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Texas Roadhouse Franchise ProfileRestaurant Franchises > Full-Service Restaurants |
What Are the Initial Investment Requirements for a Texas Roadhouse Franchise?
To open a Texas Roadhouse franchise, you should be prepared for a significant initial investment ranging from $3,894,500 to $7,901,500. This includes a franchise fee of $40,000, along with additional costs for construction, equipment, and inventory. It's essential to have a minimum cash requirement of $800,000 and a net worth of at least $800,000 to qualify for franchise ownership. Understanding these financial commitments will help you assess if this opportunity aligns with your investment strategy.
What Are the Financial Performance Metrics for Texas Roadhouse Units?
Texas Roadhouse franchises generate impressive revenue, with average annual sales per unit around $4,100,000. The gross profit margin stands at 56%, indicating a healthy profitability structure. Operating expenses are approximately $1,600,000, leading to an EBITDA of $700,000, which is 17% of revenue. These metrics highlight the potential for strong financial performance, making it crucial for prospective franchisees to consider these figures when evaluating the investment's viability.
What Are the Royalty and Marketing Fees for Texas Roadhouse Franchisees?
Franchisees of Texas Roadhouse are required to pay a royalty fee of 4% of gross sales, along with a marketing fee of 2%. These ongoing fees are essential for maintaining brand presence and support from the franchisor. It's important for potential franchisees to factor these costs into their financial projections, as they will impact overall profitability and cash flow management in the long run.
What Is the Breakeven and Payback Period for a Texas Roadhouse Franchise?
The breakeven time for a Texas Roadhouse franchise is estimated at 18 months, while the investment payback period is around 24 months. This relatively quick return on investment can be appealing for franchisees, allowing them to recoup their initial costs and start generating profit in a reasonable timeframe. Understanding these timelines can help you plan your financial strategy and set realistic expectations for your franchise journey.
Texas Roadhouse 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:
Texas Roadhouse 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 | 595 | 614 | 638 |
| Net Change YoY | 19 | 24 | |
| Franchised Units | 69 | 62 | 56 |
| Net Change YoY | -7 | -6 | |
| Corporate Units | 526 | 552 | 582 |
| Net Change YoY | 26 | 30 |
Initial Investment
The initial investment to open a Texas Roadhouse franchise ranges from $3,894,500 to $7,901,500. This includes the initial franchise fee of $40,000, along with other startup costs such as equipment, inventory, and real estate expenses. A cash requirement of $800,000 and a net worth requirement of $800,000 are also necessary to ensure franchisees have adequate financial backing to support their new business.
Revenue Potential
Texas Roadhouse franchises typically generate significant revenue, with an average annual revenue per unit of approximately $4,100,000. The median annual revenue is around $4,000,000, while the highest annual revenue can reach up to $6,500,000. This strong revenue potential makes the franchise an attractive option for aspiring entrepreneurs looking to enter the restaurant industry.
Franchise and Corporate Units
As of 2023, Texas Roadhouse operates a total of 638 units, which includes 56 franchised locations and 582 corporate-owned units. The number of franchised units has seen a gradual decline from 69 in 2021 to 62 in 2022, and now 56 in 2023, while corporate units have steadily increased over the same period, indicating a focus on corporate growth.
Royalty and Marketing Fees
Franchisees are required to pay a royalty fee of 4% on gross sales, along with a marketing fee of 2% of gross sales. These fees contribute to the overall support and branding efforts of Texas Roadhouse, ensuring that franchisees benefit from a well-established marketing strategy and operational support.
Financial Performance
The average financial performance of Texas Roadhouse franchises shows a gross profit margin of 56%, with operating expenses accounting for 39% of revenue. This results in an EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of approximately $700,000, which is about 17% of revenue. These figures highlight the profitability potential of owning a Texas Roadhouse franchise.
Breakeven and Payback Period
Franchisees can expect to reach breakeven within approximately 18 months of opening their Texas Roadhouse location. Additionally, the investment payback period is estimated at 24 months, making it a relatively quick path to profitability compared to many other franchise opportunities in the restaurant sector.
Frequently Asked Questions
The initial investment for a Texas Roadhouse franchise ranges from approximately $3,894,500 to $7,901,500. This includes the franchise fee, equipment, leasehold improvements, and other startup costs.