Published on 29 Jul 2021 Time 6 min read Last update by 31 Jan 2024

The Boiling Crab Franchise: Costs, Profits, and More!

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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. 

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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 Fee5% of gross sales
Marketing Fees0.5%
Local Advertising3% of gross sales
Co-op advertising feeNot to exceed 3% of gross sales
InventoryAt the time, the Boiling Crab is not a supplier of any inventory items
Booths and TablesMust be purchased from affiliates
Compliance Audit by Boiling CrabVariable
Interest on Late Payments1.5% per month
Remedial Work to Correct Unhealthy or Unsafe ConditionService charge equal to 25% of the cost of remedial or corrective work
Service charge for insuranceThe cost of purchasing replacement insurance plus 25%
Renewal Fee20% 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 OfferingsReasonable attorney’s fees up to $20,000 per Public or Private Offering
Additional Training After Opening Date$500/day
Indemnification and DefenseAll costs, variable
Alternate Supplier TrainingVariable, 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. 

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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
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  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.

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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
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 Annual Cash Flows Statement

 Fiscal Year Ended
20192018
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 liability18,80320,375
Due to Boiling Crab Restaurant Group LLC102,321(7,994)
Deferred Franchise Fee Revenue326,050446,050
Net Cash Provided by Operating Activities2,953,8602,449,336
Cash Flows from Financing Activities 539(80)
Distributions to Members(2,900,000)(2,400,000)
Net Increase in Cash53,86049,336
Cash – Beginning295,211245,875
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. 

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