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Biggby Coffee Franchise Cost Analysis (2023)

Written by: Parth Parth
Last Updated by María Fernández Amato: January 18, 2023
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This article is based on the video featured above, originally recorded for Vetted Biz YouTube Channel.

This article is based on its 2022 FDD

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 coffee

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
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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 StoresTop QuartileUpper MiddleLower MiddleBottom QuartileAll Stores
Store Count99999
Average Cup Count365271228191264
Unit Sales815,350615,742515,524408,312588,732
Discount Amount127,44085,40173,17254,47385,121
Gross Sales687,909530,341442,352353,839503,610
Cost of Goods Sold192,973147,645119,625104,055141,074
Operating Income494,936382,696322,727249,784362,536
Expenses
Labor209,834166,330146,640132,920163,931
Operations12,55211,33014,1059,41111,919
Administration27,72211,60734,34131,12432,512
Services64,11136,87141,90938,13247,704
Marketing & Fees75,93846,66648,96739,26854,982
Total Operating Expenses390,15655,756285,962250,854311,051
EBITDA104,780317,23036,765(1,070)51,485
Profit Margin15.2%12.3%8.3%(0.3%)10.2%
Unit Sales
Median810,537623,865495,682425,219577,961
High1,074,729650,912574,096476,2561,076,729
Low681,325581,827481,677234,559234,559
Stores / % – or = Average5/56%5/56%5/56%5/56%18/50%
Operating Income     
Median487,635382,779316,090259,925368,979
High625,185409,195370,489284,661625,185
Low406,474346,946287,513153,907153,907
Stores / % – or = Average5/56%5/56%5/56%5/56%18/50%
EBITDA
Median108,32454,31336,455(6,962)46,440
High233,855123,92478,35938,520233,855
Low(9,287)21,619(10,963)(51,021)(51,021)
Stores / % – or = Average5/56%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
 202120202019
Net Sales
Initial Franchise Fees531,335615,334429,604
Advertising Fund Contributions5,114,9473,920,2173,397,673
Technology and Maintenance Fees549,765488,404474,338
Product Sales and Other Revenue2,638,6361,621,5411,451,218
Royalty and Licensing Fees9,819,0197,544,5636,846,605
Total Net Revenue18,653,69514,190,05912,599,438
Cost of Revenue1,551,0981,129,791929,870
Gross Profit17,102,59713,060,26811,669,568
Operating Expenses14,863,10610,910,13610,176,423
Operating Income2,239,4912,150,1321,493,145
Nonoperating Income (Expense)
Investment Income25099
Other Income323,926244,209275,871
Interest Expense(851,588)(105,424)(124,125)
PPP Loan Forgiveness784,022
Total Nonoperating Income242,588922,906151,746
Consolidated Net Income2,482,0793,073,0381,664,891
Amounts Attributable to Noncontrolling Interest and Controlling Interest
Consolidated Net Income Attributable to:
Noncontrolling Interest1,009,3851842,995797,465
Controlling Interest1,472,6942,230,043847,426
Consolidated Net Income2,482,0793,073,0381,644,891
biggby coffee

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 typeYearOutlets at the Start of the YearOutlets at the End of the YearNet Change
Franchised2019231239+8
2020239245+6
2021245281+36
Company-Owned2019000
2020000
2021000
Total Outlets2019231239+8
2020239245+6
2021245281+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. 

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