Suppose you are an aspiring business owner interested in starting a hamburger restaurant. In that case, this information about Wahlburgers franchise cost, fee, and profit can be helpful to resolve what franchisor to choose.
This franchising company is primarily recognized among people because the founders of this brand are famous brothers Wahlbergs; Mark is one of the most popular Holywood actors.
Today this company has approximately 50 franchised restaurants, and 90% of them are operating on the territory of the United States. Also, they recently started franchising operations in Canada, Australia, and Germany, which means that this review about Wahlburgers franchise cost and profit ratio can also be helpful to those international entrepreneurs who want to invest in the hamburger business.
How Much Does The Wahlburgers Franchise Cost
The estimated total cost of starting a Wahlburgers franchise is between $1,575,000 to $2,790,000; this is a prediction without a lease or buying real estate cost. So potential investors must be aware that they will need to have high investment funds to start this hamburger restaurant.
This ours estimation about starting Wahlburgers franchise cost assumes that the owner will operate in a facility of approximately 4,500 square feet; this is the standard type of facility that most franchisees usually start.
If the investors decide to open this franchise in the 2,250 square feet or less, they will need to invest between $500,000 to $1,000,000. Still, starting this type of facility can be considered a high cost when we know that this brand doesn’t have popularity and profit on the level that their competition has.
So, this franchising opportunity will be available only to entrepreneurs who possess a significant startup budget!
Wahlburgers franchise list of costs:
- Construction/Leasehold Improvements: $900,000 – $1,800,000
- Furnishing, Fixtures, Equipment: $350,000 – $450,000
- Initial Training Travel and Living Expenses: $80,000 – $125,000
- Initial Fee: $50,000
- Miscellaneous Opening Costs: $30,000 – $60,000
- Point of Sale System: $30,000 – $50,000
- Architectural Design Services: $25,000 – $55,000
- Signage Package: $25,000 – $35,000
- Opening Advertising: $15,000
- Smallwares: $10,000 – $20,000
- Initial Inventory: $10,000 – $20,000
- Working Capital(first3months): $50,000 – $100,000
- Estimated Total Investment: $1,575,000 – $2,790,000
This franchisor, as a company, doesn’t offer in-house financing, nor do they have connections with third-party fund sources. So every new investor will need to find loan/funding options by herself.
Wahlburgers Franchise Fee
The Wahlburgers franchise owner will need to pay a one-time Initial Fee of $50,000, an ongoing Royalty Fee that is 6% of the gross restaurant sales, and an Ad Fund Fee that is 1% of the sales. The franchisee must pay these ongoing fees every month to the franchisor thru the whole duration of the franchise agreement.
When we combined all ongoing royalties fees of this franchising system, we came to a total of 7% of the gross sales that the franchisee will need regularly pay to the franchisor.
However, although this franchisor doesn’t have a Local Marketing Fee, investors must be aware that Wahlburgers restaurants are not so wide recognizable among customers as some of the top-rated brands in the food industry.
Because of that fact, potential owners must know that this is a significant disadvantage of starting this franchise because it will be necessary to spend a not small sum of money every month on local marketing campaigns.
As we mentioned before, the Wahlburgers franchise cost estimation does not incorporate buying/leasing store location expenses. But that doesn’t mean that it will not be necessary to pay a rental fee to a landlord every month.
Standalone Wahlburgers franchises usually operate in the space of 4,500 square feet and inline locations(share building with other businesses) in approximately 1,800 to 2,200 square feet. So potential franchisees must be aware that rent of these real estate types will cost them at least $5,000 per month.
Wahlburgers franchise list of fees:
- Initial Fee: $50,000 – one time cost
- Royalty Fee: 6% of the gross sales – an ongoing cost
- Brand Fund Fee: 1% of the gross sales – an ongoing cost
- Landlord/Real Estate Rent Fee: $5,000+ per month
- Renewal Fee: $20,000
How Much Does a Wahlburgers Franchise Owner Make
The Wahlburgers franchises, on average, make $876,000 of gross sales per year with a min. 10% profit margin. It means that the owner of this franchise can expect to make an annual salary/profit of $87,000.
In their Franchise Disclosure Document, this company doesn’t reveal data about gross sales that their restaurant units make. We found out how much is Wahlburgers franchise owner salary by analyzing their FDD Financial Statements.
This franchisor, as a company, in 2020, has earned $2,577,444 from all Royalty Fees that the franchisees have paid to them. When we know that they charge royalties that are 6% of the gross sales, we can calculate that all their franchisees together have made gross sales that are in total of $42,957,400.
In 2020 there were 49 Wahlburgers franchise units presented on the market, so by dividing $42,957,400 to 49, we get an average number of $876,681.632. So this number that we get represents the average gross sales that existing Wahlburgers franchises make per year.
If we know how much the Wahlburger franchise costs, we can predict that investors’ Return on Investment time will be at least ten years.
This franchising company doesn’t reveal in their FDD how much operating costs their franchise units usually have. So we assumed that these restaurants could deliver to the owner an average profit margin for the burger industry, which is 10% of the gross sales.
According to FounderActivity, the cost of raw food materials for making burgers are at least 30% of the selling price. So when we on this percentage put labor cost that is also 30% from the gross sales + franchisor royalties and marketing fees, 10% of the profit margin of these restaurants is the most realistic assumption.
Franchisor Overview
The famous Wahlberg family owns this franchising company. The three brothers from this family were the main stars of the reality show called ”Wahlburgers” which aired from 2014 till 2019.
This show produced a significant business boost for this company because that much of the TV presence has expanded this company’s brand awareness among potential customers and investors.
The leading spokesman of this brand is Mark Wahlberg, which wisely uses his popularity to promote his family business. At present, this franchising company has supervised opening more than 50 restaurants, so this is a business result that must not be underestimated.
Although Wahlburgers franchise cost is high, they are in a significantly growing trajectory in the last few years if we analyze their number of units over history.
If we look at the period from 2018 to 2020, this franchisor has grown its number of units by more than 50%. At the beginning of 2020, existed 16 restaurants, and at the end of 2020, 44 of Wahlburgers franchises were in the business.
This franchisor is heavily working on the expansion outside the United States. Customers can find these restaurants in Canada, Germany, and Australia. Also, they plan to open a few units in New Zealand, which means that this franchising opportunity can be one of the options even for investors outside of the U.S.
However, although this restaurant has a starting cost on the level of, for example, a Mcdonald’s franchise, their profit potential is not on the same level. So investors must be aware that this is not the most profitable franchising opportunity in the fast-food industry.
Summary
After analyzing Wahlburgers franchise cost, and profit ratio, we can summarize that this franchising opportunity will not be a good business fit for every investor. You, as a potential franchise applicant, must be aware that this restaurant’s initial expenses will be at least $1,000,000, and profit will be approximately $85,000 per year.
However, this franchising opportunity will be ideal for Mark Wahlberg fans who want to start a burger restaurant under the company that has a lot of business potential to grow even more in the future.