Sbarro is one of the most famous U.S pizza franchise brands in the world. Currently, this brand has over 600 franchise units; 300+ are located in the United States.
This franchise is very popular in the international market due to its relatively low start-up cost; they currently have more than 300 international franchise units in more than 30 countries. Due to this fact, this franchise will be attractive to all investors, regardless of the country in which they are located.
In the last couple of years, the Sbarro franchise has been in a significant decline, they have been on the edge of bankruptcy several times, but each time they managed to get out.
This franchise has been on the market since 1956, and they have always found ways to rise above the competition. This brand will start growing again in the future, so now is the right time to get involved in this franchise concept.
How Much Does The Sbarro Franchise Cost
The total cost of the Sbarro franchise is in the range of $180,000 to $640,000. This cost can go from low to high depending on the type and location of the franchise unit. The initial fee that every franchisee must pay is $20,000 to $35,000, and it is included in the total investment prediction.
Sbarro prefers that their franchises are located in shopping malls, airports, college campuses, casinos, etc., and these types of areas usually have a high renting cost. So it is wise that every potential Sbarro franchisee researches the average store renting cost in the state or city where he plans to start a new business.
Other costs of this franchise are not soo highs as they seem at first, and because of that, this franchising concept is very popular in the international market. Investors from Asia and Europe can start the Sbarro franchise for low cost because in these countries, renting or buying a store place is a lot cheaper than in the United States and Canada.
One of the higher costs of the Sbarro franchise is training, which goes in the range of $ 8,000 to $10,000. The central part of Sbarro franchisee training takes place on-site, and it lasts for about 150 days.
Cost of Sbarro Franchise:
- Estimated total investment: 180,000 – $640,000
- Aranging Space: $70,000+ ( architectural fees, signs, inventory & supplies)
- Training: $8,000 – $10,000
- Legal & Accounting: $3,000 – $5,000
- Work Permits and Licenses: $2,000 – $5,000
- Insurance Package: $800
Sbarro Franchise Fee
Some Sbarro fees are paid one-time, and some are ongoing fees that franchisees must pay weekly or monthly; the cost of these fees does not differ too much from other pizza franchise brands. The four most significant fees are Initial, Royalty, Local Advertising, and Marketing fee.
The total cost of the Sbarro initial fee ranges between $ 20,000 and $ 35,000; this fee is determined according to the expected franchise traffic, restaurant location, and type of franchise.
Investors outside the U.S. and Canada can expect that the Sbarro Initial fee will be a $ 20,000 max.
According to the Sbarro franchise disclosure document, the exact amount of this fee will be estimated by the franchisor and presented to the franchisee at least seven days before signing the franchise agreement.
In addition to the initial fee, there are also Sbarro ongoing fees that every franchise unit must pay monthly or weekly. The Royalty fee is 5% to 7%, the Local Advertising fee is 1%, and the Marketing fee is 2%; all these fees are paid from a percentage of the total gross revenue that the franchise unit makes.
The Renewal fee is $ 7,500; this fee is paid after the Sbarro franchise agreement expires (its duration is 10 years), and this fee must be paid if the franchisee wants to continue to work under the Trademarks of this brand.
The franchisee who chooses to sell Sbarro’s restaurant to another investor must pay a transfer fee of $ 3,500; payment of this fee occurs only after the Sbarro company approves the transfer between two parties.
List of Sbarro franchise fees:
- Initial fee: $ 20,000 – $ 35,000
- Royalty fee: 5% to 7% of the gross revenue
- Local Advertising: 1% of the monthly gross revenue
- Marketing fee: 2% of the gross revenue – paid weekly
- Transfer Fee: $ 3,500
- Relocation Fee: $ 1,000
Sbarro Franchise Profit
The Sbarro franchise owner’s profit depends mainly on the restaurant’s location. The profit margin on pizza is on average 20%, and after paying the fees to the franchisor, the franchisee can expect the profitability of 10% of the total gross sales.
Some Sbarro products’ profit margins can be higher than 20% because the franchisor supplies raw food ingredients directly to the franchisee. Big brands usually get a lot of raw ingredients in bulk, and they benefit from the quantity discounts given by suppliers.
Knowing the total Sbarro franchise cost, we expect to take 2+ years before the franchisee returns its initial investment. Starting an independent business is cheaper than buying a franchise, but a proven business model gives owners a lot of advantages.
Sbarro provides support in all business segments in exchange for the fees. The Sbarro brand is very well known among customers, so immediately after opening a franchise, you can expect a large number of customers, and we know that more customers = more profit.
It is crucial to research the potential of the market at the given location before starting this franchise. As in any other business, it is essential to offer a high-demand service or product in the geographical area that is not oversaturated with providers of the same services.
Each Sbarro franchisee must include in the profit calculation that they will have to pay the franchisor ongoing fees in the amount of 10% of the gross revenue.
These restaurants usually sell slice by slice of pizza, which brings better profit for the franchise unit. Also, the pasta on their menu is very profitable due to the low price of ingredients.
The conclusion regarding Sbarro franchise profit is that this brand has a good profit margin when we analyze the cost of production and the selling price that Sbarro products have.
Sbarro History
Sbarro was founded in 1956 in Brooklyn by the Italian family who moved from Napoli, Italy, to New York in the 1950s. With franchising, they started in 1977, and until the late 2000s, they were expanding at an excellent pace, so at one point, they were in the top 5 pizza chains in the US.
At its peak, this brand had over 900 franchise units; this growth correlates with the development of malls in the United States from the mid-1970s till today. However, as the visits to malls have decreased, more and more mall Sbarro franchises has closed its door.
There are currently have over 600 Sbarro franchises on the market, which is a respectable number if we know that this company has been on the verge of bankruptcy on several occasions. They have stabilized their business in the last few years, so we can expect that number of their restaurants will grow again in the future.
Considering this brand’s long history and the relatively low cost of opening a Sbarro franchise, we can expect that more investors will decide to associate with this company in the future.
The relatively low start-up costs and ongoing fees are convenient for franchisees, so the Sbarro franchise has become increasingly popular among international investors.
The first International Sbarro franchise was opened in 1990 in London, Europe, but currently, they are more present on the Asian market.
Throughout history, Sbarro has had a lot of ups and downs; however, after each fall, they got back on their feet and continued their business operations. Because ”character” that this brand has and the large base of loyal customers, this franchise is one of the best options for starting a pizza franchise.
Summary
When we analyze the Sbarro franchise cost, the support that this franchisor provides to franchisees, and the recognition of this brand, we have to conclude that this brand is still one of the top options for investors who want to make a profit in the pizza industry.
Maybe at this moment, this company is not at its peak, but there is no resident of the United States who has not once tried Sbarro pizza.
Pizza is the most popular food globally, and pizzerias have a good profit margin. The only thing you need to have in mind before you open the Sbarro franchise is to ensure that your target market is not oversaturated with other pizza chains. If you find a good store location, this franchise can bring you a good profit in the long run.