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Aroma Joe’s Coffee Franchise Pays Back in 7 Years (2023)

Written by: Vetted Biz Franchise Research Team
Last Updated by María Fernández Amato: January 23, 2023
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aroma joe's coffee

Aroma Joe’s Coffee is a coffee chain that was founded in Biddeford, Maine in 2002. The company was founded by four cousins who went from building forts at Grandma’s house, to building their own careers, to building their first Aroma Joe’s drive-thru coffee kiosk in East Rochester, New Hampshire, in 2000. Aroma Joe’s began as a small, locally owned coffee shop, but has since grown to multiple locations throughout New England.

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The company is known for its friendly atmosphere and commitment to using only the finest, locally sourced ingredients in its beverages. In addition to coffee, Aroma Joe’s also offers a variety of specialty drinks, smoothies, and food items, making it a popular destination for both coffee lovers and those looking for a quick and delicious meal. Despite facing challenges in the competitive coffee industry, Aroma Joe’s Coffee has remained a beloved fixture in the New England community, thanks to its dedication to quality and customer service.

aroma joe's coffee

How Is Aroma Joe’s Franchise Positioned in the Food and Beverage Industry?

The Food and Beverage industry in the United States accounts for 13% of all manufacturing employment in the country, employing around 14.6 million people. Food franchises make up 36% of the total franchise establishments in the U.S. and are expected to create 1.6 million more jobs by 2027. The annual growth rate in the industry is around 2% and the EBITDA multiplier is around 3x. This industry is diverse and includes a variety of businesses such as quick-service restaurants, full-service restaurants, cafe franchises, and convenience stores, among others. It is an important contributor to the economy and continues to evolve and adapt to changing consumer trends.

How Much Is an Aroma Joe’s Coffee Franchise?

The initial Aroma Joe’s Franchise Fee is from $12,500 – $25,000. You have to pay this upfront fee when opening an Aroma Joe’s Coffee franchise.

Aroma Joe’s Franchise Cost

The estimated total investment necessary to begin the operation of an Aroma Joe’s Franchise ranges from $283,500 – $1,046,500. The following costs are part of the upfront costs included in the initial investment for an Aroma Joe’s. 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 Aroma Joe’s Coffee franchise in 2022.

Estimated Initial Investment

Type of Expediture Amount To Whom Payment Is to Be Made
Low High
Initial Franchise Fee $12,500 $25,000 Us
Real Property $3,000 $12,000 Landlord
Leasehold Improvements $100,000 $300,000 Vendor
Equipment Package $105,000 $185,000 Us
Opening Inventory $10,000 $15,000 Approved Suppliers
Insurance $1,000 $6,000 Vendor
Training Expenses (including travel & lodging) $2,500 $5,000 Vendor
Store Development, Architectural and Design Fees $0 $15,000 Vendors
Site Development $10,000 $300,000 Vendors
Engineering/Planning $2,000 $75,000 Vendors
Miscellaneous Expense $1,500 $10,000 Vendor
New Store Marketing $5,000 $5,000 Us
Professional Fees $1,500 $10,000 Vendor
Optional Security System (not including monitoring) $1,000 $5,000 Vendor
Outside signage $8,000 $30,000 Us
Additional Funds – 3 months $10,000 $30,000
10% Buffer Fee $10,500 $18,500 Us
TOTAL $283,500 $1,046,500

Requirements

Aroma Joe’s Coffee states, “We ask that our franchisees begin with a minimum of $150,000 in liquid capital, and that they are qualified to secure capital for the investment necessary to their goal.”

Ongoing Fees

Royalty: 8% of total gross sales 

Marketing Fee: 2.5% to 4.5% of total gross sales

How Much Do Aroma Joe’s Franchise Owners Make?

2021 Aroma Joe’s Coffee Median Franchise Sales: $854,948

Initial investment (midpoint) %Profit margin of median franchise sales Estimated Profits Time to recoup investments
$665,000 10% $85,495 9 years
15% $128,242 7.5 years
20% $170,990 5.5 years

Based on the median sales provided by Aroma Joe’s franchise locations, at an average of a 15% profit margin it will take around 7.5 years to recoup your investment. This is slightly longer 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; and the extent of market penetration and brand awareness that Aroma Joe’s coffee stores have attained in your market. Also, the quality of management and service at your Franchised store are major factors.

Is the Aroma Joe’s Coffee Profit Worth the Franchise Cost?

To assign a valuation multiple for Aroma Joe’s 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 Aroma Joe’s franchise based on the median multiple of .55 and net sales of $854,948, it would sell for $470,221. This is significantly lower than the midpoint investment of $665,000.

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.

Aroma Joe’s (Franchisor) Income Statement Key Insights

Statements of Income and Members’ Equity

(in thousands)Year Ended December 31,
20212020
Revenues
Royalties$4,107,582$3,040,283
Franchise Fees82,50060,000
Advertising1,838,9071,395,536
Management Fees58,000133,000
Other Income85,51768,316
Total Revenue$6,172,506$4,697,135
Expenses
Selling, general and administrative expenses6,360,1164,498,332
Other (Income) Expense
Interest Income(5,748)(135,395)
Interest Expense1,2381,741
PPP Loan Forgiveness(184,500)
Total Other Income$(189,010)$(133,654)
Net Income$1,400$332,457

Aroma Joe’s Coffee is a profitable business for the franchisor with retained earnings of $1,400 in 2021. Compared to the previous year when they had earnings of $332,457, Aroma Joe’s Franchising has seen a big drop in income. Most of this drop is attributable to a PPP Loan forgiveness of $184,500.

How Many Aroma Joe’s Units Have Opened and Closed?

Outlet Type Year Outlets at the Start of the Year Outlets at the End of the Year Net Change
U.S. Franchised 2019 61 66 +5
2020 66 71 +5
2021 71 81 +10
Company-Owned 2019 1 1 0
2020 1 2 +1
2021 2 1 -2
Total Outlets 2019 62 67 +5
2020 67 73 +6
2021 73 72 +9

Over the last three years, the company has slowly expanded. Franchises have opened at a rate of 6 – 7 units a year.

Conclusion

Aroma Joe’s is a successful coffee chain that has grown from a locally owned shop in Maine to multiple locations throughout New England. The company is known for its high-quality ingredients and friendly atmosphere, and has remained popular despite facing competition in the coffee industry. However, potential franchisees should be aware that the initial investment for an Aroma Joe’s Coffee franchise can be significant, ranging from $283,500 to $1,046,500. In addition, it may take several years to recoup this investment, based on the median sales of Aroma Joe’s Coffee franchises and the profit margin achieved. Potential franchisees should carefully consider these factors before deciding to invest in an Aroma Joe’s franchise.

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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