How Much Does it Cost to Open an Arby’s? (Fee’s + Average Profit)
Knowing the cost of Arby’s franchise is one of the first things you should find out if you researching Arby’s franchise. Do you want to own the world’s second-largest sandwich chain, trailing only Subway? Then Arby’s franchise could be ideal for you. Read on to know the cost of Arby’s franchise.
Cost of Arby’s Franchise
To open an Arby’s franchise, you’ll need to invest between $336,500 and $927,900 in the beginning.
You must also show that you have $500,000 in cash assets and a net value of at least $1 million. The startup costs are comparable to other globally known food franchises that we have reviewed.
If you’re keen on this franchise opportunity, we’ve investigated the financials so you know exactly what you’re getting yourself into.
We’ve also discussed the benefits of this sandwich chain and broken down all the fees you’ll have to pay as a franchisee.
Fees and Financial Requirements
Here is a basic overview of the financial requirements for an Arby’s franchise. These figures are only a rough estimate of what you’ll need to start an Arby’s franchise and may not include any additional costs.
The costs will vary depending on whether you open a traditional or non-traditional model (explained in more detail below):
|Fees/ Expenses||Amount Needed||Low-End Costs||High-End Costs|
|Development Fee||Non-Traditional Sites $12,500. For larger, more traditional models, the development fee is waived.|
|Estimated Total Investment$336,500 to $927,900Initial Franchise Fee|
It is crucial to note that these are simply the initial costs required to get your business up and running.
Additional fees not taken into account in these figures may apply based on the location or kind of store you want to open.
Here is a breakdown of additional fees and costs associated with owning an Arby’s franchise:
|Royalty Fee||1% for the first 12 months, then 4% for the next twelve months|
|Transfer Fee||Transfer of first Arby’s fast-food chain: $17,500; $2,500 if the outlet franchise owner owns at least 50% of one current License Agreement.|
|Training Program Fee||The fee is $1,700 per attendee, but it is waived if you are one of the first three managers of your first outlet.|
|Management System ||Each Arby’s franchise costs $59.22 plus tax.|
| Suppliers Approval||Ranges from $2,500–$10,000|
Annual Sales / Average Revenue
Arby’s restaurants generate over $3.9 billion in revenue each year because of their popularity in the United States and around the world.
Remember that this is gross revenue from 3,700+ locations and does not include workers’ wages, repair, and maintenance, advertising, or overhead expenses.
Facts About Arby’s Franchise
Forrest and Leroy Raffel founded the company in 1964 in Boardman, Ohio, in response to the sudden increase in the fast number-food chain in the United States.
During the rise of fast food, the two business partners opened an outlet that served more than just hamburgers.
Arby’s is still a household name among American families, thanks to its extensive menu of sandwiches, gyros, curly fries, and milkshakes.
With the slogan “We have the meats,” the franchise is well known for its stacked pastrami sandwiches. It’s not unusual to see an Arby commercial during a football game.
Arby’s headquarters are now in Sandy Springs, Georgia, and the company has an impressive number of outlets in five countries other than the United States (Qatar, Kuwait, Canada, Turkey, and the UAE).
Right behind Subway, the eatery was named the largest sandwich chain in 2017. As of 2019, the restaurant had 3,472 franchises and is still expanding year after year. One interesting fact is that the company name, Arby’s Restaurant Group, Inc., was changed when the company was acquired.
Arby’s Franchise Annual Profit Margin
Arby’s does not publish financial information online, but when compared to similar fast-food chains in the United States, its business owners are likely to earn $100,000 to $150,000 per year.
This is a rough guess based on other competing fast-food chains like McDonald’s and Subway.
According to Indeed.com, shift managers earn an average of $12.12 per hour, while assistant managers earn $13.14.
However, I believe these wages will rise over the next year. We have recently seen several fast-food restaurants offering starting salaries ranging from $11 to $13.
To compete, I expect other chains to raise their hourly wave.
When calculating a yearly salary, general managers earn an average of $33,388.80. This is at the lower end of general manager salaries in the United States.
It varies depending on location and store type, but as a relatively smaller fast-food chain specializing in high-cost menu items, the profit margin may be lower.
While rising wages are great for store employees, they are not ideal for restaurant owners. Increased costs will eventually have to be passed on to the consumer as menu price hikes.
Things Worth Considering
Below are a few things about the cost of Arby’s franchise that is worth considering before you start an Arby’s franchise.
Arby’s has two types of franchises available. The typical franchise model is an outlet that has a full menu, is self-contained, and offers full customer service. Cooks, cashiers, and janitors are examples of this.
These outlets are frequently found in convenience stores, malls, plazas, truck stops, and other locations near freeways and densely populated areas.
This business model has an advantage: the development fee (which is normally $12,500) is waived.
A fast-food chain with a limited menu, limited size, and limited customer service is a non-traditional model.
Typically, there will be cooks and a few cashiers. This space is usually in a smaller retail outlet and has little or no seating. Non-traditional franchises cause less labor, inventory, and customer service.
Consider how much liquid capital and net value you have, as well as whether you can afford to invest in a larger or smaller outlet when deciding which type of franchise to invest in.
One disadvantage of launching a non-traditional site is that, unlike a traditional site, the development fee is not waived.
Don’t worry – non-traditional eateries are already significantly less expensive than traditional ones, so it shouldn’t be too much of a financial strain for you if you already have a sufficient net worth and liquid capital.
Overall, each type of franchise has advantages and disadvantages, so it is critical to weigh them all to determine which is best for you.
Arby’s freestanding locations are typically found along freeways, highways, and other “quick-stop” public transit locations such as truck and rest stops.
This is because travelers visiting a nearby state or lorry drivers en route to their destination frequently visited Arby’s. Your License Agreement allows you to operate one restaurant at a specific location approved by Arby’s Restaurant Group.
This location is designated as a Protected Area, which means you won’t face competition from nearby Arby’s franchises.
The franchisee cannot own another Arby outlet inside the Protected Area of the first outlet during the period of the License Agreement.
The Protected Area is one mile from the freestanding building if the franchise is a traditional area.
Because of the small size of the site, the franchisee cannot grant a Protected Area if the franchise is non-traditional.
This should not be a hindrance for business owners, because another Arby’s franchisee is unlikely to want to open near your business.
Arby’s Restaurant Group, unfortunately, does not provide financial help to franchisees.
This means that if you find yourself in financial difficulty, it is up to you to resolve the situation. You are, however, eligible for an SBA loan through the SBA’s Franchise Registry.
Remember, you need to have $500,000 in liquid capital, a net worth of $1.00 million, and a plan to commit between $336,500 and $927,900 in the business to open an Arby’s location.
These costs may appear exorbitant if you have never started a business before, but they are typical for establishing a well-known franchise.
If you want to open a franchise with financial help, Arby’s may not be the best option.
Benefits of Arby’s Franchise
Arby’s restaurants offer many benefits. One advantage is the extensive menu selection. Unlike many fast-food restaurants, Arby’s serves wraps, sandwiches, salads, fries, shakes, and other items.
They are well-known for their popular roast beef sandwich, which is a favorite among their regular customers. To keep customers coming back, they also have seasonal and marketing items that follow current trends.
Although Arby’s is a fast-food chain, they provide options that many other restaurants do not.
Arby’s franchise buildings are modern, prominent, and built in the Pinnacle style.
This means that the building stands out amongst other unremarkable structures and can easily change design styles as time passes.
Another advantage of this restaurant is the ability to choose between traditional and non-traditional locations.
You can choose which model best suits your financial situation and invest in that model.
A smaller, non-traditional location is often better suited for people looking for a less labor-intensive restaurant. If you choose to open a traditional model, the $12,500 opening development fee is waived.
The company culture at Arby’s is remarkable. Their core principles of dreaming big, working hard, completing tasks quickly, fair play, making a difference, and enjoying life are critical to their business owners’ and employees’ success. I
f you share similar core values, this company could be a good fit.
- Broad menu selection
- Multiple designs to choose from
- Uplifting company culture
- Eye-catching design
Arby’s Franchise Challenges
One disadvantage of the franchise is that it does not provide direct or indirect financing.
If you encounter financial difficulty, it will be up to you to overcome it. You can apply for a sped-up Small Business Administration loan from the SBA.
Another issue is the non-traditional outlet concept. Smaller, non-traditional sites do not have a Protected Area Agreement, whereas traditional outlets do.
This implies that if you open a non-traditional outlet, there is no guarantee that nearby competitors will avoid your area.
Other non-traditional Arby’s restaurants are more likely to open nearby, drawing customers away from your outlet.
It’s also worth noting that Arby’s may face stiff competition from other fast-food chains in the neighborhood.
Even if traditional outlets have a Protected Area Agreement in place for their own stores, you could be just steps away from another fast-food outlet.
While Arby’s has a good customer base and is getting more well-known, they are a relatively smaller and less common fast-food chain that may cause more extensive advertising.
In addition, if you want to open a non-traditional Arby’s, you’ll have to pay a $12,500 development fee, which is usually waived for traditional locations.
This shouldn’t be a major burden, given the lower cost of opening and operating a non-traditional Arby’s. It’s worth noting if money is tight, particularly since Arby’s does not provide financial help.
- Financial assistance is not guaranteed.
- There is no Protected Area Agreement in place for non-traditional sites.
- There is no fee waiver for non-traditional sites.
- Employee compensation costs are rising.
Is Owning an Arby’s Franchise Right for You?
Now that you’ve learned everything there is to know about the cost of Arby’s franchise, it’s time to decide if this restaurant is right for you. To determine whether you can commit to the franchisor’s requirements, ask yourself the following questions:
Are You Enthusiastic About the Fast-Food Industry?
Arby’s is seeking candidates who are enthusiastic about team building in a fast-paced restaurant environment.It is critical that you have prior restaurant and management experience, as this will increase your chances of success.
You’ll also have a much better idea of what it takes to run a restaurant. Arby’s provides training to franchisees, but they prefer owners with management experience.
Are You Ready to Open Several Stores?
Arby prefers that you open at least three outlets per development agreement.
This may appear to be a daunting task, but it will only increase your chances of business and financial success. However, if you want to make it big in the world of franchising, you must own multiple units.
Do You Have the Financial Resources?
Opening a franchise is an important undertaking, not only as physical and mental labor but also in terms of financial investment.
If you lack the liquid capital and net worth to start a franchise the size of Arby’s, consider collaborating with a business partner or selecting a different, cheaper franchise.
Do You Live in an Area that is Ideal for Arby’s Customers?
Keep in mind most of Arby’s customers are people on road trips or long distances truck drivers.
It’s all too common to see an Arby’s sign on a highway exit, and for good reason: a quick-stop fast food is ideal.
If you live in a big city or in the country, Arby’s might not be the best choice (unless you will relocate).
Frequently Asked Questions
All the questions raised above will help you narrow down your potential franchise options until you find the ideal investment for you. Opening and operating an Arby’s requires restaurant experience, passion, a desire to expand, sufficient financial resources, and an ideal spot.
If you choose to open and operate an Arby’s, be prepared to work in an enjoyable, fast-paced, family-oriented environment with high financial potential.