Since its beginnings in 1962, Taco Bell, as a company, supervised the opening of more than 7,500 franchise units in worldwide locations. This franchising opportunity is top-rated among investors, so we decided to present how much is Taco Bell franchise cost and how much profit the owner can make per year.
This company, ever since its start of business, was on a steady growth trajectory; today, by the number of franchise units, Taco Bell, is a leading Mexican food brand in the U.S market.
This company is currently searching for new franchisees in more than 20 countries, including the United States and Canada. So, this our review about Taco Bell franchise starting cost and profit that can owner expect can be the first step in acquiring this fast-food outlet.
How Much Does The Taco Bell Franchise Cost
The investor who wants to start a Taco Bell franchise can expect that will be needed an investment between $575,600 to $3,370,100. The precise starting cost will vary according to the location and the expenses related to the restaurant’s site/building improvements.
The investor can choose between the ”Traditional” and the so-called ”In-Line’ locations. Traditional Taco Bell franchise locations are usually free-standing, permanent buildings with drive-thru. In-line sites operate in malls or similar buildings where they share space with other businesses.
The total cost of starting a Taco Bell franchise on a Traditional location is between $1,298,600 to $3,370,100. This estimation includes the Initial Fee of $45,000 and all other expenses till the opening day.
If the investor opts to start a new In-Line Taco Bell franchise, can expect a starting cost from $575,600 to $1,415,100. The Initial Fee for these locations is $25,000, so this will be a more affordable option for starting this franchised restaurant.
The most affordable starting option will be to buy the already existing Taco Bell restaurant. By purchasing the established restaurant, a new franchise owner gets a turnkey business that can make a profit immediately after closing the franchise unit transfer.
Taco Bell franchise list of costs:
- Initial Fee: $25,000- $45,000
- Background Check: $350-$600 per person
- Construction Services: $27,250
- Real Estate Services: $0 – $37,250
- Licenses and Security Deposits: $74,000 – $125,000
- Buying/Leasing Property: $20,000 – $1,400,000
- Site Construction: $177,000 – $1,200,000
- Equipment, Signage,POS: $200,000 – $460,000
- Initial Inventory: $7,000 – $10,000
- Grand Opening Advertising: $5,000
- Working Capital (first 3 months): $40,000 – $60,000
- Estimated Total Investment: $575,600 to $3,370,100
This brand’s ”second-hand” franchises don’t demand a soo high initial investment as the new ones that are started from scratch. Usually, their price on the market ranges from $175,000 to $1,800,000.
How Much Is Taco Bell Franchise Fee
The Taco Bell franchise owner will need to pay a one-time Initial Fee of $25,000 to $45,000 and an ongoing Royalty Fee which is 5.5% of the Unit’s Gross Sales. Also, there is the cost of monthly Marketing Fee which is 4.25% of the gross restaurant sales.
It means that franchisees will need to pay ongoing monthly royalties that will be all combined 9.75% from all restaurant sales. This amount of royalties is pretty standard for the fast-food industry, but every investor must know that this implies that profit margins will be lowered for this percentage of the ongoing fees.
In exchange for paying Royalty Fee, the franchisee gets full support in every business segment, that is, gets operations manual, and according to it, the everyday business is running. The franchisor reinvests the Marketing Fee for commercial campaigns that are launched regularly, which means that the owner will profit from it in the long run.
The Taco Bell franchise Initial Fee is $25,000 to $45,000, depending on the type of restaurant. An initial fee is paid after is closed the Franchise Agreement, which usually has a duration of 10 to a max of 25 years.
At the start investor will also need to pay a Grand Opening Fee, which is $5,000; This money is spent by the franchisee for local advertising and promoting the opening of the new unit in the town/area.
After the Franchise Agreement expires, the franchisee will need to pay for the renewal of the agreement, the so-called ”Successor Fee ” which will cost $12,500 for In-Line locations or $22,500 for Traditional locations.
Taco Bell franchise list of fees:
- Initial Fee: $25,000 to $45,000 – one time cost
- Grand Opening Marketing Fee: $5,000 – one time cost
- Royalty Fee: 5.5% of the restaurant Gross Sales – an ongoing cost
- Marketing Fee: 4.25% of the restaurant Gross Sales – an ongoing cost
- Successor (Renewal) Fee: $12,500 – $22,500 – after expiration of the Franchise Agreement
- All other franchisor service fees: approximately $6,000 per year
How Much Does a Taco Bell Franchise Owner Make
Taco Bell franchises, on average, make a gross sales of $1,600,000 with a 10% profit margin. It means that the owner of the Taco Bell franchise can expect to make $160,000 profit per year if its unit has gross sales on the average level for this company’s outlets.
According to Statista, these franchised restaurants in 2020 were earning on average 1.6 million U.S. dollars per unit per year; this doesn’t mean that future owners can be sure that their franchise will make this amount of gross sales. Some restaurants make more, some less it all depends primarily on the type of location and territory in which business operations are run.
However, the future owners interested in how much is Taco Bell franchise profit can be sure that they will make an excellent paycheck at the end of the month. These franchised restaurants are high earners, so the owner can expect to make at least $90,000 per year, which is a very high sum when we know how much the average salary is in the U.S.
But the potential investor also must be aware that this is a high-cost franchise, and because of that, it is expected that a Return of Investment will take at least five years. But, in the long run, the franchisee can anticipate making a secure and steady income every month/year by owning these brand franchised restaurants.
What Are The Requirements to Own a Taco Bell
This franchisor offers a high-cost franchising opportunity, so investors will need to prove that they have the necessary investment funds by meeting specific financial requirements. The applicant for the new owner of the Taco Bell franchise will need to satisfy two main capital requirements, the Net Worth of $1,500,000 and Liquid Assets in a minimum of $750,000.
This franchisor doesn’t have any requirements regarding past business experience; the applicant franchisee doesn’t need to have previous business managerial experience in food systems similar to this.
One of the franchisor’s main requirements is that the investors are obligated to enter the so-called Development Services Agreement with the franchisor. It means that company people will coordinate real estate preparation and construction development of the new facilities; this service package costs $25,000.
When the franchisee applicant is approved and starts business operations, it is obligated to purchase supplies from the franchisor-approved vendors and distributors. It means that franchisees can buy furniture, fixtures, equipment, small wares, food, and paper products only from authorized companies by the franchisor.
Also, we must mention a Taco Bell franchise requirement regarding soda drinks. This franchisor has an agreement with Pepsi, which means that their franchises are forbidden to sell Coca-Cola drinks.
Taco Bell – Company Overview
The late Glen Bell founded Taco Bell in California in 1962. Since 1964 Bell started to offer franchising opportunities to investors who were willing to operate a restaurant under the trademarks of this brand. At present, there are more than 7,500 of these restaurants on worldwide locations.
This company is part of Yum Brands, so they are under the same company as KFC and Pizza Hut. It is not soo unusual to see these two brands franchise units under the same roof(same building), so investors who have the necessary investment funds can choose to open both of these food outlets simultaneously.
Although Taco Bell is a franchise that mandates a high starting cost, owning this franchised restaurant is today more popular than ever. The main markets are the U.S and Canadian, but this company’s franchising opportunity is also top-rated in Asia. At present, this company’s franchises operate in 31 different countries.
This franchisor seeks new franchisees in the United States, Asia, Australia/New Zealand, Middle East, Europe, Central America, and South America. It means that investors from these regions can apply to become the new owner of this franchised restaurant.
Summary
This franchising opportunity will be available only to investors with a high startup investment fund. But, When we see the Taco Bell franchise’s profit potential, we can conclude that starting high cost will not be too much burden to the overall business profitability in the long run.
This is one of the best franchises globally, so by owning these restaurants, franchisees can anticipate to make a secure income every month and a high paycheck at the end of the year. So if you have a wish and necessary investment fund, this can be an ideal business opportunity for you.