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Five Guys Burgers and Fries Franchise ProfileRestaurant Franchises > Quick-Service Restaurants |
What Are the Initial Investment Requirements for a Five Guys Franchise?
To open a Five Guys franchise, you will need to make a significant financial commitment. The initial investment ranges from $256,200 to $591,250, which includes a franchise fee of $25,000. Additionally, you must have a net worth of $500,000 to $1,000,000 and be prepared for ongoing royalty fees of 6% and a marketing fee of 2% of gross sales. Having sufficient cash reserves is crucial for covering these costs and ensuring smooth operations during the startup phase.
What Are the Average Revenues and Financial Performance of a Five Guys Franchise?
Five Guys franchises generally see robust financial performance, with an average annual revenue of approximately $1,182,254 per unit. The median annual revenue stands at $877,394, while the lowest recorded revenue is $780,050. However, the highest annual revenue can reach around $1,182,254. Despite the impressive revenue figures, it's important to note that operating expenses can be high, and franchisees may face challenges in achieving profitability, as indicated by an EBITDA of (42,387), representing a negative margin.
What Is the Breakeven Timeline for a Five Guys Franchise?
Franchisees can expect to reach their breakeven point within approximately 12 months of operation. This relatively quick breakeven timeline can be appealing to aspiring entrepreneurs, as it suggests a faster return on investment. However, it's essential to consider the overall investment payback period, which averages around 24 months, ensuring that franchisees plan their finances accordingly to sustain operations during the initial phases.
How Many Five Guys Locations Are There?
As of 2023, Five Guys operates a total of 1,521 locations, with 924 of those being franchised units and 597 corporate-owned units. The growth trajectory has been consistent, with an increase in total units from 1,458 in 2021 to 1,521 in 2023. This growth reflects the brand's strong presence in the fast-casual dining sector and its appeal to both franchisees and customers alike.
Five Guys Burgers and Fries Franchise Financial Requirements
Below, you’ll find an overview of the initial investment needed to launch the business, along with the ongoing fees required by the franchisor to maintain operations over time.
The minimum total assets (minus liabilities) you must possess.
Net Worth Required:
The estimated period to recoup your total investment.
Investment Payback:
The initial fee paid to join the franchise system.
Franchise Fee:
Ongoing percentage of revenue paid to the franchisor.
Royalty Fee:
Regular contribution toward the franchise’s advertising fund.
Marketing Fee:
The estimated timeframe to recover your initial costs.
Breakeven Time:
The total amount required to launch the franchise.
Initial Investment:
The minimum liquid capital you must have on hand.
Cash Required:
The typical yearly revenue generated per franchise location.
Average Revenue:
The middle value of yearly revenue among franchise locations.
Median Revenue:
The largest reported annual revenue among franchisees.
Highest Revenue:
The smallest reported annual revenue among franchisees.
Lowest Revenue:
A broad sector defining similar types of franchise businesses.
Industry:
A more specific division within the broader industry.
Category:
The key individuals guiding the franchise’s strategy and growth.
Leadership:
The official business address of the franchisor’s headquarters.
Corporate Address:
Available financing options to help start the franchise.
Funding Year:
The main organization that owns the franchise brand.
Parent Company:
Five Guys Burgers and Fries Franchise Unit Growth Summary
A breakdown of corporate, franchised, and total units, with yearly net changes.
Total Units
Franchised Units
Corporate Units
| Units | 2021 | 2022 | 2023 |
|---|---|---|---|
| Total Units | 1458 | 1477 | 1521 |
| Net Change YoY | 19 | 44 | |
| Franchised Units | 979 | 899 | 924 |
| Net Change YoY | -80 | 25 | |
| Corporate Units | 479 | 578 | 597 |
| Net Change YoY | 99 | 19 |
Initial Investment
The initial investment required to open a Five Guys Burgers and Fries franchise ranges from $256,200 to $591,250. This includes a franchise fee of $25,000, which grants the franchisee the rights to operate under the Five Guys brand. Additionally, potential franchisees should prepare for ongoing costs such as a 6% royalty fee on gross sales and a 2% marketing fee.
Revenue Potential
Five Guys franchises have demonstrated strong revenue potential, with an average annual revenue per unit of $1,182,254. The median annual revenue is reported at $877,394, showcasing the brand's ability to generate significant sales. This strong performance can be attributed to the brand's loyal customer base and popular menu offerings.
Breakeven and Payback
Franchisees can expect to reach their breakeven point within approximately 12 months of operation. The investment payback period is estimated at 24 months, allowing franchise owners to recoup their initial investment relatively quickly, provided they effectively manage their operations and maintain sales momentum.
Franchise Growth
As of 2023, Five Guys operates a total of 1,521 units, with 924 being franchised locations. The brand has experienced steady growth, with an increase in both franchised and corporate units over the past few years. This growth reflects the brand's expanding market presence and consumer demand for its offerings.
Financial Performance
The average financial performance of Five Guys units shows a gross profit margin of 77.7%, indicating efficient management of cost of goods sold (COGS). However, operating expenses are reported to exceed revenues, resulting in a negative EBITDA of $42,387. This highlights the importance of controlling operational costs to achieve profitability.
Operational Expenses
Franchisees should anticipate various operational expenses, including lease payments ranging from $7,500 to $20,000 annually. Additionally, marketing and advertising costs are set at 2% of gross sales, along with other administrative expenses. Understanding these costs is crucial for maintaining a sustainable and profitable franchise operation.
Frequently Asked Questions
The initial investment for a Five Guys franchise ranges from $256,200 to $591,250, which includes a franchise fee of $25,000.