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Smashburger Franchise ProfileRestaurant Franchises > Quick-Service Restaurants |
What Are the Initial Investment Requirements for a Smashburger Franchise?
To open a Smashburger franchise, you should expect an initial investment ranging from $1,172,500 to $2,176,500. This includes a franchise fee of $40,000, with ongoing royalty fees set at 5.5% of gross sales and a marketing fee of 2.25%. Additionally, potential franchisees need to demonstrate a net worth between $500,000 and $1,000,000, along with sufficient cash reserves to cover the startup costs. Understanding these financial commitments is crucial for anyone considering this opportunity.
What Are the Revenue Expectations for a Smashburger Franchise?
A Smashburger franchise can generate significant revenue, with average annual revenue per unit reported at $709,000. The median annual revenue stands at $364,000, while the highest-performing units can achieve up to $1,800,000. Interestingly, the breakeven period is relatively short, typically around 12 months, and franchisees can expect to recover their investment within approximately 24 months. These figures highlight the potential profitability of the franchise, making it an attractive option for investors.
What Are the Operating Costs for a Smashburger Franchise?
Operating a Smashburger franchise involves various expenses that franchisees must manage effectively. Typical annual costs include rent, which ranges from $28,000 to $38,000, utilities at $5,000 to $15,000, and insurance premiums ranging from $10,000 to $20,000. Other expenses, such as marketing and advertising, management salaries, and professional fees, can also add up, leading to total annual expenses between $104,290 and $191,095. Understanding these costs is essential for maintaining profitability and ensuring smooth operations.
How Has Smashburger's Franchise Network Evolved?
Smashburger has seen fluctuations in its franchise network over recent years. In 2021, there were 91 franchised units, which decreased to 82 in 2022 and further to 78 in 2023. Meanwhile, corporate units have remained relatively stable, with 128 in 2021, 135 in 2022, and 133 in 2023. This trend suggests a focus on optimizing existing locations rather than rapid expansion, which could provide a more stable environment for franchisees looking to invest in the brand.
Smashburger 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:
Smashburger 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 | 219 | 217 | 211 |
| Net Change YoY | -2 | -6 | |
| Franchised Units | 91 | 82 | 78 |
| Net Change YoY | -9 | -4 | |
| Corporate Units | 128 | 135 | 133 |
| Net Change YoY | 7 | -2 |
Investment Overview
The Smashburger franchise offers a range of initial investment costs, from $1,172,500 to $2,176,500. This includes a franchise fee of $40,000, alongside ongoing royalty and marketing fees of 5.5% and 2.25% of gross sales, respectively. Prospective franchisees should be prepared for a cash requirement that aligns with these figures, ensuring they have sufficient capital to support their new business venture.
Financial Performance
On average, Smashburger units generate annual revenues of approximately $709,000, with a median revenue of $364,000. The revenue range varies significantly, with the lowest reported at $700,000 and the highest reaching $1,800,000. This financial performance indicates a strong potential for profitability, making it an attractive option for franchisees.
Breakeven and Payback
Franchisees can expect to reach breakeven within 12 months of operation, which is a relatively quick turnaround in the restaurant industry. Moreover, the investment payback period is estimated at 24 months, allowing franchisees to recoup their initial investments efficiently if operational strategies are executed effectively.
Franchise Growth
As of 2023, Smashburger operates a total of 211 units, with 78 being franchised and 133 corporate-owned. The franchise has seen a slight decline in franchised units from 91 in 2021 to 78 in 2023, indicating potential challenges in franchise recruitment or market saturation that new investors should consider.
Operating Expenses
The average annual operating expenses for Smashburger franchisees range between $104,290 and $191,095. Key expenses include rent, utilities, insurance, and management salaries, which can significantly impact overall profitability. Understanding these costs is crucial for effective financial planning and management.
Corporate Structure
Smashburger is owned and operated by a corporate entity that oversees both franchised and company-owned locations. This structure allows for centralized support and resources for franchisees, ensuring they benefit from established operational protocols and brand marketing strategies, fostering a unified brand experience across all units.
Frequently Asked Questions
The initial investment for a Smashburger franchise ranges from $1,172,500 to $2,176,500, which includes the franchise fee, equipment, and other startup expenses.