The Boiling Crab Franchise: Costs, Profits, and More!
The Boiling Crab is a southern seafood restaurant that is replicated after the Louisiana seafood boil with a Vietnamese twist. The franchise serves Cajun-style seafood dishes and offers complimentary side dishes to complete the meal. The casual restaurant also serves specialty sauces from sweet to spicy.
The Boiling Crab History
Dada Ngo and her husband Sinh Nguyen, the owners of The Boiling Crab, opened up the first restaurant in Garden Grove, California in 2004. The Boiling Crab was inspired by Sinh Ngyuen, who grew up in Southern Texas located on the Gulf of Mexico. In this area, seafood boils were part of the culture in that community. Currently, there are 20 Boiling Crab Restaurants in California, Las Vegas and Dallas.
The CEO of The Boiling Crab franchise is Dada Ngo, who is the founder of the franchise. Dada Ngo was CFO of the company from the beginning through December 31, 2013. She was then named CEO and president on January 1st, 2014. She flopped roles with her husband Sinh who was CEO through December 31, 2013. He became CFO the same day Dada Ngo became CEO, January 1st.
The Boiling Crab Franchise Cost
The initial franchise fee is $39,500 and for an additional franchise, there is a 20% discount. The initial franchise fee is nonrefundable although if The Boiling Crab terminates your franchise agreement, they will refund you $31,600 if it is within 120 days.
The initial investment for The Boiling Crab can cost anywhere from $ 941,000 to $ 1.3 million. The majority of these costs are required so you need to put in a decent amount of capital to open this restaurant. Some of the high-priced items in this are the training expenses, which can cost between $ 45,000 to $ 55,000. Other expensive costs include the equipment, construction/remodeling, furniture, etc. which ranges anywhere between $ 750,000 to $ 1.1 million. An unusual expense included in the FDD are security cameras and a security system which are mandatory. This expense is between $45,00 to $55,000.
Additional Cost Breakdown
| Royalty Fee | 5% of gross sales |
| Marketing Fees | 0.5% |
| Local Advertising | 3% of gross sales |
| Co-op advertising fee | Not to exceed 3% of gross sales |
| Inventory | At the time, the Boiling Crab is not a supplier of any inventory items |
| Booths and Tables | Must be purchased from affiliates |
| Compliance Audit by Boiling Crab | Variable |
| Interest on Late Payments | 1.5% per month |
| Remedial Work to Correct Unhealthy or Unsafe Condition | Service charge equal to 25% of the cost of remedial or corrective work |
| Service charge for insurance | The cost of purchasing replacement insurance plus 25% |
| Renewal Fee | 20% of their then current initial franchise fee |
| Transfer Fee – Area Development Agreement and Unit Franchise Agreement | $10,000 |
| Transfer Fee – Qualified Transfers | $1,500 per qualified transfer |
| Public or Private Offerings | Reasonable attorney’s fees up to $20,000 per Public or Private Offering |
| Additional Training After Opening Date | $500/day |
| Indemnification and Defense | All costs, variable |
| Alternate Supplier Training | Variable, not to exceed $2,500 |
| Mystery Shopper Fee | $200-$500 per year |
| Management Fee | $500/day |
There are not many specific numbers for the ongoing costs of the franchise. However, there are some high costs mixed in with the unspecific costs. For example, the transfer costs amount to $10,000. Transfer costs are when the franchisor wants to sell the business or sell shares in the company. Also, the public or private offerings are costly, such as paying for an attorney which can be upwards of $20,000. The rest are percentages of sales, which can add up depending on how much the company makes. Most of these costs go towards advertising, insurance, and the franchise itself.
Advertising and Marketing Payments
The marketing fee is 0.5% of your gross sales. But there is a possibility the Boiling Crab can raise the price upwards of 3% in less than 30 days of a written notice. But this cost will not be increased more than every 6 months. The franchise also has to spend a minimum of 3% of gross sales on local marketing. Lastly, there may be a charge of $500 to customize the restaurant’s website.
Annual Gross Sales by Reporting Restaurant
| Unit | A/F | Year Opened | 2019 Total Gross Sales (Annual) |
|---|---|---|---|
| 1 | A | 2010 | $9,792,097 |
| 2 | F | 2011 | $8,989,235 |
| 3 | F | 2012 | $7,988,895 |
| 4 | F | 2011 | $8,870,508 |
| 5 | F | 2011 | $7,505,108 |
| 6 | A | 2006 | $7,480,741 |
| 7 | A | 2015 | $6,019,885 |
| 8 | F | 2009 | $5,523,432 |
| 9 | F | 2010 | $6,259,539 |
| 10 | F | 2008 | $4,985,225 |
| 11 | A | 2004 | $5,267,269 |
| 12 | F | 2010 | $4,744,174 |
| 13 | F | 2012 | $5,244,048 |
| 14 | F | 2016 | $5,989,655 |
| 15 | A | 2016 | $5,835,364 |
| 16 | A | 2017 | $3,814,750 |
| 17 | A | 2017 | $6,406,989 |
| 18 | F | 2017 | $2,315,713 |
2019 Reporting Year – Gross Sales by Reporting Restaurant – Period (5 or 4 weeks)
| Unit | Year Opened | January | February | March | April | May | June | July | August | September | October | November | December |
| 1 | 2010 | 921,039 | 776,333 | 786,510 | 899,268 | 798,859 | 810,916 | 940,926 | 748,938 | 733,833 | 919,053 | 752,233 | 705,089 |
| 2 | 2011 | 811,751 | 680,580 | 708,786 | 851,950 | 719,809 | 722,758 | 891,652 | 687,327 | 703,666 | 864,782 | 692,323 | 653,841 |
| 3 | 2012 | 746,374 | 627,763 | 656,674 | 771,316 | 639,135 | 673,923 | 807,482 | 642,699 | 533,061 | 730,354 | 601,011 | 559,083 |
| 4 | 2011 | 767,752 | 687,138 | 738,560 | 848,653 | 745,531 | 739,244 | 919,215 | 716,229 | 646,227 | 803,004 | 656,277 | 602,678 |
| 5 | 2011 | 674,796 | 582,308 | 618,602 | 715,778 | 584,535 | 587,585 | 704,544 | 584,254 | 588,643 | 743,412 | 581,970 | 538,761 |
| 6 | 2006 | 705,421 | 621,845 | 635,211 | 747,191 | 622,379 | 604,211 | 709,048 | 573,818 | 566,164 | 655,431 | 544,090 | 495,912 |
| 7 | 2015 | 528,534 | 459,843 | 476,840 | 590,696 | 488,349 | 529,766 | 615,391 | 497,432 | 449,829 | 552,518 | 425,544 | 407,144 |
| 8 | 2009 | 492,436 | 407,177 | 432,852 | 519,414 | 443,400 | 450,113 | 553,257 | 431,066 | 435,207 | 531,255 | 425,808 | 401,445 |
| 9 | 2010 | 568,480 | 483,357 | 508,227 | 579,756 | 492,184 | 491,036 | 601,401 | 496,043 | 496,764 | 606,382 | 482,412 | 453,536 |
| 10 | 2008 | 478,143 | 431,812 | 463,731 | 519,988 | 412,530 | 376,381 | 500,634 | 383,503 | 388,040 | 427,399 | 319,751 | 310,313 |
| 11 | 2004 | 486,206 | 424,020 | 422,934 | 502,342 | 434,068 | 439,145 | 516,068 | 404,741 | 401,927 | 465,218 | 391,342 | 359,258 |
| 12 | 2010 | 429,282 | 359,437 | 374,295 | 439,344 | 375,277 | 372,801 | 446,353 | 355,225 | 380,857 | 471,594 | 387,471 | 352,238 |
| 13 | 2012 | 442,220 | 385,753 | 431,446 | 499,403 | 422,395 | 438,426 | 528,931 | 431,590 | 405,237 | 484,580 | 399,049 | 375,018 |
| 14 | 2016 | 536,815 | 463,689 | 472,882 | 569,117 | 474,596 | 483,880 | 565,683 | 455,476 | 453,704 | 596,396 | 466,172 | 452,045 |
| 15 | 2016 | 492,885 | 433,238 | 466,411 | 504,556 | 439,157 | 447,204 | 584,932 | 475,774 | 466,025 | 613,151 | 482,723 | 429,328 |
| 16 | 2017 | 314,735 | 289,815 | 320,150 | 356,909 | 309,391 | 320,006 | 363,341 | 310,069 | 310,421 | 363,547 | 265,495 | 270,671 |
| 17 | 2017 | 531,906 | 457,264 | 516,164 | 598,998 | 497,447 | 532,460 | 649,157 | 510,997 | 504,358 | 633,912 | 503,649 | 470,677 |
| 18 | 2017 | 162,797 | 166,357 | 174,549 | 191,042 | 186,892 | 196,022 | 266,520 | 213,749 | 188,340 | 228,152 | 170,792 | 170,501 |
In this chart it breaks down the monthly gross sales of each Boiling Crab restaurant. The gross sales range anywhere from 160 k to 940 k, which amounts to approximately $1,000,000 annually. From this chart it also shows what months are the peak of sales and which months experience slower business.
Although it depends on the restaurant itself, December tends to be a low sales month for the majority of the restaurants while July is a peak season for seafood sales. This makes sense since seafood is more popular in the summer and fishing season starts in July.
How Many The Boiling Crab Units Have Opened and Closed
| Outlet Type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2017 | 10 | 11 | +1 |
| 2018 | 11 | 11 | 0 | |
| 2019 | 11 | 12 | +1 | |
| Company-Owned | 2017 | 5 | 7 | +2 |
| 2018 | 7 | 8 | +1 | |
| 2019 | 8 | 8 | 0 | |
| Total Outlets (United States) | 2017 | 15 | 18 | +3 |
| 2018 | 18 | 19 | +1 | |
| 2019 | 19 | 20 | +1 |
Annual Cash Flows Statement
| Fiscal Year Ended | ||
|---|---|---|
| 2019 | 2018 | |
| Cash flows from operating activities | ||
| Net income | $ 2,550,579 | $ 2,234,305 |
| Adjustments to reconcile net income to net cash provided by operating activities | ||
| Increase in accounts receivable | (43,893) | (243,400) |
| Increase(decrease) in | ||
| Gift card liability | 18,803 | 20,375 |
| Due to Boiling Crab Restaurant Group LLC | 102,321 | (7,994) |
| Deferred Franchise Fee Revenue | 326,050 | 446,050 |
| Net Cash Provided by Operating Activities | 2,953,860 | 2,449,336 |
| Cash Flows from Financing Activities | 539 | (80) |
| Distributions to Members | (2,900,000) | (2,400,000) |
| Net Increase in Cash | 53,860 | 49,336 |
| Cash – Beginning | 295,211 | 245,875 |
| Cash – Ending | $349,071 | $295,211 |
This cash flow statement includes two years — 2018 and 2019 — and both these years have similar results. In 2018, the net income of the restaurant was $2,234,305 and the expenses were $2,400,000. The beginning cash was $245,875 and the ending cash was $295,211. In 2019, the net income was $2,550,579 and the expenses were $2,900,00. The cash at the start was $295,211 and the cash ending is $349,071. In 2019, there was a net increase of $53,860 in cash. This shows the company is profitable and does have cash on hand.
Conclusion
From our above analysis, we have determined that The Boiling Crab has a high chance of making a profit and surviving. According to their FDD, all of the restaurants in this franchise are profitable and so far none of them have gone out of business.
Overall, the Boiling Crab seems to be a good investment. However, like with buying any franchise a detailed analysis of the business and seeing if it’s the right decision for you is strongly recommended. The Boiling Crab requires an upfront fee of $39,500 and additional fees that are priced to be almost around a million dollars. This is a major factor to consider and limits its accessibility to high net worth individuals.
Think The Boiling Crab is the right franchise for you, or are you interested in exploring other franchise opportunities? Make sure to check out Vetted Biz’s website for listings of other similar franchises in the restaurant industry.
