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The Biggest Franchise You’ve Never Heard Of: Advanced Fresh Concepts

Written by: Parth Parth
Last Updated by Ailen Faiad: November 10, 2022
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This article is based on its 2022 FDD

Advanced Fresh Concepts franchises offer prepared sushi and other Asian-style foods from (i) AFC food service counters at a grocery store, retail center or other locations (ii) Wild Blue Counters at a university or other select locations

How is Advanced Fresh Concepts Franchise Positioned in the Food and Beverage Industry?

The Food and Beverage industry in the USA accounts for 13% of all manufacturing employment in the country. Around 1.46 million people get employed in this industry. Food franchises make up to 36% of the total franchise establishments in the USA and it is expected to create 1.6million more jobs by 2027. The annual growth rate in the industry is around 2% and the EBITDA multiplier is around 3x.

Advanced Fresh Concepts competes in the Asian market against companies such as Panda Express.

Advanced Fresh Concepts Franchise Cost

The estimated initial investment for one new full-time food service counter or part-time food service counter located in a grocery store or other location owned by a third party ranges from $39,339 – $136,939. The following costs are part of the upfront costs included in the initial investment for Advanced Fresh Concepts. Many of these are one-time fees that are needed to launch the franchise.

Review the chart below to see how much it costs to buy an Advanced Fresh Concepts franchise in 2022.

Item Amount To Whom Payment Is To Be Made
Initial Fee $4,500 AFC
Credit and Background Check Fee $85 AFC
Tuberculosis, Drug Testing and Criminal Background Checks $100-$2,000 AFC
Training Fee $1,000-$4,600 AFC
Training Fee for your managers $0-$2,300 AFC
ServSafe Food Protection Manager Training, Testing and Certification $275-$550 AFC
ServSafe Allergen Awareness Training and Testing $10-$30 ServSafe
Travel and Living Expenses while Training $1600-$11,500 Airline, hotel, restaurant
Operating Manual/SSOP/Sushi Recipe Guide/Wild Blue Recipe Guide/Steam Table Manual Fee $300-$600 AFC
Purchase of already existing AFC Operated Food Service Counter from us $1000-$100,000 AFC
Opening Food Inventory $8000-$24,000 AFC
Signage $0-$1,000 AFC
Opening Assistance $0-$1,800 AFC
Labeling Machine and Inventory Scanner $900-$2,000 AFC
Warranty service for labeling machine $99 AFC
Data and Web Access Fee for Tablet $120-$225 AFC
Equipment and Small Wares $14,700-$46,000 ACF or suppliers
Insurance per location $700-$5,000 Insurance company/AFC if we obtain the insurance on your behalf
Additional Uniforms $0-$350 AFC
Licenses & Permits $300-$2,000 Government Agencies/AFC
Computer and Internet Access $150-$800 Third Parties
Additional Funds – 3 months $5,500 – $25,000 Employees, suppliers, utilities and AFC
Professional Advisor $1,000 – $2,000 Your Professional Advisors
Account Broker Fee $0-$500 AFC
Total for a new full-time or part time Food Service Counter Franchise $39,339-$136,939 $40,339 – $236,939
advanced fresh concepts

Owning a Advanced Fresh Concepts Franchise Requires Ongoing Fees

Compensation to Franchisor: Typically 25% to 27% of Gross Sales to the store or other facility where you are located, and 8% to 11% of Gross Sales to AFC

How much do Advanced Fresh Concepts franchise owners make?

AFC earned $377 million from 4,000 locations in 2021. We estimate from those numbers that the AUV for an AFC franchise is around $942,500.

2021 Advanced Fresh Concepts Median Franchise Sales: $942,500

Initial investment (midpoint) %Profit margin of average franchise sales Estimated profits Time to recoup investment
$2,542,500 10% $126,800 21.5 years
15% $190,200 15 years
20% $253,600 11.5

Based on the median sales provided by Advanced Fresh Concepts’s franchise locations, at an average of a 10% profit margin it will take around 3 years to recoup your investment. This is shorter than other franchise opportunities. You may not get a 15% profit margin which would elongate getting a return on your investment.

Many factors affect the sales, costs, and expenses of your Franchised Store. Such as the Franchised Store’s size, geographic location, menu mix, and competition in the marketplace. The presence of other Food and Beverage stores; the extent of market penetration and brand awareness that Advanced Fresh Concepts stores have attained in your market. Also, the quality of management and service at your Franchised Store are major factors.

Is the Advanced Fresh Concepts Franchise Profit Worth the Franchise Cost?

To assign a valuation multiple for Advanced Fresh Concepts franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems where more transaction data is available.

Under $5 Million Net Sales

  • Estimated Selling Price = Net Sales * 0.55

When you go to sell an Advanced Fresh Concepts franchise based on the median multiple of .55 and net sales in 2021 of $942,500, it would sell for around $500,000. This is significantly higher than the midpoint investment of $138,639.

The more franchises you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators.

Advanced Fresh Concepts (Franchisor) Income Statement Key Insights:

Years Ended March 31, 2022, 2021 and 2020

 
202220212020
Revenues   
Franchise Revenue$377,991,889 $272,274,159$257,003,032
Product Revenue$191,180,414$144,995,576$144,909,404
Retail Revenue$19,073,738$14,365,473$14,559,631
Total Revenues$588,246,041$431,635,208$416,472,067
Costs and expenses   
Direct contract costs$198,762,058$149,788,110$151,534,213
Operating expenses$370,759,020$272,834,464$258,456,929
Total costs and expenses$569,521,078$422,622,574$409,991,142
Income from operations$18,724,963$9,012,634$6,480,925
Financial Income (expense)   
Interest Income$46,975$40,860$230,061
Interest Expense$(1,500)$(2870)$(4,723)
Net financial income$45,475$37,990$225,338
Income before provision for income taxes$18,770,438$9,050,624$6,706,263
Provision for income taxes$4,441,212$2,038,646$2,009,686
Net income$14,329,226$7,011,978$4,696,577
Other comprehensive income (loss)   
Foreign currency translation adjustment$32,155$484,457(37,124)
Total comprehensive income$14,361,381$7,496,435$4,659,453

Advanced Fresh Concepts is a very profitable business for the franchisor with retained earnings of $14.36 million in 2022. Compared to $4.65 million in 2020, they saw an increase of 208% from 2020 to 2022. This is a good indication of high growth as a company overall.

advanced fresh concepts

How many Advanced Fresh Concepts units have opened and closed?

System-wide Outlet Summary

Outlet typeYearOutlets at the Start of the YearOutlets at the End of the YearNet Change
Franchised20203,8493,973+124
20213,9733,9730
20223,9734,020+47
Company-Owned2020172158-14
2021158143-15
2022143150+7
Total Outlets20204,0214,131+110
20214,1314,116-15
20224,1164,170
+54

Over the last three years, the company has been expanding. Over the last three years, franchises have opened at a rate of around 50 units a year. This is an indicator that these stores might be performing very well.

Conclusion

Advanced Fresh Concepts offers people the opportunity to be a part of a business that is rapidly evolving and expanding and has good opportunities. The payback period is short and the resale value is insanely high.

While this may be the business for you, make sure also to check out other companies offered on Vetted Biz and in the Food and Beverage Industry.

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