Rusty Taco was founded in 2010, and since then, this franchising company has organized the openings of a 35 franchise unit in the nine U.S states. Recently, this franchising opportunity became very popular among investors, so we decided to present Rusty Taco franchise cost and how much profit the owner of this restaurant can make.
The flavors of Mexico and Texas inspire these franchise’s menus, so for entrepreneurs interested in opening a Mexican food outlet, this can be one of the better franchising opportunities.
This franchisor is currently searching for new franchisees in all states across the U.S. So, if you wish to own a Mexican food restaurant, information about Rusty Taco franchise cost, fees, and profit can be of your interest.
How Much Does The Rusty Taco Franchise Cost
The investment necessary to open a Rusty Taco franchise ranges from $532,000 to $897,000; this estimated starting cost includes the Initial Licensing Fee of $25,000 and all other expenses that investors will need to pay until the opening day.
The highest cost of starting this franchised restaurant will be related to all kinds of leasehold improvements that franchisees must do before opening day.
The construction, remodeling, and decorating of the location will cost between $253,000 to $450,000 if the investor decides to lease real estate. If franchisees choose to build a new building, the expense can go very high, and because of that, it is the best option to lease a restaurant site.
Also, the franchisee will need to buy furniture, fixtures, different work equipment, and inside and outside signage, which usually costs from $163,000 to $210,000. These restaurants must have installed specific computer systems; installation of software and hardware will cost in the range between $15,000 to $30,000
Rusty Taco franchise list of cost:
- Leasehold Improvements: $253,000 – $450,000
- Furniture, Fixtures, Equipment, and Signage: $163,000 – $210,000
- Architect Fee: $15,000 – $25,000
- Computer Hardware and Software: $15,000 – $30,000
- Initial Advertising and Marketing: $10,000 to $15,000
- Initial Inventory/Supplies: $7,400 to $10,000
- Insurance: $6,000 – $30,000
- Utility Security Deposits: $6,000 – $10,000
- Accountants, Lawyers, Architect Fees: $5,000 – $15,000
- First Month’s Rent and Security Deposit: $3,000 – $7,000
- Business Permits and Licenses: $3,000 – $6,950
- Restaurant Design Consulting Services: $500 – $1,500
- Initial & Opening Training Costs: $0 – $12,000
- Working Capital (first 3 months): $20,000 – $50,000
- Estimated Total Investment: $532,000 – $897,000
For all starting Rusty Taco franchise costs, the franchisor itself, as a company, doesn’t offer direct or indirect financing. It means that investors will need to search for funding assistance from third-party sources.
Rusty Taco Franchise Fees
The Rusty Taco fees are a one-time Initial Fee of $25,000, an ongoing Royalty Fee that is 5%, and a Local Marketing Fee that is 2% of all gross restaurant sales. Ongoing fees franchisees must pay on a weekly basis.
The honorably discharged Veterans of the U.S Army Forces have a right to an Initial Fee discount of 50%. So, this group of franchise applicants will need to pay only 12,500, which will reduce their starting cost.
The Rusty Taco charges only 5% of the royalties fees, and this percentage is on the lowest end of the franchising industry. We can consider this one of the most significant advantages of starting this franchise; because usually, these fees can go all the way to 10%.
This franchisor still doesn’t have a Brand Development Fund Fee, which means that franchisees will not have unnecessary costs related to advertising on the national level. However, this company charges 2% for the Local Marketing Fee.
The Local marketing Fee obligates franchisees to reinvest 2% of the gross restaurant sales in marketing campaigns that will target new customers. But, we don’t consider this fee an unnecessary operating cost; this kind of marketing campaign targets a group of people who live nearby, so they will likely come to the restaurant site and spend some money, maybe even become regular customers.
Rusty Taco franchise list of fees:
- Initial Fee: $25,000 – one time cost
- Royalty Fee: 5% of the Gross Sales – an ongoing cost
- Local Marketing Fee: 2% of the Gross Sales – an ongoing cost
- Renewal Fee: $12,500 – after Franchise Agreement expire
- Transfer Fee: $5,000 – if the franchisee decides to sell the business
Periodically Rusty Taco offers under the “Development Incentive Program” reduced franchise royalties fees to a specific group of investors. The investors who get approved for this program will need to pay only 1% of the Royalty Fee for the first 12 months of the restaurant’s operation and 5% of Gross Sales after that.
Rusty Taco Franchise Profit
Rusty Taco franchises, on average, make gross sales of $950,000 with a profit margin that is at least 10%. It means that the average earning franchise unit owner can expect to make an annual salary of $95,000.
According to the Rusty Taco Franchise Disclosure Document, in 2020, their franchise units have gross sales between $623,152 and $1,333,716, which suggests that the owner can predict to make from $62,000 to $133,333 of profit per year.
This brand’s franchises are a high earner, so owners of these restaurants can expect that initial investment cost will definitely pay off in the long run. Also, this franchisor has low ongoing royalties, so owning Rusty Taco can be the best option for investors who want to open a profitable Mexican food franchise.
In this, our prediction about profit that the Rusty Taco franchise owner can make was estimated a profit margin of 10%, but these restaurants can deliver higher margins. If the manager has business skills to reduce operating costs to the minimum, the profit margin can go all the way to 13% or more.
Opening this franchised restaurant can be an ideal low-cost replacement for the Taco Bell franchise. Also, there are not too many of these restaurants, which means there will not be competition from the franchisees of the same franchising system.
This company originally came from Texas, where its late founder Rusty Fenton opened at first a simple small Rusty Taco stand. In 2010 he opened a first restaurant location, and since then, they have started to grow their business numbers slow but steady.
At present, customers can find these franchised restaurants in nine states, and it is expected that they will have at least one franchise unit in every corner of the United States by 2030.
Rusty Taco number of franchises per year:
- 2016: 14
- 2017: 24
- 2018: 30
- 2019: 33
- 2020: 34
- 2021: 35
Today, this brand, along with Arby’s, Buffalo Wild Wings, Sonic Drive-In, Jimmy John’s, Mister Donut, Dunkin’, and Baskin-Robbins, is part of Inspire Brands Inc.
Rusty Taco is a relatively low-cost franchise opportunity compared to their competition, so we expect that this franchisor will become the main competitor to Taco Bell in the future.
Because of all said, we think that it is now the right time to get involved in this business concept and start to make a profit from it.
Rusty Taco is one of the best options for investors who wish to own a Mexican food outlet in the territory of the United States. By working under the framework of this company, franchisees can expect excellent franchisor support thru the whole duration of the franchise agreement.
When we analyze the Rusty Taco franchise cost and profit ratio, we can conclude that this investment can bring its owner high and secure income every month.