Biggby Coffee Franchise Cost Analysis (2023)
Written by: Parth Parth
Last Updated by
María Fernández Amato: March 3, 2023
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Biggby Coffee is a community coffee shop chain with offerings of espresso beverages, sandwiches, baked goods, etc. Their franchise is generally operated from either a free-standing, store front or strip center location or a prefabricated modular structure. Biggby has a very high focus on community integration, which they credit for their economic recovery after COVID-19 pandemic. Robert P. Fish is a Co-Founder and Co-CEO of Biggby Coffee since April 2016, along with Michael J. McFall. Both of them are managing members of Global Orange, Biggby’s associates.
Contents
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Biggby Coffee’s Positioning 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 there’s the expectation that it will 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.
Biggby Coffee competes in the Food and Beverage industry with brands like Aroma Espresso Bar, Illy, etc.
How Much Is a Biggby Franchise?
The initial (Company) Franchise Fee is $20,000. You have to pay this upfront fee when opening a (Company) franchise.
Biggby Franchise Cost
The estimated total investment necessary to begin operation of a Biggby Coffee Franchise ranges from $276,000 to $439,000.
The following costs are part of the upfront costs included in the initial investment for a Biggby Coffee franchise. 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 a franchise in 2022.
Company Franchise Cost (Detailed)
| Site Built Location | |||||
|---|---|---|---|---|---|
| Type of Expenditure | Estimated Amount Low | Estimated Amount High | Method of Payment | When Due | To Whom Payment is to be Made |
| Initial Franchise Fee | 20,000 | 20,000 | Lump Sum | At the time the Franchise Agreement is Signed | Global Orange |
| Real Property Rental | 1,000 | 21,000 | As arranged | As specified in lease | Third Party Landlord |
| Leasehold Improvements | 140,000 | 205,000 | As arranged | As arranged | Contractors |
| Equipment, Furniture and Decor | 61,500 | 71,000 | As arranged | As arranged | Global Orange and Suppliers |
| Drive-Through Equipment | 13,500 | 14,500 | As arranged | As arranged | Global Orange and Suppliers |
| Blueprints, Plans and Permits | 5,500 | 11,000 | As arranged | As arranged before opening | Architect and Contractor |
| Signage (Interior/Exterior) | 4,000 | 15,000 | As arranged | As arranged before opening | Signage Supplier |
| Initial Inventory | 9,000 | 14,000 | As arranged | As arranged | Food Service Suppliers and Global Orange |
| Insurance-general Liability, Property and Workers Compensation | 3,500 | 4,500 | As arranged | As arranged before opening | Insurance agent |
| Uyility Expense | 500 | 4,000 | As arranged | Monthly/Quarterly | Utility Company |
| License Permits and Other | 1,000 | 2,500 | Lump Sum | As incurred | Public Agencies, Landlord |
| Initial Advertising and Gran Opening Promotions | 9,000 | 9,000 | As arranged | As arranged | Advertising Media |
| Miscellaneous | 500 | 5,000 | As arranged | As incurred | Travel Company, Hotels, Restaurants |
| Organizational Expenses | 2,000 | 2,500 | As arranged | As arranged | Lawyer, accountant |
| Additional Funds – 3 Months | 5,000 | 40,000 | As incurred | As incurred | Global Orange, Various Suppliers and Employees |
| Total Estimated Initial Investment | 276,000 | 439,000 | |||
Franchise Requirements
Biggby Coffee requires franchisees to lease around 1300-1700 sq ft. for a “free-standing, store front or strip center location.” The franchisee will also be responsible for maintenance. At the time of signing, the franchisee is required to have a grand opening advertising plan which is to be implemented at the franchisee’s own cost. A minimum of $9,000 is required to be spent on this.
Owning a Biggby Franchise Requires Ongoing Fees
Royalty: 6% of gross sales
Marketing Fee: The greater of: (a) $100 per week; or an amount specified by Biggby, not to exceed 3% of Gross Sales
Local Marketing: Up to 3% of Gross Sales
Annual Conference Fees: Determined by Biggby (not to exceed $1000)
These fees are more or less standard for the Food and Beverages industry.
How Much Do Biggby Coffee Franchise Owners Make?
| Non Drive Thru Stores | Top Quartile | Upper Middle | Lower Middle | Bottom Quartile | All Stores |
|---|---|---|---|---|---|
| Store Count | 9 | 9 | 9 | 9 | 9 |
| Average Cup Count | 365 | 271 | 228 | 191 | 264 |
| Unit Sales | 815,350 | 615,742 | 515,524 | 408,312 | 588,732 |
| Discount Amount | 127,440 | 85,401 | 73,172 | 54,473 | 85,121 |
| Gross Sales | 687,909 | 530,341 | 442,352 | 353,839 | 503,610 |
| Cost of Goods Sold | 192,973 | 147,645 | 119,625 | 104,055 | 141,074 |
| Operating Income | 494,936 | 382,696 | 322,727 | 249,784 | 362,536 |
| Expenses | |||||
| Labor | 209,834 | 166,330 | 146,640 | 132,920 | 163,931 |
| Operations | 12,552 | 11,330 | 14,105 | 9,411 | 11,919 |
| Administration | 27,722 | 11,607 | 34,341 | 31,124 | 32,512 |
| Services | 64,111 | 36,871 | 41,909 | 38,132 | 47,704 |
| Marketing & Fees | 75,938 | 46,666 | 48,967 | 39,268 | 54,982 |
| Total Operating Expenses | 390,156 | 55,756 | 285,962 | 250,854 | 311,051 |
| EBITDA | 104,780 | 317,230 | 36,765 | (1,070) | 51,485 |
| Profit Margin | 15.2% | 12.3% | 8.3% | (0.3%) | 10.2% |
| Unit Sales | |||||
| Median | 810,537 | 623,865 | 495,682 | 425,219 | 577,961 |
| High | 1,074,729 | 650,912 | 574,096 | 476,256 | 1,076,729 |
| Low | 681,325 | 581,827 | 481,677 | 234,559 | 234,559 |
| Stores / % – or = Average | 5/56% | 5/56% | 5/56% | 5/56% | 18/50% |
| Operating Income | |||||
| Median | 487,635 | 382,779 | 316,090 | 259,925 | 368,979 |
| High | 625,185 | 409,195 | 370,489 | 284,661 | 625,185 |
| Low | 406,474 | 346,946 | 287,513 | 153,907 | 153,907 |
| Stores / % – or = Average | 5/56% | 5/56% | 5/56% | 5/56% | 18/50% |
| EBITDA | |||||
| Median | 108,324 | 54,313 | 36,455 | (6,962) | 46,440 |
| High | 233,855 | 123,924 | 78,359 | 38,520 | 233,855 |
| Low | (9,287) | 21,619 | (10,963) | (51,021) | (51,021) |
| Stores / % – or = Average | 5/56% | 5/56% | 5/56% | 5/56% | 18/50% |
Is the Franchise Profit Worth the Franchise Cost?
To assign a valuation multiple for Biggby Coffee franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings.
Under $1 Million Net Sales:
- Estimated Selling Price = Net Sales – 0.44
$1 Million – $5 Million Net Sales:
- Estimated Selling Price = Net Sales – 0.34
Over $5 Million Net Sales:
- Not Applicable
When you go to sell a Biggby Coffee franchise based on the median multiple of .44 and net sales averaging between 2020 and 2021 of $722,745, it would sell for $318,000. This is slightly lower than the median investment of $357,000.
Biggby Coffee Income Statement
| Years Ended December 31, 2021, 2020, and 2019 | |||
|---|---|---|---|
| 2021 | 2020 | 2019 | |
| Net Sales | |||
| Initial Franchise Fees | 531,335 | 615,334 | 429,604 |
| Advertising Fund Contributions | 5,114,947 | 3,920,217 | 3,397,673 |
| Technology and Maintenance Fees | 549,765 | 488,404 | 474,338 |
| Product Sales and Other Revenue | 2,638,636 | 1,621,541 | 1,451,218 |
| Royalty and Licensing Fees | 9,819,019 | 7,544,563 | 6,846,605 |
| Total Net Revenue | 18,653,695 | 14,190,059 | 12,599,438 |
| Cost of Revenue | 1,551,098 | 1,129,791 | 929,870 |
| Gross Profit | 17,102,597 | 13,060,268 | 11,669,568 |
| Operating Expenses | 14,863,106 | 10,910,136 | 10,176,423 |
| Operating Income | 2,239,491 | 2,150,132 | 1,493,145 |
| Nonoperating Income (Expense) | |||
| Investment Income | 250 | 99 | – |
| Other Income | 323,926 | 244,209 | 275,871 |
| Interest Expense | (851,588) | (105,424) | (124,125) |
| PPP Loan Forgiveness | – | 784,022 | – |
| Total Nonoperating Income | 242,588 | 922,906 | 151,746 |
| Consolidated Net Income | 2,482,079 | 3,073,038 | 1,664,891 |
| Amounts Attributable to Noncontrolling Interest and Controlling Interest | |||
| Consolidated Net Income Attributable to: | |||
| Noncontrolling Interest | 1,009,3851 | 842,995 | 797,465 |
| Controlling Interest | 1,472,694 | 2,230,043 | 847,426 |
| Consolidated Net Income | 2,482,079 | 3,073,038 | 1,644,891 |
How Many Biggby Coffee Units Have Opened and Closed?
Over the last three years the company has been expanding. Franchising units are growing. Franchises have closed at a rate of 16 units a year for the past three years.
System-wide Outlet Summary
| Outlet type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2019 | 231 | 239 | +8 |
| 2020 | 239 | 245 | +6 | |
| 2021 | 245 | 281 | +36 | |
| Company-Owned | 2019 | 0 | 0 | 0 |
| 2020 | 0 | 0 | 0 | |
| 2021 | 0 | 0 | 0 | |
| Total Outlets | 2019 | 231 | 239 | +8 |
| 2020 | 239 | 245 | +6 | |
| 2021 | 245 | 281 | +36 |
At the close of 2021, Biggby Coffee has 281 franchised stores in operation. They have no company-owned outlet stores
Conclusion
Key insights you should know as a prospective franchisee:
Biggby Coffee presents itself as an up-and-coming player in the industry focused heavily on community values and engagement. It is offering a chance to be a part of an industry that has been long present. While still in its early stages, Biggby Coffee’s growth seems to be accelerating.
While this may be the business for you, make sure to also check out other businesses offered on Vetted Biz and in Food and Beverage Industry.
