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We have a Wendy's in my neighborhood that, I swear, has a line from the time they open in the morning until 1am. I wonder how much money (gross) a busy place like this brings in each month? Because hamburger prices are the same across the country, I assume so is the income. I realize actual profits will vary by location because of the difference in rent, etc.

Also I would like to know how much money a fast food restaurant with average traffic brings in.

Are rent, utilities, and employee wages their main expenses or is there more?

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sure does...

riznick (Oct. 01, 2009 @ 3:00p) |

A lot just forget the fries, pie and occasional burger per the bosses order:
http://www.buzzfeed.com/yacomink/robert-trug... (more)

DamnoIT (Oct. 01, 2009 @ 3:56p) |

A Sonic opened recently on the north shore of MA to LONG LINES. See the pictures in the link:

Text

flowindex (Oct. 08, 2009 @ 12:02p) |

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franchise fee can be the biggest expense.

I dont know about the gross, but
Top locations make their owners $500k+ per year after all expenses. Most do not hit this level, but a very busy location might.

Big name franchises like McDonalds typically require a track record of success in the franchised restaurant business.

nm

Subway to surpass McDonalds...

"According to Advertising Age, which cited data from Technomic, the average Subway store made about $445,000 last year, compared with $2.3 million for the average U.S. McDonald's."

Kismet4Max said: Subway to surpass McDonalds...

"According to Advertising Age, which cited data from Technomic, the average Subway store made about $445,000 last year, compared with $2.3 million for the average U.S. McDonald's."


after reading those articles, those figures are for sales, not net income

you can see why the subways need the much smaller footprint for their stores vs. McD's

One of the top traffic Taco Bells grossed $4M a year in sales. The biggest expense beyond the ones already mentioned is shrinkage (at the register and of the product).

Venturion said: The biggest expense beyond the ones already mentioned is shrinkage

It's not my fault, the water was cold

I think I recall a McDonalds franchise on CNBC indicated it had a approx. 10% profit margin, on something like $3.5M in sales.

The franchise fee is pretty high, as others have pointed out. I imagine you could do pretty well with a high traffic location. Interesting note - the products like soft drinks have obscene profit margins (buy a bag of syrup - get hundreds of $1.50+ drinks out of it). However, I guess the sandwiches/etc. run pretty low margin, so that cuts in on the profits.

Porqin said: I think I recall a McDonalds franchise on CNBC indicated it had a approx. 10% profit margin, on something like $3.5M in sales.

That's about right. Retail Quick Serve (new name for Fast Food!) runs on razor thin margins and high traffic.

I know that an average Denny's grosses about 1.2M million in sales. A smaller restaurant like a Huddle House grosses 660k a year.

The investment for opening one single QSF (quick service food) restaurant of a major player in the market will cost you a minimum of 2 million to open the doors. The franchise fee is dependent on how profitable the brand is, reputable ones make your deposit enough start-up capital to keep you for a few months, buy food and paper products, etc. You can bu Subway franchises cheaper than McD's, same for BK, Wendy's, et. al.

Mickie3: could you break down the 2 mil it would take to open a Wendy's? I have friends who own restaurants, but not big-name fast food chains.

I'm also curious as to how much involvement the owners typically have in running the business. I imagine it's probably hard to find a loyal manager who won't start stealing if you spend too much time drinking mojitos in South Beach while he's selling burgers for you.

Knocks said:
I'm also curious as to how much involvement the owners typically have in running the business. I imagine it's probably hard to find a loyal manager who won't start stealing if you spend too much time drinking mojitos in South Beach while he's selling burgers for you.


There is a difference between owning a business and having a business own you. I dont care what the profit margins are, I am NOT working at my own McDonalds.

Knocks said: Mickie3: could you break down the 2 mil it would take to open a Wendy's? I have friends who own restaurants, but not big-name fast food chains.

I'm also curious as to how much involvement the owners typically have in running the business. I imagine it's probably hard to find a loyal manager who won't start stealing if you spend too much time drinking mojitos in South Beach while he's selling burgers for you.


Most of the MCDs around here are owned by a family management corp, so the owners usually work at the corp office doing whatever they do. Might see them around when it's time to do reviews.

However, the involvement is always going to depend on how much you want to do or can afford. You can always just hire people, but it of course costs you.

Some numbers here

I used to work at the Wendy's headquarters (1998) and recall seeing that a franchisee is charged a one time fee of $600k and a annual fee of $60k. on top of that, the store has to buy all the food and supplies from Wendys International. I was told that the one-time fee for McD was $1 million at the time

The one I worked at 10years ago, aavg day would be 3200 and 5 on the weekend. 35k town, with 4 others

The Mickey D I work in makes over 500k profits for the owner each year.

I worked for a Corp. Store for a while, and i can tell you the profit margin is SLIM! We did 2.8 Mil in sales a year and Bottom Line Before any investment gain and or interest income was about 12% of sales and we did not pay a franchise fee, and got better deals on insurance and such.

Knocks said: Mickie3: could you break down the 2 mil it would take to open a Wendy's? I have friends who own restaurants, but not big-name fast food chains.

I'm also curious as to how much involvement the owners typically have in running the business. I imagine it's probably hard to find a loyal manager who won't start stealing if you spend too much time drinking mojitos in South Beach while he's selling burgers for you.


Not sure about Wendy's, but a large chain that I worked for had a min of 2 million then as a buy-in. The franchise fee at that time was only about one million, the store costs were around 500k, and paper products / initial supplies / foodstuffs were about 100k. The rest was for working capital as it usually took up to a year to start to make money. I am sure all these costs have went up dramatically since that time and getting a location in a prime market is still as high as ever.

The owners typically had a successful background in some area, fast food or otherwise. That was pretty much assumed as the required capital you had to show you had was NOT lines-of-credit, etc. but cash and liquid negotiable assets (not real estate).

The owners typically had little involvement in day-to-day management of the stores. They oversaw the stores and checked in on a regular basis, but never saw one actually run a store. The stores all had professional managers who were well compensated to run the locations. (The average salary for store manager was well into the 6 figure range.) The average store netted well in excess of 10% of net sales.

Sorry my numbers are not more current than they are, but left that industry to return to one I enjoyed more.

wiredspider said: Knocks said: Mickie3: could you break down the 2 mil it would take to open a Wendy's? I have friends who own restaurants, but not big-name fast food chains.

I'm also curious as to how much involvement the owners typically have in running the business. I imagine it's probably hard to find a loyal manager who won't start stealing if you spend too much time drinking mojitos in South Beach while he's selling burgers for you.


Most of the MCDs around here are owned by a family management corp, so the owners usually work at the corp office doing whatever they do. Might see them around when it's time to do reviews.

However, the involvement is always going to depend on how much you want to do or can afford. You can always just hire people, but it of course costs you.

Some numbers here


That article references some pretty reliable sites, but since they are selling you a franchise on something that sounds of snake-oil to me, I am suspect of their additions to the referenced works of others.

80% of McDonald's are "company owned."

Venturion said: One of the top traffic Taco Bells grossed $4M a year in sales. The biggest expense beyond the ones already mentioned is shrinkage (at the register and of the product).
Not only that, you have to account for the FW Hot Deals crowd coming in and demanding that you give them 8 free food items AND pay them $5 because of their coupons and rebates.

The real money is made in selling franchises.

My impression was that a franchise owner has to pay back the head office every year, and that he or she makes a piddly salary for 80 hour weeks. After the initial investment is paid back, then the owner has a good income and the option of selling the store for hundreds of thou.

'Subway' is notorious for opening another store near you if your store becomes too profitable.

Subway Complaints

The franchisee is really working for the franchisor. Franchisors dictate the terms of your business and take a cut, off the top and force you to buy supplies from them at prices they dictate. They all have terms such as when you have to remodel, buy new equipment to start selling the stuff they cook up at corporate, tell you when to open and when to close, how much of your sales you have to spend on advertising, when to buy new signage from them, etc. sure, you run your own business, but you ar in the business of selling what they give you to sell. your main task as the business owner is to manage your staff of minimum wage workers, who are enlightened, aspiring and ambitious to help you succeed. good luck.

I think the better bet would be to franchise a successful smaller franchise for next to nothing and open it in a new area (maybe next state over) which doesn't have the following of a bigger chain nor the commissions. From my investigation into the bigger franchises, all of the cash goes to the parent company and the only way to make money is to have multiple locations.

miserly said: The franchisee is really working for the franchisor. Franchisors dictate the terms of your business and take a cut, off the top and force you to buy supplies from them at prices they dictate. They all have terms such as when you have to remodel, buy new equipment to start selling the stuff they cook up at corporate, tell you when to open and when to close, how much of your sales you have to spend on advertising, when to buy new signage from them, etc. sure, you run your own business, but you ar in the business of selling what they give you to sell. your main task as the business owner is to manage your staff of minimum wage workers, who are enlightened, aspiring and ambitious to help you succeed. good luck.

That is one way of looking at it, but sounds like you have no idea as to what is legally done. Legally, there is NO way the franchiser can FORCE you to buy from them or exercise any control over where you buy your supplies. Usually, as a practical matter, the franchisees start a co-op and get the goods at a price lower than what one franchisee can get it for.

As to the rest of your statements, it depends on what the contract calls for. If you agree to the terms you are saying that everyone does, that is your own fault.

The company I worked for had maybe a thousand people, in total, at corp HQ. Out of that number, we had maybe 50 lawyers on staff. Of those 50, 1 (yes, one) was a general practice guy who basically dealt with putting all the general legal matters (slip & falls, EEO, etc.) in the hands of outside firms. The other 49? They were all franchise law specialists, making sure they were within the legalities of the feds and each state and country we operated in. We did handle our own franchise lawsuits, though, as the guys we had on-board were responsible for that entire portion of the company. The amazing thing was that if someone screwed up the contract, there was no doubt that they were discharged, IMMEDIATELY. I saw this happen to a Exec-VP of law who had inserted a phrase that brought suits within months and cost us big in terms of PR and time, but little in terms of cash outlay.

dmlavigne1 said: I think the better bet would be to franchise a successful smaller franchise for next to nothing and open it in a new area (maybe next state over) which doesn't have the following of a bigger chain nor the commissions. From my investigation into the bigger franchises, all of the cash goes to the parent company and the only way to make money is to have multiple locations.

Not gonna happen, NEVER. Franchise companies that are run like that are never successful.

I do agree with you that the more locations you own the more you make. Basic math with tell you that.

jcbrooks said: The real money is made in selling franchises.

GM and Chrysler may disagree.

Based on lawsuits filed against the company, I would not open a subway. Wish I could find the article I had relating to their deceptive practices in regards to franchise owners.

silam said: Based on lawsuits filed against the company, I would not open a subway. Wish I could find the article I had relating to their deceptive practices in regards to franchise owners.

Look about 5 posts up.

I used to work as Tacobell manager. I was in the process of getting a franchise store with them. After seeing all the numbers and the selection process, I conclude that new franchisees have no shot in getting a good store. First, there is the franchise fees. Second, Corporate never sell any good store. Only the ones in bad neighborhoods or not making money. If they do sell, the larger franchisees get the first picks.

My brother-in-law has a mail center (I know not restaurant related). His major complain with a franchise operation is that corporate takes too much of a cut. It comes in a form of supplies and equipments. They make you buy equipments from them which they make a lot of profit. For example, a credit card machine which cost $250 on eBay, they sold to him for $500. A copy machine that he can buy off eBay for 5k used, they wanted him to buy from they for 15k. Of the ten franchisees who went into training with him, only 2 survived after half year. He survived because his location and luck.

As for Subway, I hear good things about them. However, things may have change since they are growing so fast.

i like the model of WalMart better . look at what happened to krispy kreme store owners who paid millions to get one store and it bombed .

kevinatwsi said:
As for Subway, I hear good things about them. However, things may have change since they are growing so fast.

Really? See few posts earlier....

ColbyS said: With a lot of middle class being squeezed financially the fast food industry is booming.

Cuz it's so much cheaper than going home and making something?

Oh, I'm sorry...that actually requires that you plan ahead, or practice self-control until you get home.

Me feed kids and wife dollar menu double cheeseburgers and lots of pie.

Me saw plant matter last on NatGeo.

Me wonder why we is all fatties.

Me hungry now.

mmmmm.....pie.

Skipping 81 Messages...
A Sonic opened recently on the north shore of MA to LONG LINES. See the pictures in the link:

Text



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