Growth Club
1851 Growth Club
Comparing Franchise Brands In The Sandwich Industry
Breaking down the number of locations and FDD items 7 and 19 for some of today’s leading sandwich restaurants.
Competitve analysis is an essential part of the discovery process for entrepreneurs as they determine the option that is the best fit for them as a business owner. In this process, most prospective franchisees base their assessment of a given franchise brand off of the answers to two key questions: ‘How much does it cost?’ and ‘How much can I make?’
As a refresher, here’s a breakdown of some of the important sections of a brand’s Franchise Disclosure Document (FDD):
Item 7: Estimated initial investment
Item 19: Financial performance representations
Franchise consultant Mark Siebert, who serves as CEO of Homewood, Illinois-based iFranchise Group, told 1851 that in his experience, the information included in both of these important sections of a brand’s FDDworks hand-in-hand.
“While it is important to understand your budget and eliminate any [option] that you cannot afford, ultimately, it is about return on investment – the ratio of net profit to investment dollars,” he said.
Specifically in regard to Item 7, Siebert said, “Oftentimes, different underlying assumptions [behind the numbers included] mean that you are not comparing apples to apples – so be sure you read the footnotes of Item 7 and understand fully the nature of each investment. Don’t just compare the numbers without fully understanding them.”
This knowledge is beneficial for franchisees evaluating brands in any segment of the franchise industry, but even more so comparing like brands in the same segment. 1851’s Competitive Analysis Issue begins with the sandwich industry. It is one of the most competitive and exciting industries in which to franchise, but where do you start?
FDDs can provide potential franchisees with the tools they need to make the choice that is right for their lifestyle. Available below is a brief recap of 10 sandwich brands and what to expect in terms of unit count, initial investment and potential profitability as a franchisee.
Locations: 100
Item 7: $197,200 to $648,000
Item 19: $865,254 in Average Gross Receipts
Cousins Subs is ranked No. 457 in Entrepreneur Magazine’s Franchise 500. With over 50 years in business, this sandwich shop strives to provide its partners with a worthwhile investment opportunity; according to the Cousins Subs franchise development website, its system has had positive same-store sales growth for 18 of the past 21 quarters. Its steadily increasing AUVs reveal stable and consistent growth, offering franchisees the chance to scale with intention.
Locations: 500
Item 7: $181,100 to $480,250
Item 19: $79.5 million in Estimated Annual Revenue
With 15 years of franchising history, Which Wich comes in at No. 146 on the Franchise 500. Which Wich offers financing to cover everything from the initial franchise fee to startup costs, equipment, payroll and more. Veterans receive $10,000 off of the $30,000 franchise fee as an added incentive. Boasting over 500 locations, Which Wich has even expanded internationally to the Middle East, South and Central America and the United Kingdom.
Locations: 25
Item 7: $404,500 to $687,500
Item 19: Average net sales of $1.4 million-plus
Cheba Hut is the first cannabis-themed fast-casual sub shop concept in the United States. With only 25 locations open and several more in development, Cheba Hut is gearing up for entry into the Southeast market, with locations set to open in Atlanta, Austin, Texas and Little Rock, Arkansas before the end of 2019. Currently expanding through three-pack deals, Cheba Hut is a good fit for franchisees looking to invest in a small-but-growing business with a strong culture and high average ticket prices boosted by its full bar concept.
Locations: 240-plus
Item 7: Average development costs of $325,000
Item 19: Not available
Togo’s comes in at No. 249 on the Franchise 500, and boasts higher average annual revenue than most sandwich franchises with an investment rate and building expense that trends lower than their competitors. This simple business model with a focus on service makes for a franchising relationship that sets franchisees up for success. In business since 1977, the brand has become a California staple and is continuing to grow on the West Coast after a recent rebrand and revamped operations model.
Locations: More than 42,000 units across the globe
Item 7: $350,000 to $750,000 with no royalties
Item 19: Average Unit Volume of $2.3 million
One of the most popular franchises in the world, Subway ranks No. 125 on the Franchise 500. Franchise fees are waived for openings on a military or government location, with 50% off franchise fees if opening on non-government location but receiving government financing. These franchise masters offer an easy and streamlined franchise experience, with a large well of resources for financing and expansion options.
Locations: 2,800
Item 7: $313,600 to $556,100
Item 19: $1.1 million in average annual gross sales
Ranked No. 11 in Entrepreneur Magazine’s Franchise 500, Jimmy John’s offers a franchising experience that is as simple, fast and streamlined as ordering one of the well-known brand’s sandwiches. With speed at the core of its operations model, the average Jimmy John’s franchisee sees $90,964 in net profit from operations. The brand is among the top 50 fast food restaurants in America by sales, according to QSR Magazine.
Locations: 2,000-plus
Item 7: $139,970 and $401,450
Item 19: Average Unit Volume of $450,000, estimated total sales of $2.3 million
Blimpie has been in business from humble beginnings in 1964 and currently holds the No. 304 spot in the Franchise 500. Blimpie does not directly offer financing opportunities to qualified prospects, meaning those with a net worth of $250,000 and $100,000 in liquid capital, but does have relationships with third-party financial institutions. At only $19,000, the brand’s franchise fee trends slightly lower than most competitors, with a lower buy-in but promise of steady growth.
Locations: 1,085
Item 7: Average turnkey investment of $350,000
Item 19: Average Unit Volume of $675,000, estimated total sales of $515 million
Firehouse Subs has seen rapid growth in recent years, and is ranked No. 49 in Entrepreneur Magazine’s Franchise 500. Created by a former firefighter, revenue from this business directly benefits first responders and public safety organizations with the Firehouse Subs Public Safety Foundation. Veterans receive 10% off of the franchise fee for their first store.
Locations: 1,500-plus
Item 7: $237,419 to $766,971
Item 19: Average Unit Volume of $700,000, estimated total sales of $893 million
Ranked No. 9 overall in the 2019 Franchise 500, Jersey Mike’s is the highest-ranked sandwich brand on Entrepreneur’s annual list. Dubbed the fastest-growing sandwich franchise in the U.S., the brand is on track to open 2,000 locations by 2020. Jersey Mike’s is ideal for franchisees who want to work with a company that offers highly thorough and in-depth training centered around optimizing the customer experience.
Locations: 400
Item 7: $762,000 to $2,028,500
Item 19: Average net sales of $2.4 million for the top quartile of franchise owners
McAlister’s Deli ranked No. 41 in Entrepreneur's Franchise 500, moving up 73 spots in 2019. While the brand requires a higher buy-in than competitors, the promise of higher returns is also present. McAlister’s sales reflect the slightly more upscale experience, selling a wider variety of items at a higher price point than other sandwich brands. Veterans receive $15,000 off the $35,000 franchise fee.
*This brand is a paid partner of 1851 Franchise. For more information on paid partnerships please click here.
