Yesterday I visited BoneHeads, The Manager said they did $2500 in lunch on Friday. The location is key here, I do understand that. This location is the prime spot in Georgia. I read where a McDonalds franchisee for 35 years got out of McDonalds and into Moes and really like his experience with Raving Brands. I may take a look into BoneHeads. Your thoughts? http://www.ravingbrands.com/
Looks interesting. How much is the on going Royalty and total start up package? If I were you I would send for the franchise package and also attend the seminar they have coming up. Also, and this is important, sit down and talk with the 4 franchise operators in Georgia and pick their brains! Have a list of questions written out on a pad of paper when you go in to see them. ( Ill give you the list if you desire). Good luck! jif
Krispy Kreme has left Houston Jif, they opened to a big fan fare and everybody figured they would run Shipley's Donuts out of business. But Shipleys is going strong and the KK's failed. I don't know why though, they have a good product and they certainly got off to a great start there was a time when you had to stand in line to just get into the building to buy donuts. Goes to show you how risky the whole business is in general.
T... we had the same thing here in Cranston. Krispy opened up 3 years ago. The first week was gang busters. It went down hill from there. Krispy Kreme has its busiest week the first week it opens because of all the hype. Now here is whats wrong with Krispy Kreme as I see it, and I have written to the corporate office. The honey dip donut which is their signature donut is 2/3 the size of a Dunkin Donut. The filled donuts, although very tasty are also an ounce or 2 smaller then most donut chains. They don't have "plain" donuts ( only raised) They dont have muffins and bagels which are very very in demand in the northeast. When you go into a Krispy Kreme store for take out.. the donuts are in one place and the coffee in another...this makes for a very very confusing order placement. Krispy Kreme was very strong in the south where they were the only show in town. I dont know about Texas and the rest of the country , but in the northeast there are donut chains galore. Rhode Island for example has the most donut shops per capita then any othe state. I told my wife 5 years ago when I heard Krispy Kreme was coming that they would not make it unless they change the way they operate. I hope this answered your question :arrow: :arrow: :!: :!: jif
Our local Krispy Kreme here at the shore closed up about two months ago. It seems to be an epidemic, at least in the northeast. They also are suspected of cooking their books... the accusation was that they forced un -needed inventory on the franchises to pump up their corporate sales figures. Then they would supposedly buy it back after the accounting period ended. Of course that will only work for the short term.
5% royalty fee and a 2% advertising fee <t>Jif, Read this and let me know your thoughts please.<br/> <br/> <br/> Q: Is it necessary to have previous retail or restaurant experience to be a Boneheads Franchisee?<br/> A: It is preferable that you have at least 5+ years in the Franchise/Restaurant arena. Also, quota driven executive sales professionals with a great entrepreneurial spirit have been very successful. If you would like to submit a request to us, please include the following: your preferable location, restaurant owner/operator experience, financial qualifications, and any other pertinent information. We will be happy to review your information and contact you if we determine that you or your group meets our qualifications.<br/> <br/> Q: Does Boneheads provide financing?<br/> A: Yes, indirectly. We have several institutions that work with our franchisees to provide financing.<br/> <br/> Q: I know very little about commercial lease arrangements. Will Boneheads assist me in reviewing my lease?<br/> A: Boneheads and Raving Brands have over fifty years of commercial real estate experience on its team, which we put to work for you in finding and evaluating potential locations. However, when it comes to actually reviewing a lease, we recommend speaking with a qualified real estate attorney. We have several attorneys with whom we have worked in the past, who know our system, and we can provide contact information should you need it.<br/> <br/> Q: Will I be trained to run my restaurant?<br/> A:Yes, all franchisees must attend and successfully complete the training program provided by Boneheads at our stores in Atlanta, GA. The cost of training is included in your franchise fee, though travel, food, and lodging are the responsibility of the franchisee. All owners and operating managers are required to attend training.<br/> <br/> Q: What is the franchise fee for a single store? How is my franchise fee paid?<br/> A: Our franchise fee is $20,000 per store as of our 2005 UFOC agreement. We prefer developers that are interested in a minimum 3 store commitment (total $60,000). You would pay $30,000 down when you sign up and the balance would be paid when you sign the lease on your first store. Therefore, your franchise fees are paid up front and you are guaranteed your rights to build your fantastic Boneheads!<br/> <br/> Q: How many stores do I have to commit to opening to become a franchisee?<br/> A: You are requested to sign up for a minimum of 3 stores which would be developed in an agreed upon area. Your development schedule typically has a store opening every nine months. Depending on your financial needs, you can then use the income generated from the first store as collateral with your lending institution to get financing for the second store.<br/> <br/> Q: How much money can I make from a Boneheads restaurant? A:The Federal Trade Commission will not let us make any earnings claims to prospective franchisees. Therefore, we rely on our franchisees to supply you information on this subject and, with some effort on your part, you can put together a fairly accurate pro forma.<br/> <br/> Q: Does Boneheads supply me with an accounting system, daily sales summary system, and inventory control system?<br/> A:Yes. Complete, easy to use accounting, daily sales summary, and inventory control systems are provided in your Operations Manual, and you will be trained on their use. These systems are designed to help you maintain the highest product quality and track your business performance.<br/> <br/> Q: What is the franchise fee for a single store?<br/> A: Our franchise fee is $20,000 per store.<br/> <br/> Q: Are there any ongoing fees paid to Boneheads, such as royalties?<br/> A:Yes, there is a 5% royalty fee and a 2% advertising fee<br/> <br/> Q: What is the average investment for a Boneheads?<br/> A: $344,000 to $625,00</t>
Tailback, It doesn't seem that you have (at least what little I know of you) the basic qualifications that they set out in the question #1. I wonder if they wave that for anybody who has sufficient captial to aquire 3 franchises? While I am sure that they want each franchisee to be successfull, I'm sure it is tempting to take somebody with the capital but without the experience they desire. Terry
TB.. Everything looks ok except the first mentioned item. In my honest opinion you do NOT need experience to succeed in this business. You do , however, need the dedication to working 7 days a week 12 hours a day for the first several years to get the business off and rolling properly. The food business is tough. It looks easy, but it aint! I dont understand why they are looking for people with experience..you might want to talk to them about that. 5% royalty and 2 % advertising is very reasonable. They also mention that the corporate office can not supply you with projected P & L's anymore ( Years ago they could do that ). Thats why I mentioned in my previous post that you will sit down with other franchisees and they will open their books to you. You will need a copy of the Franchise agreement to give to your attorney for his/her approval, and after you sit with the franchisees you will sit with your own CPA and talk. jif
T.. I just noticed your last post. These franchise companies teach you everything you need to know to be successful. You dont need prior experience. You need THE DESIRE AND DEDICATION TO SUCCEED and of course the $$$...or at least part of it. in 1993 I sold my A&W Root Beer Restaurant to a gentleman for a substantial down payment( I carried the paper). The VERY FIRST DAY he was there , it was a Saturday, He said to me "Im out of here". ( I was supposed to be there 30 days to teach him the business). "Where are you going says I". "I play golf on Saturdays says he". I wnt home and told my wife We are in big trouble. Sure enough 6 months later he gives the keys back to me..he went under!! I had his home and his deposit and then I resold the restaurant again. No such thing as days off in this business. jif
Tailback, You need big bucks to get involved. $ 344 -625 K investment per store. or $ 1.032 million to $ 1.875 mill . You WILL NOT get a franchise for only $ 60 K. They are looking for someone with major liquid assets and ability to get started. Somewhere there should be a minimum liquid asset requirement. You need a minimum 25 % capitalization or 250K to 450k to get started. They will not finance 100 % . You also need $$$ to pay for insurance, legal, promo advertising etc plus money to fund an inventory as well as cash to fund at least 3 weeks payroll before your profits are able to fund your operation. Restaurant business is very tough and long long hours. Lots of competition.
Guys, How hard will it be to get a loan for my needs? I have a piece of land valued near 1 million. My home is worth 225K, it's near paid for.
TB.. The piece of land you own is your key. How much do you owe on it? The home would be your second option...but more often then not wives hesitate to use homes for business equity...must be talked over thoroughly.AJ knows from his clients that the food business can be very good...but very long hours. jif
Tailback, You have a lot of due dilligence to do especially with 3 locations. When you invest a good portion of your wealth, you need to do a good job mapping out your plan. Don't leave any stone uncovered. If you have never been in the restaurant business, it can be an eye opening experience. You have to have certain skills to be successfull. You have to manage people, you have to be extremely organized, you need a little financial skill and you have to know what the public wants. A franchise structure helps, but you need to have some of the basic skills or develop it very fast. Location location location. Yes it's important but it is not everything. For a full service restaurant, you can be in the sticks and be wildly successful. . If you have great food , they will come. On the other hand, a location may be great , but if there are too many opportunities for a competitor to park himself accross the street be a little wary. What if a TGI Friday, Bennigan or Chilli's moves nearby. Your business will get hurt, especially a franchise which is not as nimble as an individually owned business. You can't change the menu with a franchise, on your own you are nimble enough to out maneuver your competitors. eg( buy one get one free) If you need traffic to survive, invest in a demographic report. I believe Trans Union or one of the 3 major credit agencies can provide you with one. They do a head and traffic count and you will get data on average income, disposable income etc. For example, in the Northeast coffee is king. If you have a coffee shop near a hospital or conveniently located as people go to work, you can get a lot of takeout business if you have a convenient pick up and go setup. In the South this may not be true. As far as borrowing on land, that's a tough call. Most banks will not lend on land unless it is under constructiion or if you have substantial income to afford the loan payments. Be wary of loan sharks . You might even consider selling. SBA is another option, but if you are too leveraged it will not happen.
Tailback, Here's a list of average restaurant ratios. You need to estimate your fixed monthly costs such as your rent, loan repayment, and your salary,etc. then use the food/salary ratios to back into what your gross sales should be in order to make it work. Full Service / Limited Service: ($10 or More) Where It Came From (%) Food Sales 77.7% / 95.4% Beverage Sales 22.3 / 4.6 100 % / 100 % Where It Went (%)* Cost of Food Sold 27.4 / 33.0 Cost of Beverages Sold 6.6 / 3.3 34.0 % / 36.3 % Salaries and Wages 29.2 / 29.5 Employee Benefits 3.4 / 2.7 Direct Operating Expenses 7.8 / 6.0 Music and Entertainment 0.7 / 0.1 Marketing 1.9 / 3.4 Utility Services 2.1 / 2.8 Restaurant Occupancy Costs 5.3 / 7.4 Repairs and Maintenance 1.7 / 1.7 Depreciation 2.0 / 2.3 Other Operating Expenses/Income) (0.6) / (2.9) General and Administrative 4.3 / 3.9 Corporate Overhead 2.1 / 2.1 Interest 1.0 / 1.2 Other 0.3 / 0.1 Pre-tax Income 4.8% / 3.4% Note: All figures are weighted averages. *All amounts are reflected as a percentage of total sales. Source: National Restaurant Association, Restaurant Industry Operations Report - 1999
AJ, Terry and Jif, Thanks... I'm in and out of work at the momment so I really haven't had much time to respond. AJ, I'll have to get an accountant to help me with all that. That's all out of my league. Jif, Yeah the property is paid for.
Jif, It will probably be this weekend before I can give this alot of discussion. One thing that scares me would be how much the lease is for the space needed. I heard It's in the 30 dollar plus range a square foot. Wow!
Never worry about "per sq footage". You WILL NOT do business unless you have the location. LOCATION LOCATION LOCATION. This in numero uno. Number 2 is ADVERTISE. So many new comers try to save on these 2 things..and DOWN they go! jif
1200 sq ft at $30 bucks is 36 Grand a month, That can't be right. No way anyRest can make that kind of money to pay off that lease! Jif, You say to ask 4 franchise owners to show their books, who's going to agree to that? Why would they do it? I would think they would be too busy and think it was none of your business?
Are you sure that 30sq/ft isn't an annual quote? 36K/month for 1200 sq ft is a hell of a nut to face.