14 Sep Franchised Sandwich Shops
Following is a draft of the information we are gathering for the 2012 Business Reference Guide. Sandwich shops are good sellers for business brokers. Buyers like them because they are easy to operate, the hours are better than most quick service food operations; the prices are reasonable, and they are generally located in a shopping center and have a limited menu. Listing sandwich shops can be very profitable. Here is some information that might be helpful. Although the information is based on franchised operations, it can be relevant to non-franchised shops also.
“It seems like every time we visit our son, Ron, in Wilmington, NC, there is a new franchised sandwich shop that has opened in the area. In gathering data for our 2012 Business Reference Guide, (It is hard to believe that this will be the 22nd edition) we started playing with some of the figures. Following is an update on some of the shops. The listing of the various franchises has the rule of thumb for pricing them along with the average annual sales figures that we have so far. The rest of the data is just our rough calculations.
|Franchise Name||Pricing Rule of Thumb||Ave. Annual Sales|
Start-up Costs Average = $145,000 to $317,931
Average Sales = Approx. $500,000 year
Average Rule of Thumb = 45% of annual sales
Average Price = $225,000
Average Profit = $100,000
“Business brokers handle the resale of many of them. Today, almost every conceivable small business concept has at least one franchise in it – and some have many. Years ago almost every town had a sub shop (In Philadelphia where I was raised, they were called hoagie shops, and I suspect they still are). In other areas they are called grinders, etc. They can be nice little money makers in the right location and for a hard worker. It has been said that to be really successful, you need to own three or four sandwich shops.
“To keep up to date on the world of franchising, you need to visit the web site: www.bluemaumau.org. It has lots of interesting and valuable information. For example, they receive important information from the SBA including a list of franchises whose franchisees failed to pay back their SBA loans. Here is a list of the sandwich franchises and their percentage of franchises who failed to pay back their loans. We have rounded off the percentages and they are listed in order of from best to worst. Jimmy Johns had the lowest figure which means they had the fewest franchisees that did not pay back their loans. This list covered the years 2001 to 2010. The source was: SBA, May 2011.
“One might think that the higher the loan default, the riskier it is. However, keep in mind that a franchise such as Mr Goodcents or the Philly Connection, since they’re certainly not as well known as Subway, might attract franchisees who are not as financially qualified as the buyer for Subway who may be using SBA financing to purchase additional units.”
If you sold a sandwich franchise in the last year or so I would appreciate any information you could supply. You can complete our simple online form or just email me the name, state, annual sales and selling price. Any other information you want to furnish would be appreciated as well.
Tom West, BBP Founder