This review of Jimmy John’s Gourmet Sandwiches franchise display all important data regarding the initial starting cost and profit/salary that the owners of these franchised restaurants can expect to make.
Key Takeaways:
- Jimmy John’s restaurants sell sandwiches, fresh-baked bread, and a wide range of food and beverage products, along with providing carryout and delivery services for its customers.
- Launching a new franchise restaurant of Jimmy John’s Gourmet Sandwiches demand startup capital between $355,900 and $671,400.
- Every franchise applicant must pay a one-time Initial Franchise Fee of $35,000 and ongoing franchisor royalties; a Royalty Fee of 6%, and an Ad Fee of max. 4.5% of all gross restaurant sales
- An average earning Jimmy John’s franchised restaurant makes approximately $900,000 of gross revenue with a 10% profit margin.
- The Jimmy John’s Gourmet Sandwiches franchise owner, who achieves an average gross sale level, can expect to make $90,000 of salary/profit per year.
How Much Does The Jimmy John’s Gourmet Sandwiches Franchise Cost
Starting a new franchised restaurant of Jimmy John’s Gourmet Sandwiches with included Initial Fee of $35,0000 and all other pre-opening costs will demand investment capital between $355,900 and $671,400!
The estimation above supposes that the developer of the new restaurant will opt for leasing real estate. If a new franchisee decides to buy a building or land to construct an entirely new restaurant premise from scratch, the initial cost will be much higher.
A Jimmy John’s restaurant typically occupies approximately 1,000 to 1,800 square feet of space, so arranging this amount of space can be very costly!
Necessary leasehold improvements to meet the franchisor’s inside and outside design parameters will cost investors between $115,000 and $310,000. This exspense represents more than half of the total investment, so this outlay will be the highest pre-operating exspense that investors need to bear.
Available types of franchise locations:
- Traditional Locations: Restaurants located in strip shopping centers, malls, and free-standing units.
- Non-Traditional Locations: Restaurants located in universities, schools, other education facilities, military bases, stadiums, sports, and entertainment venues, food courts, and other food service locations within shopping centers, etc.
- Transfers Locations: Sometimes, investors get the opportunity to buy an existing Jimmy John’s restaurant from a franchisor directly or from a franchisee who is retiring and want to sell his business.
The most affordable option to start this franchise is for investors to buy the assets of an existing restaurant and take over its operation as a franchisee. No leasehold improvements are involved in this arrangement, so the initial investment is much lower than starting from scratch!
Table of initial costs:
- Initial Franchise Fee: $30,000 – $35,000
- Real Estate/Rent: $2,500 – $8,000 (1 month estimation rent)
- Landlord Security Deposit: $2,500 – $8,000
- Leasehold Improvements: $115,000 – $310,000
- Furniture, Fixtures, Signage, and Equipment Package: $115,000 – $166,000 (includes POS System cost)
- Architect Fees: $9,500-$14,500
- Office Equipment: $1,900
- Utility Deposits: $1,000 – $2,000
- Opening Inventory and Supplies: $6,000
- Grand Opening Event: $3,000 – $5,000
- Training Expenses: $6,000 – $15,000 – travel, living, and payroll costs for three trainees
- Insurance: $11,500 – $15,000
- Miscellaneous Expenses: $2,000 – $10,000
- Additional Funds: $50,000 – $75,000 – working capital for first three month after launch
- TOTAL ESTIMATED INITIAL INVESTMENT COST: $355,900 – $671,400
This estimation excludes real estate purchase costs and supposes that investors will opt to lease restaurant store buildings/real estate.
Options To Fund Jimmy John’s Gourmet Sandwiches Franchise Initial Investment Cost
This franchisor, as a company, does not offer direct or indirect financing regarding initial starting exspense, so the investors will need to search for SBA loan options or other third-party funding sources!
Jimmy John’s Gourmet Sandwiches Franchise Fees
One-Time Fees
Initial Franchise Fee
- $35,000 per every new franchise
Every developer of the new restaurant needs to pay an initial franchise fee of $35,000 after closing the Franchise Agreement.
Inside, the initial franchise fee costs, along with licensing/trademark rights, are incorporated, among other things, the costs of evaluating the proposed site of the new restaurant and the initial training program for three people!
Ongoing Franchisor Royalty Fees
The franchise owner of Jimmy John’s restaurant needs to spend a total of 10.5% of gross sales on the costs associated with different franchisor royalties.
The new franchisees must be aware that franchisor royalties represent ongoing exspense that their franchised business will have every month. To better understand these fees, we will now break down them item by item.
Jimmy John’s Gourmet Sandwiches Franchise Royalty Fee
- 6% of Gross Restaurant Sales
The franchisees will need to redirect 6% of their gross revenue to the franchisor’s bank account to cover the Royalty Fee outlay that this franchising company charges monthly for its services.
This fee is the primary income source of the franchisor, and by paying it, the franchisee gets ongoing assistance in every business segment throughout the whole franchise agreement duration.
Sometimes Jimmy John’s offers a reduced royalty fee in the first few years after starting a business for investors who meet requirements to apply to specific Incentive Programs.
It is wise for investors to check if they can apply some of the available incentive programs to their case because that can reduce operating costs to a minimum.
Advertising and Development Fund Fee
- 4.5% of Gross Sales for Traditional Locations
- 1.5% of Gross Sales for Non-Traditional Locations
The owners of the Jimmy John’s franchised restaurant operating in “Traditional Location” need to redirect 4.5% and owners of “Non-Traditional Location” 1.5% of gross revenue to cover the financing of ad/marketing campaigns that this franchisor launches on a national or local level.
This fee is slightly different from the Royalty Fee since this is not the income/profit of the franchisor!
The franchisor doesn’t spend this money on its general operating expenses; it is invested in promotional campaigns that aim to increase brand awareness among potential customers.
Local Advertising Fee
- 0.5% of the Gross Restaurant Sales during the first four months after the start
The investors are obligated to spend in the first 120 days after opening the restaurant at least 0.5% of the weekly Gross Sales to advertise and promote their business locally.
This amount of money new franchisees will spend on local marketing campaigns so that potential customers get to know that new business is presented in their area of living.
This fee will be only presented in the first four months after the start; after that, there are no costs associated with the local promotion of the business!
Real Estate/Rent Fee
- between $2,500 and $8,000 per month
Jimmy John’s restaurants typically operate in approximately 1,000 to 1,800 square feet of space, which means investors will pay between $2,500 and $8,000 per month for rental fees.
The Landlord’s expenses will be one of the higher operating expenses the business needs to bear from its income. Investors need to research rental prices in their geo area to find out the exact outlay of this fee.
Investors who buy rather than rent restaurant real estate will not have this fee. However, building a new restaurant or buying already constructed real estate will cost at least $1,000,000, so franchise applicants who lack capital need to opt for leasing options.
Point-Of-Sale System Maintainance Fee
- $250 to $500 per month
The POS system is a must-have, and its installation will cost franchisees between $25,000 to $55,000; after that, they are obligated to pay maintenance and support fees of approximately $250 to $500 per month.
Like royalty and ad fees, these will be ongoing business costs throughout the entire franchise agreement duration!
How Much Is Jimmy John’s Gourmet Sandwiches Franchise Profit
To reveal Jimmy John’s Gourmet Sandwiches’ restaurant profit potential, we first need to uncover the average gross sales per location and profit margin these franchises deliver to their owners.
Jimmy John’s Average Gross Revenue Per Restaurant Per Year
Jimmy John’s Gourmet Sandwiches franchised restaurants, on average, make gross sales of approximately $900,000 per year per location.
In 2021 their highest-earning restaurant had made approximately $2,500,000, and the lowest-earning location produced roughly $190,000 of gross revenue; the average was $900,000 per franchise!
In the first year after start, it will be challenging to make sales on an average level that this company outlets produce. After the business establishes awareness among potential customers and gains some regular customers, the gross sales level will start to grow!
Jimmy John’s Gourmet Sandwiches Franchise Profit Margin
After all, operating costs (including franchisor royalties) are paid, the franchise owner of the Jimmy John’s restaurant can expect its restaurant to deliver 10% of the profit margin from the gross sales level.
This percentage seems like a low margin, but investors must know that they will need to spend 10.5% of gross revenue on the different franchisor royalties. Also, with 10% of the profit margin, Jimmy John’s restaurant delivers better results than other franchising concepts have.
Usually, restaurants deliver between 6% to 9% of the profit margin, so this franchising concept has exceeded that average. Owners can expect to make a good salary by owning this brand franchised restaurant since their average gross sale level is high!
How Much is Jimmy John’s Gourmet Sandwiches Franchise Owner Salary
A franchise owner of the average earning Jimmy John’s Gourmet Sandwiches restaurant can expect to make $90,000 in salary per year.
However, to make this money, franchisees must know that the restaurant will need to have gross sales of at least $900,000 annually.
How We Estimate Jimmy John’s Gourmet Sandwiches Franchisee Salary
We estimate Jimmy John’s franchisee salary according to financial data that this franchising company has revealed in their Franchise Disclosure Document.
The Jimmy John’s FDD (2022) has revealed financial results for 2021 revealed:
- The average sales volume that the franchised restaurant made was $922,442 per location.
- The highest Unit Volume made gross sales of $2,585,567
- The lowest Unit Volume makes gross sales of $186,570
When we know the gross sales these restaurants make, we need to find out their profit margin, and that percentage apply to the sales volume!
The franchisor itself doesn’t reveal the margin that the franchise owner has, so we used subway as an example because this franchising concept is similar to Jimmy John’s
Subway franchises deliver at least 10% of the profit margin to their owners, so we applied that data to our estimation!
The formula for calculating Jimmy John’s Gourmet Sandwiches Franchise owner’s annual salary is:
- 10% (profit margin) of $922,442 (average gross revenue per franchise)
- = $92,244 ( franchisee salary per year)
Is it Profitable to Own Jimmy John’s Gourmet Sandwiches Franchise?
With an expected owner’s profit of $90,000 per year, Jimmy John’s Gourmet Sandwiches represents a highly profitable franchise opportunity.
For example, the average salary of the franchise owner in the U.S is approximately $50,000, so when we know that Jimmy John’s restaurant exceeds this amount, we can conclude that this franchise opportunity offers good profitability.
Also, the investors can expect an ROI ( Return Of Investment) of 5 years which is a good result for the franchising industry.
How Much Is Jimmy John’s Gourmet Sandwiches Franchise Agreement Duration
The length of Jimmy John’s franchise agreement is ten years; after that, it is possible to renew it for additional ten years if the franchisee has fulfilled all franchisor requirements in the past period.
Are All Jimmy John’s Gourmet Sandwiches Franchises
Almost 99% of all Jimmy John’s Gourmet Sandwiches restaurants are franchised ones; currently, there are only 41 locations that are company owned.
Jimmy John’s number of locations at the beginning of 2022:
- Total Outlets = 2657
- Franchised Location = 2616
- Company-Own Locations = 41
Who Owns Jimmy John’s Gourmet Sandwiches
Since 2019, Inspire Brands, Inc. has been the owner of Jimmy John’s; they purchased a majority stake of this company from Roark Capital Group.
Jimmy John’s owners, thru history:
- From 1983 to 2016 owner was Jimmy John Liautaud, also the founder of this company.
- 2016 – 2019 Roark Capital Group
- Since 2019 Inspire Brands
The key people of this company are Paul Brown, who is Inspire Brands’ Chief Executive Officer, and James North, who has been Jimmy John’s President since 2017. He also has been JJF’s President
Subsidiaries of Inspire Brands are:
Summary
Now when we have outlined Jimmy John’s initial cost and expected a profit of the franchise owner per year, we can conclude that this franchising opportunity can be a very lucrative business opportunity.
By owning this franchised restaurant, you can’t expect to become a millionaire owning. However, you can expect to be part of the growing brand that delivers a good paycheck at the end of the year.