Brian Nagele
If you’re thinking about buying an Arby’s franchise, you probably want to know how much money you can expect to make. After all, purchasing a franchise requires a big financial investment, so you want to be sure you’re making the right choice. The good news is that Arby’s is a well-known and well-liked fast-food business, so franchisees have a decent chance of making a lot of money.
The typical investment for an Arby’s franchise is $1,320,000, according to SharpSheets.
Although the cost may appear high, the Average Unit Volume (AUV) of $1,254,000 annually indicates that there is a chance for sizable profits.
It’s crucial to remember that the real profits will vary depending on a number of variables, such as location, competition, and regional economic conditions.
It’s also important to note that Arby’s gives veterans a $5,000 discount on the franchise fee.
FranchiseGator also states that franchisees can anticipate investing a total of $500,000 to $2,474,400.
Given the variety, it’s important to do your research and make sure you fully comprehend the associated costs before committing.
Understanding the Arby’s Franchise Model
It’s critical to comprehend the franchise model and possibilities for success if you’re thinking about buying an Arby’s business.
With more than 3,400 outlets globally, Arby’s is a well-known brand in the fast-food sector.
You will be able to capitalize on the brand’s recognition as well as its successful business model as a franchisee.
A standard quick-service restaurant (QSR) concept, the Arby’s franchise business allows customers to place their orders at the counter and pick up their food to eat in or take out.
According to SharpSheets, Arby’s has found success with this strategy, with an average unit volume (AUV) of $1,254,000 annually.
You will be in charge of locating and securing a space for your Arby’s restaurant as a franchisee.
Arby’s offers site selection advice and may assist you in assessing suitable locations using demographic information and other variables.
You will need to spend money on the tools, furnishings, and fixtures required to set up your restaurant once you have found a place.
According to Franchise Gator, the initial expenditure required to open an Arby’s franchise can be anywhere between $336,500 and $2,474,400.
This investment comprises a $30,000 initial franchise fee as well as ongoing royalty payments of 4% of traditional restaurants’ gross sales and 6.2% of non-traditional restaurants’ gross sales.
A 4.2% contribution to the advertising fund is also necessary.
Despite the initially expensive cost, Arby’s offers franchisees a thorough training program and continuing assistance to ensure their success.
This includes continuing assistance from a committed franchise business consultant as well as training in operations, marketing, and management.
Overall, for business owners who are eager to work hard and stick to the tried-and-true business strategy, purchasing an Arby’s franchise can be a profitable venture.
Arby’s provides franchisees the chance for long-term profitability and expansion thanks to a strong brand and an effective franchising strategy.
Initial Investment for an Arby’s Franchise
If you’re thinking about starting an Arby’s franchise, you’ll need to put down a sizable down payment.
The typical first investment for an Arby’s franchise is $1,320,000, according to SharpSheets.
The overall investment, however, might vary from $500,000 to $2,474,400, depending on a number of variables like location, size, and equipment requirements.
Here’s a breakdown of the costs that are included in the initial investment:
- Development Fee: This fee ranges from $6,250 to $12,500 and covers the cost of site selection, lease negotiations, and construction management.
- License Fee: The license fee ranges from $0 to $37,500 and covers the cost of obtaining the license to operate an Arby’s franchise.
- Fees and Expenses During Training: These fees range from $5,000 to $23,400 and cover the cost of training for the franchisee and their staff.
- Equipment and Inventory: This cost can vary greatly depending on the size and location of the franchise, but typically ranges from $187,000 to $583,000.
- Real Estate and Leasehold Improvements: This cost can also vary greatly depending on the location and size of the franchise, but typically ranges from $300,000 to $1,000,000.
- Other Costs: There may be additional costs associated with opening an Arby’s franchise, such as legal fees, insurance, and working capital.
It’s crucial to keep in mind that these expenditures only cover the initial outlay and do not cover recurring costs like royalties, advertising fees, and other running expenses.
Before making any investment decisions, it’s crucial to conduct in-depth research on the costs and requirements related to starting an Arby’s franchise.
Ongoing Costs of an Arby’s Franchise
Before making an investment, you should be informed of the continuous expenses associated with operating an Arby’s franchise.
Here are a few examples of common recurring expenses for an Arby’s franchise:
Royalty Fees
Franchisees of Arby’s are obligated to pay a royalty charge equal to 4% of total sales. The usage of the Arby’s brand, ongoing maintenance, and marketing initiatives are covered by this fee.
Advertising Fees
Franchisees must also pay advertising expenses in addition to royalties. These charges support local and national advertising activities.
Local advertising costs 3% of gross sales, compared to 1.2% of gross sales for national advertising.
Rent and Utilities
Rent and utilities for your Arby’s franchise store must be paid, just as they would for any other business.
Depending on the location of your franchise and the size of the space, the cost of rent and utilities will change.
Food and Supplies
Food and supply costs are an additional recurring expense of an Arby’s franchise.
The price of the menu items and the ingredients required to prepare and serve the cuisine are both included in this.
Insurance
You will also require insurance for your franchise as a business owner. This covers workers’ compensation insurance, property insurance, and liability insurance.
Employee Wages
Paying your personnel is the last step. The cost of employee pay will vary depending on how many employees you have and the minimum wage laws in your area.
Revenue Potential of an Arby’s Franchise
The potential revenue that can be earned should be one of the most crucial considerations when thinking about purchasing an Arby’s franchise.
The average unit volume (AUV) of an Arby’s franchise is $1,254,000 per year, according to SharpSheets. This implies that an Arby’s franchise has a potentially high income potential.
It is crucial to remember that income potential might vary depending on a number of variables, including location, competition, and marketing initiatives.
Before purchasing an Arby’s franchise, it is essential to carry out careful study and analysis to make sure the revenue potential matches your financial objectives.
Franchisees of Arby’s can make money not only from the AUV but also from other sources including catering, delivery, and smartphone ordering.
The potential revenue of an Arby’s franchise can be further increased by these additional revenue sources.
Additionally, it’s critical to keep in mind that an Arby’s franchise’s overall revenue and profitability will be impacted by operational costs and expenses.
The overall startup costs for an Arby’s franchise can range from $500,000 to $2,474,400, according to Franchise Gator.
This includes one-time charges like development fees as well as recurring costs like royalties and marketing fees.
An Arby’s franchise may have a sizable income potential overall, but it is crucial to undertake careful study and analysis to make sure that it will meet your financial objectives and expectations.
Factors Influencing Profitability
The success of your Arby’s business can be impacted by a number of variables.
Some of the most significant ones to think about are listed below:
Location
Your Arby’s franchise’s location may have a big impact on how profitable you are.
A franchise that is situated in a busy, high-footfall region is more likely to produce more sales than one that is situated in a quieter area.
Additionally, the cost of leasing or purchasing a property in a desirable area may be higher, which may have an effect on your profitability as a whole.
Competition
The profitability of your Arby’s franchise can also be impacted by the level of local competition.
It could be harder to draw consumers and increase sales if there are a lot of competing fast-food businesses nearby.
On the other hand, if there aren’t many rivals, you could be able to improve your market share and profits.
Franchise Fees and Royalties
You must give the franchisor a set amount in fees and royalties as a franchisee. These could consist of a startup franchise fee, continuing royalties deducted from your sales, and advertising costs.
It is crucial to include these charges in your financial plans because they may have an impact on your profitability.
Labor Costs
Labor expenditures are one of the biggest expenses for every restaurant. To operate your Arby’s franchise, you will need to employ and train workers, and these expenses can mount up rapidly.
To maximize your profitability, it’s critical to strike the ideal balance between workforce levels and labor costs.
Food Costs
Another important aspect that might affect the profitability of your Arby’s franchise is the price of food.
Food and supplies must be purchased from authorized vendors, and their prices may change over time.
To keep your food expenditures in check, it’s crucial to manage your inventory wisely and bargain with vendors.
Frequently Asked Questions
How much does it cost to open an Arby’s franchise?
According to SharpSheets, the average investment cost for an Arby’s franchise is $1,320,000. However, the total investment cost can vary depending on the location and type of restaurant. For example, a free-standing Arby’s location can cost between $332,700 and $1,647,000, while a non-free-standing location can cost between $272,700 and $1,025,000. Keep in mind that these figures are from the 2016 Franchise Disclosure Document (FDD) and may have changed since then.
What are the qualifications required to open an Arby’s franchise?
To open an Arby’s franchise, you’ll need to meet certain financial and personal qualifications. According to Franchise Gator, you’ll need a minimum of $500,000 in liquid capital and a net worth of at least $1 million. You’ll also need to have experience in the restaurant industry and be willing to commit to a 20-year franchise agreement.
How much can you make with an Arby’s franchise?
The potential profits of an Arby’s franchise can vary depending on a number of factors, including location, competition, and management. According to Vetted Biz, the median franchise sales for Arby’s in 2021 was $1,296,616. However, keep in mind that this figure is a median and not a guarantee of profits. Your actual profits will depend on a number of factors, including your operating costs, marketing strategies, and customer base.
Does Arby’s offer any discounts or incentives for veterans?
Yes, Arby’s offers a $5,000 discount on the franchise fee for veterans who qualify. This is a way for Arby’s to show appreciation for the service and sacrifice of our nation’s veterans. To qualify for the discount, you’ll need to meet certain financial and personal qualifications and provide proof of your veteran status.
What kind of support does Arby’s offer to franchisees?
Arby’s offers a comprehensive support system to its franchisees, including training programs, marketing support, and ongoing operational assistance. According to Franchise Gator, Arby’s provides a 12-week training program for new franchisees, as well as ongoing training for managers and employees. They also offer marketing support, including national advertising campaigns and local marketing materials. Additionally, Arby’s provides ongoing operational assistance to help franchisees optimize their operations and maximize their profits.
Conclusion
According to the information provided, starting an Arby’s franchise can be a financially rewarding venture, but it costs a lot of money up front.
With an average unit volume (AUV) of $1,254,000 annually, the average investment cost ranges from $500,000 to $2,474,400.
Despite the hefty initial outlay, owning an Arby’s franchise may guarantee a consistent flow of cash.
The average franchise sales for Arby’s in 2021 were $1,296,616. It’s crucial to remember that individual franchise revenues might differ based on things like location, rivalry, and management.
Veterans can also receive a discount from Arby’s that might lower their franchise fee by $5,000.
The organization also offers franchisees continuing training and support, which can contribute to the success of the enterprise.
