Hello,
Jimmy Johns may sound a great franchise, but actually it is just another sub shop. I understand that you have a low investment, but seek a franchise that will offer great franchise support.
Consumers want cheap food. If they decide to pay $8 or $10 or $20 a meal than they may wish to go to high end restaurants.
Such thing as Fast Casual concept with average ticket being $9 - $12 , are not very surviving concept. It may be more of a burden to own a such concept.
Jimmy John is consider a high end type of expensive sub, it is not cheap. The reason subway does well is due to pricing being very low. Quiznos is too expensive with high Food Cost, QuizNos is No No..
Okay, here is the break down you must consider. Post the following number for me to help you better understand your brand.
Total investment ?
Cash Investment ( 20% if you are getting loan, and at what %)
Franchise Fee: ?
Advertising Fee: ? ( And is it locally applied or national )
How many people working for the franchiser : ?
How many in operation department: ?
Due Diligence:
2007 Total Current units in the system :
2006 Total Current Unit in the system:
How many closed per year :
Average Unit Volume :
Average Unit Food Cost Volume:
How many employees required to run the concept: ?
Is it pre-made frozen food ?
Do you have to make all the subs mets, etc...from scratch ?
* Stay away from concept, that requires too much food preparation etc... You know what I am talking about..Yum Yum brand is easy to operate, food is usually toast in the oven and serve, you don't really have to prepare anything. ...
Stay away from concept that requires you to make things from scratch.
Your rent seems very very low... But, how is the rent determined, by sqft or just flat rent ?
In typical food cost business, the cost goes something like this:
Labor Cost: 25 % ( excluding tax )
Food Cost: 28.5% ( Good food cost, above 30% not good)
Franchise fee: 10.5 ( for Jimmy Jones)
Rent: 7% ( Is great if you can get at 7% of you total sale)
Administrative Cost: 12% ( You want this number to be high for unexpected cost of running restaurant )
Your total cost: 83%
Your total Profit is at : 17% ( Before tax, debts etc... )
-------------Analyzing ------------
Restaurant does: 10,000 a week in sales
Year Volume: 520,000
Operation Cost: 431,600
Your EBDIT ( $ 88,400 ) a year
Know, you must pay your debt and loan payment...
And after subtracting eveything you come up with $ 35,000 to $40,000 in net profit... Do not do it, your better of getting a job..
Franchise is only worth it if you are willing to multiple quick.... Single Franchsie is not worth it because you will be working for the franchiser and making them money.
Franchise fee at 10,000 a week volume a year is $54,600
It sucks to know that the Franchiser will make more money from your investment than you will.
** My suggestion: If you willing to multiple the franchise and expend then go for it, other wise no...But your rent is very low, so you have a upper hand..
Hope all this kind of makes sense and helps you in make a decision.
Ben
