The franchisor Five Guys Franchisor, LLC is a fast-casual dining restaurant that sells hamburgers, french fries, and other relevant items. The advantages, disadvantages, and financial cost of running a Five Guys franchise are all detailed in this article.
Financial Cost for Five guys Franchise
Net-worth Requirement: $500,000
Liquid Cash Requirement: $250,000
Initial Investment: $306,200 – $716,250
Initial Franchise Fee: $25,000
Here is a further breakdown of the costs;
Initial Franchise Fee; $25,000
Development Fee; $50,000
Leasehold Improvements; $100,000 to $300,000
Lease Payments and other rental expenses; $7,500 to $20,000
Equipment; $55,000 to $105,000
Signage; $6,500 to $15,000
Initial Inventory; $10,000 to $15,000
Architectural / Engineering; $7,000 to $25,000
Electronic Cash Register System with Modem; $15,000 to $25,000
Facsimile Machine; $350 to $500
Travel, lodging, and meals for initial training; $100 to $5,000
Business Supplies (stationery, business cards, menus, gift cards, paper, and other materials); $4,000 to $8,500
Business licenses, permits, utility deposits, etc. (for the first year); $5,000 to $15,000
Delivery and catering expenses; $0 to $1,000
Insurance deposits and premiums; $750 to $1,250
Additional Funds for first 3 months; $20,000 to $25,000
TOTAL; $306,200 to $641,250
About the Five Guys Franchise
Five Guys take pride in operating as a family-owned business. The Arlington, Virginia-based eatery opened its doors in 1986 and started franchising in 2002.
The restaurant sold over 300 franchise locations in just one and a half years.
Five Guys raised revenues by more than 32% between 2010 and 2011, making it the fastest-growing fast-food chain in the entire country.
The business added 1,500 new stores in 2016 and started building 1,500 more.
Five Guys ultimately expanded internationally in 2013, with the first international store opening in London and 113 other outlets opening up quickly throughout the UK.
The business even extended to the Middle East and Germany, which pleased foreign consumers by increasing the number of sites they could choose from. These details alone prove the beloved burger joint’s widespread appeal and quick expansion.
All meal is also prepared with pure peanut oil, which doesn’t contain any cholesterol. Five Guys, unlike many other burger joints, doesn’t have its own refrigerators. Instead, they have coolers, which attest to the product’s freshness.
The franchise is the recipient of a staggering array of accolades, including the titles of Best Burger in Philadelphia, Charlottesville, Richmond, and Annapolis as well as recognition from The Washingtonian and The Washington Press.
How to Open a Five Guys Franchise
1. Make Sure You Have Enough Capital
You need $150,000 in liquid funds in order to start a Five Guys restaurant business. Recognize the financial commitment needed for a restaurant franchise.
You must take into account costs associated with purchasing real estate, purchasing tools, and signs, obtaining licenses and permissions, purchasing uniforms, purchasing insurance, etc.
2. Consider Your Past Expertise and Strong Points
Prior business experience is not required in order to apply to operate a Five Guys franchise. They have received thorough and extended instruction.
Following your training, you’ll be completely equipped to run your store.
3. Analyze the Supply in the Market
Before moving forward with the franchising application, you should check the Five Guys franchise market availability to determine if there are any markets in your target location.
4. Send Your Application in
The team that oversees the Five Guys franchise will examine your application.
Upon receiving your online application, you will receive a confirmation email. In this email, we will also include the franchise owner’s contact information.
5. Get the Go-Ahead to Start Your Five Guys Franchise
Following the conclusion of your background and financial checks, you will be granted franchise clearance.
Only applicants who fully satisfy the standards of franchise owners will receive approval.
Five Guys Franchise Average Sales / Profits
Every year, Five Guys locations typically bring in about $1.2 million in sales and revenue.
Even while the statistic seems outstanding, it disregards the expenses each retailer must incur for sales.
Operators must take into account how the cost of items sold, labor, and other overhead expenses reduce gross income.
The annual income of all food franchise owners is around $126,866. Unfortunately, the business doesn’t make franchisee profit available to the public.
Given this data, it is likely that the salaries of Five Guys franchise owners are equivalent to those of other burger franchises. Depending on the area and how well you manage the firm, your run rate will change.
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Things to Consider Before Starting the Franchise
1. Franchise Type
Fortunately, Five Guys only offer one sort of franchise. An entrepreneur’s decision is made easier as a result.
All the Five Guys franchise locations are walk-in, sit-down eateries that are between 2,000 and 3,000 square feet in size.
Although there is only one option, some people might consider this franchise’s lack of options to be a drawback.
Mall locations are an option provided by other franchises.
Five Guys restaurants operate out of a single location. The Five Guys franchisors have authorized this location, which was chosen after considering the market’s demographics, growth patterns, and accessible building sites.
Other Five Guys locations won’t be allowed to open during the duration of the franchise agreement within a specific distance of your location.
This enables each franchise to occupy a territory that is specific to their contract.
Because the franchise agreement is valid for ten years, your store can operate in the designated area without being impacted by the opening of new Five Guys locations.
In addition to being firmly entrenched in very particular locations, Five Guys restaurants are nearly always close to malls, stadiums, airports, campuses of colleges, and railway stations.
Customers can enter the store easily, which increases the possibility of foot traffic. The size of each restaurant varies from 2,000 to 3,000 square feet.
Despite having more domestic than foreign outlets, Five Guys is nevertheless a well-liked restaurant chain worldwide.
Five Guys is the ideal option for international clients who are looking for a healthy alternative to the typically processed meals they get at other American-inspired eateries.
A Five Guys restaurant may be an alluring approach to draw consumers looking for an All-American dinner if you live in the United Kingdom due to its popularity among Europeans, which should not be understated.
Five Guys offers business owners a more reasonable alternative when compared to other franchises. Depending on how high building costs are in your region, starting a franchise typically costs between $300,000 and $650,000.
In comparison to Five Guys, competitors like Burger King demand a four-times-larger financial investment to open a franchise.
Unfortunately, Five Guys Burgers & Fries does not promise financial assistance. The likelihood of receiving aid from headquarters if you have financial difficulty is low.
Advantages of Five Guys Franchise
In comparison to other fast-food joints, Five Guys offers a healthy alternative thanks to the use of peanut oil, fresh ground beef, and refrigeration.
Its dedication draws customers seeking fresh meals rather than to Five Guys to healthier food options, which also provides the impression that the restaurant is more upscale than its rivals.
This benefit is especially beneficial to business owners given the current market trend, which favors healthier, more natural meals over frozen ones.
As was already mentioned, opening a Five Guys restaurant is typically less expensive than opening many other fast-food establishments.
Just this fact alone allows business owners more opportunity to spend money on other areas of their company, like high-quality advertising or supplies.
Due to the fact that Five Guys is a significantly smaller burger business, there is also less competition from other Five Guys restaurants.
The initial training program offers greater assistance to business owners in their endeavors. Providing them all the resources they need to succeed in their franchise, it raises their chances of success.
For instance, the business headquarters in Lorton, Virginia, requires two to six weeks of classroom instruction for initial training.
The operational principal owner, one general manager, one assistant manager, and all need to be there for the training. The franchisor provides instructors and training materials to each franchise owner.
The training program may cost $1,500 per individual, but there are benefits to paying the price. They will provide a trained representative to the franchisee for the debut of their first location.
Prior to opening, the representative will train employees, supervise operations, and serve as assistant manager for ten days.
Disadvantages of Five Guys Franchise
There are difficulties if you choose to open a Five Guys restaurant. For instance, the franchisor does not provide the franchisee with any financial support in the form of loans, notes, leases, or other commitments.
This implies that you are left to your own network and creativity if you require financial assistance.
However, given the more modest financial needs needed to run the business, this shouldn’t be an issue. The fact that burgers and fries are a classic fast food dish presents another difficulty.
Given that Five Guys is less well-known than McDonald’s and Burger King, a stronger marketing effort may be required in your region to raise awareness of the idea.
Questions to Ask Yourself Before Starting the Franchise
Asking yourself the following questions will help you determine if operating a Five Guys shop is the correct choice for you.
Do you have the resources necessary to launch and run such a company?
The average income of a Five Guys owner is just as high as that of other restaurant owners, despite the fact that the business is typically less expensive than other fast-food chains.
Your investment in a Five Guys franchise can be smart if you have the money and net worth to do so.
Do you prefer to provide more nutritious food options? It’s critical to consider whether you concur with a restaurant’s guiding principles.
In this instance, Five Guys favors higher-quality meals over quicker-to-prepare frozen cuisine.
Are you prepared to accept that the franchisor did not make any financial help promises? Again, because starting a Five Guys is so inexpensive, there is definitely less chance of going into debt.
It might not be a good idea to invest in a franchise right now if you are concerned about your finances.
Do you have any previous restaurant business experience? Prior knowledge and industry expertise are the keys to a successful restaurant.
For those with prior experience working as a restaurant manager or in a related field, this business venture is possible.
Even though all of this information might seem overwhelming, buying a franchise can be profitable. You can invest in a tried-and-true method that works.
Make sure you consider your answers to the preceding questions as well as your potential contributions as a franchisee.
Being a franchisee and business owner requires a lot of bravery, grit, and dedication; the best way to succeed is to approach this opportunity well-prepared.