2021 and ended on December 27, 2022.

Drive-Thru Chalet

• Over $1,200,000:  24 stores (24.2%)
• $1,000,000 to $1,200,000:  35 stores (35.4%)
• $800,000 to $1,000,000:  22 stores (22.2%)
• $600,000 to $800,000:  13 stores (13.1%)
• Less Than $600,000:  5 stores (5.1%)
• Total:  99 stores (100.0%)

• Average Gross Sales:  $1,059,600
• Number of Stores Achieving Equal or Greater Than Average Sales:  52
• Median Gross Sales:  $1,075,314
• Highest Gross Sales Unit:  $1,926,664
• Lowest Gross Sales Unit:  $336,542

Cabin

• Over $1,200,000:  4 stores (18.2%)
• $1,000,000 to $1,200,000:  6 stores (27.3%)
• $800,000 to $1,000,000:  6 stores (27.3%)
• $600,000 to $800,000:  4 stores (18.2%)
• Less Than $600,000:  2 stores (9.1%)
• Total:  22 stores (100.0%)

• Average Gross Sales:  $947,661
• Number of Stores Achieving Equal or Greater Than Average Sales:  11
• Median Gross Sales:  $936,868
• Highest Gross Sales Unit:  $1,508,054
• Lowest Gross Sales Unit:  $563,358

• The results in Part 2 were for gross sales volumes for Company-Owned Coffeehouses of the type noted, all having a drive-thru. There were 99 Company-Owned Drive-Thru Chalet Coffeehouse locations and 22 Company-Owned Drive-Thru Cabin Coffeehouse locations that were active as of December 27, 2022 and recorded sales for the entirety of fiscal 2022.

• New Coffeehouse openings in 2022 are excluded from this data as well as results from Coffeehouses that were closed during, or for part of, the year. 30 Drive-Thru Chalet and Cabin Coffeehouses that were not open for the full year were excluded from the results for these reasons. Also excluded were results from one franchised Cabin, which was not open
  for the full year.

• Cash flow rates for the sales tiers in Part 2 for the 12 months ending December 27, 2022 were:

Drive-Thru Chalet, Grouped by Cash Flow % Range

• >25%:  26 stores (AUV: $1,306,011)
• 20-25%:  25 stores (AUV: $1,121,240)
• 15-20%:  25 stores (AUV: $1,000,648)
• 10-15%:  6 stores (AUV: $832,878)
• <10%:  17 stores (AUV: $764,451)
• All:  99 stores (AUV: $1,059,600)

Cabin, Grouped by Cash Flow % Range

• >25%:  4 stores (AUV: $1,221,378)
• 20-25%:  5 stores (AUV: $1,113,918)
• 15-20%:  3 stores (AUV: $919,881)
• 10-15%:  3 stores (AUV: $921,900)
• <10%:  7 stores (AUV: $695,444)
• All:  22 stores (AUV: $947,661)

• “Cash Flow” means profit after deducting the following costs and excludes depreciation, expressed as a percentage of Gross Sales: cost of goods sold; labor (including store manager labor); operating, marketing, and occupancy expenses.

• Note that company-owned Chalet Coffeehouse Cash Flow presented in the table above does not include franchisee related costs such as royalties, product purchases, and other fees. Store leadership overhead and corporate overhead (or general and administrative expenses) is not included in Cash Flow.

Part 3 – Expense Distribution

• Part 3 below organizes the information based on the sales and expense factors incurred at the 99 company-owned Caribou Coffee Drive-Thru Chalets and the 22 company-owned Caribou Coffee Cabin locations for the trailing 12-month period ending December 27, 2022.

Drive-Thru Chalet

• Number of Stores:  99
• Cash Flow Percentage:  20.9%

Company-Owned Expense Rates

• COGS %:  26.6%
• Labor %:  31.4%
• Operating Expense %:  9.1%
• Marketing Expense %:  1.9%
• Occupancy %:  10.1%

Additional Franchisee-Related Cost Rates

• Royalty:  5.0%
• Marketing:  1.0%
• Additional Franchisee-Related COGS:  5% to 8%
• Franchisee-Adjusted Cash Flow %:  7% to 10%

Cabin

• Number of Stores:  22
• Cash Flow Percentage:  17.1%

Company-Owned Expense Rates

• COGS %:  26.4%
• Labor %:  34.3%
• Operating Expense %:  9.6%
• Marketing Expense %:  1.9%
• Occupancy %:  10.6%

Additional Franchisee-Related Cost Rates

• Royalty:  5.0%
• Marketing:  1.0%
• Additional Franchisee-Related COGS:  5% to 8%
• Franchisee-Adjusted Cash Flow %:  3% to 6%

• The information and results provided in Part 3 are based on Caribou Coffee’s affiliate’s experience operating company-owned Coffeehouses in fiscal 2022, and should not be considered as the actual or potential costs that you will incur, nor will they be static over time given costs will vary with changes in market prices of key commodities such as coffee and dairy. Fiscal 2022 saw significant inflation in commodity costs, freight, operating expenses, and labor costs.

• Please also note that in addition, because these are the results of company-owned Coffeehouses, these company-owned figures do not include costs that a franchisee will incur, such as royalties, incremental distribution and product costs that affect the franchisee COGS rate, fees, and the amortized portion of the initial franchise fee (if it was financed).

• Additionally, for some items, Caribou Coffee allocates internal charges to owned Coffeehouses that are less than the price charged to or will be incurred by a franchisee, because of Caribou Coffee’s own internal accounting procedures, so as a result a franchisee will incur additional costs.

• Furthermore, company-owned Coffeehouses may experience economies of scale in distribution and freight costs which may not extend to a franchisee. However, Caribou Coffee has estimated an approximate impact on cash flow rate for a franchisee based on expected terms of the franchise agreement.

• New Chalet and Cabin Coffeehouse openings in 2022 are excluded from the results in Part 3 as well as results from such Coffeehouses that were closed during, or for part of, the year. 30 Chalet and Cabin Coffeehouses that were not open for the full year were excluded from the results in Part 3 for that reason.

• The rates shown are the arithmetic averages of the results of the cost factors as a percentage of Gross Sales.

• COGS is the total cost of products sold including the cost of coffee, beverage ingredients, food, paper, and other products. Franchisees will incur additional COGS costs, such as incremental product costs, that are adjusted in the table.

• Labor includes hourly and salaried employee compensation, bonuses, taxes, and benefits at the store level, but does not include corporate store leadership overhead.

• Operating expenses include ordinary operating maintenance and repairs, planned and unplanned maintenance and repairs, supplies, and other miscellaneous operating expenses.

• Marketing expenses relate to all marketing spend.

• Occupancy expenses include rent, CAM, utilities, and real estate taxes.

• Cash Flow means profit after deducting the following costs and excluding depreciation, expressed as a percentage of Gross Sales: COGS; labor (including store manager labor); and operating, marketing, and occupancy expenses. Note that company-owned Cash Flow presented in the table above does not include franchisee-related costs such as royalties, product purchases, and other fees. However, as noted below, an amount of marketing expense included above would count toward franchisee ad fund rates. Store leadership overhead and corporate overhead (or general and administrative expenses) is not included in Cash Flow.

• The above costs and Cash Flow rates do not include adjustments for any franchisee expenses, such as royalty fees and marketing contributions, that Caribou Coffee does not incur for its own company-owned Coffeehouses, but that a franchisee would incur.

• COGS rates that the company-owned Coffeehouses experience also reflect efficiencies within the cost of distribution given the geographic concentration of Coffeehouses in Minnesota and surrounding market. Distribution costs will vary based on the geography of the franchised Coffeehouses.

• In addition, because Caribou Coffee operates many company-owned Coffeehouses, it may have some labor-related efficiencies in the operation of its company-owned Coffeehouses that are not available to franchisees.

• You will incur other substantial costs in the operation of your Coffeehouse that are not included in this discussion, including, among others, local marketing expenses, mortgage or other debt/financing costs, computer upgrades, renovations, improvements and major repair/maintenance expenses, legal and professional fees, income and other non-real estate taxes, and various other expenses (together, these are referred to as “Additional Costs”). You will incur Additional Costs and should determine and account, for yourself, the Additional Costs that you will have to have to pay.

• Some Coffeehouses have sold these amounts. Your individual results may differ materially. There is no assurance you will sell as much.

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