Tim, Kevin, Jonathan, Mary and Analysa have decided to franchise a Jimmy John’s Gourmet Sandwich shop. In 2010, Jimmy John’s was ranked 61 by Franchise 500 ("Jimmy John's Gourmet Sandwiches," 2014). By 2014, they were ranked at number 5. ("Jimmy John's Gourmet Sandwiches," 2014). We will be renting a space at 500 San Francisco, El Paso, TX, 79901. This space is in the Union Plaza Entertainment District and is 1,711 square feet. This triple net lease will cost $22 per square foot per year. This total comes out to $37,642 per year with a lease of 60 months (5 years). With the lease of the space there is a build out allowance of+$10/square foot. Therefore we will receive a credit of $17,110 to apply to our rental space. This property is currently …show more content…
There is a one-time fee of $35,000 to start the franchise. There is also a royalty fee that is 6% and advertising fee that is 4.5% of the total sales per month. The average gross sale for a Jimmy John’s is $1,470,812 a year. That means that the royalties per month would be around $7,354 and the advertising would be $5,515.55 to Jimmy John’s Franchise, LLC. Every month the franchise has to pay approximately $12,869.55 (Jimmy Johns Co., 2014). We do not anticipate any kind of failure since the failure rate is 5.19% (significantly lower than that of McDonalds 21.43%) and since there is not a Jimmy John’s in El Paso, Texas (“The Best and Worst Franchises to Own”, 2011). Jimmy John’s requires that the leasing terms of the building be at least five years and the contract agreement is ten years for Jimmy John’s. Therefore, if we decided to quit, we as the investors would still have to pay the balance of the franchise to Jimmy …show more content…
Since we plan to put up the initial capital from our own personal resources we will not be taking out a bank loan or getting financing from any outside sources. Typically a Jimmy Johns franchise will cost anywhere from $330,500 - $519,500 to open (Jimmy Johns Co., 2014). After doing research and finding a location to lease in downtown El Paso, we have calculated that in our case we will need approximately $400,000 to open the restaurant. As a cushion to our investment we have decided to round that number up to $500,000. We have decided that each of us will invest $100,000 into the business and organize a limited liability company. (We are assuming that we all have the required net worth of $300,000 per person as per Jimmy John’s requirements) (Jimmy Johns Co., 2014). If one business member decides to leave the company, the company and the other members will have the option to buy out that member all as set forth in our operating agreement. Part of the $100,000 investment from each member will be put into equity and part will be put into a loan payable to the individual member from the company. Our accountant suggests we have $20,000 of each member’s investment in equity and $80,000 of each member’s investment in a loan payable to the
The sampling strategy was a huge success. Free samples of the subs were given out to people for them to taste it. The shop’s name was also being brought to the attention of passersby. All the advertisement that Jimmy Johns does has its name and logo in it. This is to promote awareness. Another thing that made the sub shop so successful was the culture that the owner created. He had a sense of humor and made sure that all the ads shared the same hilariousness. All the colors and signs in the stores are part of the funny environment of Jimmy Johns. The delivery system is a huge part of the company. The sandwiches will be delivered with any form of transportation available. The company refuses to offer discounts or coupons because they use all their revenue to make sure that the ingredients are the best they can be.
o Pay $200,000 up front for development fees and franchise fees for the first five stores
Lucky Bar and Grill anticipates making a profit of $30,000 in its first year due to a combination of excellent location, local competition, and a strong advertising campaign. We predict sales of $10,000 Year 1 Month 1, and over $22,000 by the end of Year 1 Month 12, representing a 120% increase in profits over the year.
Customer acquisition costs can make or break a franchise because you need to have customers come into your business and you will have to find them. Having a low customer acquisition cost means that you are able to bring potential customers into your franchise. To formula to find customer acquisition cost is how much you spend on money divided by number of customers acquired. The first year the franchise will spend around $40,000 with the number of customers being around 60,000 to 80,000 customers. The customer acquisition costs would be from 50 to 67 cents. The average customer acquisition for Popeyes is around 80 to 90 cents. Having this low customer acquisition means that the franchise can acquire customers at a low
According to yelp, Milton's’ average price is around $11-30; however, there are many complaints about the food costing too much.
The average franchisee fee ranges from $25,000 -$35,000, although some franchise fees can go well over $100,000, as in the case of what’s called a Master Franchise. In a Master Franchise, one buys the rights to an entire area, and it’s usually based on population.
Our team has been instructed to help advise on a business case involving a restaurant, The Mongolian Grill. It’s owner, John Butkus, is contemplating renovations, in hopes of adding capacity and increasing revenue. There are several scenarios that are available to him. One option is to add an extra food bar. The second option is to move the location of the cooking area. He can also implement both options, if he so chooses. Our team has done the appropriate financial calculations, as well as qualitative considerations.
However, when examining the average time it takes to receive a return on investment, Subway proves to top the list at roughly 3 years. This makes sense given the average startup cost of $200,000 and an annual profit of $70,000. Subway’s competitors fall behind in this important statistic; while Jimmy John’s is close behind with a 3.1 year ROI, Quiznos franchise owners often never receive a return on their investment. With my proposed location in a college campus, the ROI could come even sooner, because my total investment cost will likely fall below the average of $200,000. It is important to note that there other competitors in the fast food market that can reduce the traffic coming into my Subway location. Chains like Chipotle, McDonald’s, Papa John’s, and Taco Bell are rampant across college campuses, but at the end of the day, none of those places offer a quality sub. While a college student may go to Chipotle one day, the next time he/she will likely opt for variety and choose Subway. In addition, Subway boasts healthier food compared to chains such as McDonald’s and Taco Bell, and while the price point may be steeper, those who are inclined towards their health will likely choose Subway a majority of the time. These considerations make Subway beat out most of its competitors, while the few remaining on par will serve as motivation to continually maintain and improve upon the Subway
The following is a summary of the market audit and competitive analysis of incorporating Domino’s pizza into the country of Cuba. One will learn about product analysis and the relative advantages compatibility, complexity that Domino’s may face while setting up their new business venture. Additionally, one will have a better understanding of the market, marketing strategy, what needs to be modified or adapted as the plan is moved into place. Determining the type of promotional mix, distribution and one of great importance is the determination of the price. As it is already known that this is a poor country and the annual income does not exceed $2000 per month.
Now lets look at some of the other key factors that have led to success at this point. Papa Johns is known for their excellent customer service and have really blown their competition in area. They need to remind their customers that they are the best at making pizza lovers happy. The price point of a product tends to be the first thing noticed by the consumer but if they are not happy with what they get they being to think twice about their decision. In today's
In 2012, a typical foodservice outlet earned US$119,861 from about 45,000 transactions, or US$2.66 per transaction. Cafés/bars had the highest average transaction value at just US$7.33; however, with US$458,548 fast food recorded the highest average sales per outlet because of consumer’s frequent use of this quick, convenient and generally affordable way of buying their food.
...the franchise contract. As part of the continuing franchise contract, they will then be paying on-going fees for the support and training provided by the franchisor. In the long term, this means a restriction to the amount of profit that can make by a franchisee.
Opening a new restaurant required many decisions. Pricing strategy is one of the vital ones that could make or break the restaurant. I would recommend the combination of value pricing and competitive pricing for the new restaurant. Value pricing strategy is to use the price to communicate the restaurant’s position, reflect the bundle benefits offered while competitive pricing gives the restaurant a competitive edge among the existing restaurants in the neighborhood. Ideally, the restaurant’s pricing should be high enough to place itself into the fine dinning categories in customers’ minds, but also competitive enough to attract customers from competitors. The decision for choosing these strategies is based on the following reasons.
The total franchise cost is around P750,000 including the whole initial stock on consignment. Every franchisee who joins the TGP network benefits from a full support package that includes the right right to use TGP’s trademark, name and logo, start-up and pre-opening assistance, site evaluation assistance, architectural/store design and construction assistance, franchise operations manual, extensive training on pharmacy retailing, business management/operations and customer service, guidance and education on generic drugs, regular advertising support and marketing and promotion assistance.
...e owner by paying the rent. According to Business Insider, last year, nearly 1000 restaurants opened in New York City. The next 5 years, 800 of them will go out of business due to many reasons such as poor service, horrible décor and so on (LAYA, 2011). The owner will be forced to close the business due to the negative impact to the profit.