Published on 28 Jun 2022 Time 8 min read Last update by 29 May 2024

Caribou Coffee Provides a Lower Franchise Cost Kiosk Option (2024)

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Caribou Coffee Company is an American coffee company and coffeehouse chain. It was founded in Edina, Minnesota, in 1992 and started franchising last year, now you can open your Caribou Coffee franchise! In 2005, Caribou launched its IPO listed on NASDAQ under CBOU – the company experienced rapid growth, from declining sales growth to a public holding company. In 2012, Caribou was taken private in a $340 million deal by German equity company JAB Holding Company. Although merged with a bigger company, Caribou had operated as an independent company with its own brand. In 2021, Caribou announced that it had merged with Panera Bread and filed paperwork for another IPO.

As of December 31, 2021, there were 139 franchised or licensed Caribou coffeehouses in the United States, and 321 company-owned. With a full chain of coffee manufacturing, a Caribou Coffee franchisee will operate a retail coffee shop business featuring coffee, coffee-based beverages, and teas.

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How is Caribou Coffee Positioned in the Food & Beverage Industry?

The food industry is a significant contributor to regional economies and to the U.S. economy. It is a stable industry in terms of employment and labor income due to the consistent demand for food. The food sector accounts for about 5% of gross domestic product (GDP), 10% of total U.S. employment, and 10% of U.S. consumers’ disposable personal income (DPI). It has total sales of $1.4 trillion, of which $164 billion in value-added is generated by the food and beverage industry alone.

Food franchises are often the first thing people correlate with the franchise industry. Food & Beverage is certainly one of the most popular areas of franchising. Although food franchising is often associated with fast food, the industry also includes fast-casual, coffee, and pizza.

Of the food and beverage concepts we have reviewed, total investment amounts can start as low as $3,000 for smaller kiosk concepts all the way up to $6,732,615 for a full-service restaurant. Caribou Coffee positions in the middle point of the industry in terms of the initial investment. In our research, the average royalty fee takes up 5.3% of gross revenue, and the average marketing fee is 2.3% of the gross revenue.

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What is the Caribou Coffee Franchise Cost?

Caribou coffee offers franchisees for the operation of the retail shops of varying sizes: a “Chalet,” “Cabin,” and “Kiosk.” Specifically, “Chalet” and “Cabin” operate at stand-alone or more traditional locations, and “Kiosk” typically operates at non-traditional facilities, including college campuses. “Chalet” is the largest format with dine-in and drive-thru available, while “Cabin” is drive-thru only.

The below chart summarizes the total investment necessary to begin operation for each type of operation. The fees for “Chalet” and “Cabin” include $40,000 to $50,000 that are paid to the franchisor or affiliates; the fees for “Kiosk” include $25,000 to $35,000 that are paid to the franchisor or affiliates.

Total Investment Necessary to Begin Operation in 2022 (excluding leases)

Type of Operation Total Investment in 2022
Chalet $722,100 – $1,146,300
Cabin $446,100 – $732,300
Kiosk $249,100 – $606,300

The total investment includes an initial franchise fee varying in the type of operations. The initial franchise fee for both “Chalet” and “Cabin” is $30,000 and $15,000 for “Kiosk.” Additionally, franchisees are required to purchase certain inventory from the affiliates, which ranges from $10,000 to $20,000.

Once the operations begin, franchisees are expected to pay the company a royalty fee of 5% on gross sales for “Cabin” and “Chalet” and a royalty fee of 6% on gross sales for “Kiosk.” Each franchisee is required to pay another up to 3% of gross sales on marketing.


How Much Do Caribou Coffee Franchise Owners Make?

Kiosk coffeehouse is currently Caribou’s only franchised coffeehouse. There are 119 active licensed Kiosk locations as of December 28, 2021.

The Closet Factory Franchise Corporation Statements Of Income (Loss)

Gross Sales Distribution 2021 Kiosk (Non-Traditional)
$’s # of Stores Average Sales # of stores exceeding Average Median Sales High Sales Low Sales
Grocery 61 $264,729 27 $237,915 $921,524 $88,332
Grocery with Drive Thru 32 $553,928 13 $478,587 $1,245,064 $215,308
Airport 7 $1,368,347 4 $1,771,092 $2,769,496 $348,830
All Other 19 $345,906 11 $350,465 $781,790 $86,361

The above chart shows that locations open in the airport have the highest average sales in 2021, presumingly with more consumer traffic. The average sales for locations open in the grocery with a drive-thru are $300,000 higher than that without a drive-thru.

2021 Average Kiosk Franchise Sales: $633,227

Initial Investment (midpoint) %Profit margin of average franchise sales Estimated profits Time to recoup investment
$427,700 12.5% $79,153 7 years
$427,700 17.5% $110,814 5.5 years
$427,700 22.5% $142,476 4.5 years

In 2021, based on the average sales of $633,227, at an average 17.5% profit margin, it will take around 5.5 years to recoup the investment. Although it is similar to other franchise opportunities, you may not get a 17.5% profit margin which would elongate getting a return on your investment. The time to recoup investments incorporates roughly a 1.5-year period to scale up the store. This includes finding the location, building the store, passing break even, and then reaching significant income.

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Is the Caribou Coffee Profit Worth the Franchise Cost?

To assign a valuation multiple for a Caribou Coffee franchise, 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 $1 Million Net Sales

  • Estimated Selling Price = Net Sales * 0.44

When you go to sell a Caribou Coffee franchise based on the median multiple of 0.44 and net sales of $633,227, it would sell for $278,619. This is significantly lower than the midpoint investment of $427,700.

How Many Caribou Coffee Units Have Opened and Closed?

Year Outlets at Start of Year Outlets Opened Terminations Non-Renewals Reacquired by Franchisor Ceased Operations – Other Reasons Outlets at End of Year
2019 126 12 8 0 0 0 130
2020 130 8 6 0 0 0 132
2021 132 11 4 0 0 0 139

The number of franchisees is increasing over the last three years. In 2021, there were 4 stores terminated, resulting in a failure rate of 2.87%. This is much lower than the average industry failure rate of 19.17%! Even during the COVID-19 pandemic, there was a net increase in the number of stores. As of December 31, 2021, there are 5 new franchise agreements signed, 15 projected new outlets, and 46 company-owned stores open next year.


Caribou Coffee Income Statement Takeaways

Although Caribou Coffee experienced a temporary decrease in revenue during the COVID-19 pandemic, the revenues in 2021 reached $857,464,000. This is an increase of over $100 million since 2020. The revenues primarily came from coffeehouse and bagel bakery sales, which consist of 83% of the net sales. Although the cost of revenues is increasing as well, Caribou Coffee is able to control the cost and reach a positive net income of $37,512,000 in 2021, compensating for the net loss in 2020.


Fiscal Year Ended
December 28, 2021 December 29, 2020 December 31, 2019
Coffeehouse and bagel bakery sales $709,744 $599,983 $759,215
Franchise royalties and fees 20,000 16,975 24,212
Franchise advertising sales 3,524 2,519 3,545
Franchise and commercial product sales 124,196 116,418 127,492
Net sales 857,464 735,895 914,464
Cost of goods sold 173,808 146,597 196,841
Labor 221,362 198,536 256,285
Occupancy 80,742 89,687 85,515
Other operating expenses 101,794 88,922 102,514
Total coffeehouse and bagel bakery expense 577,706 523,742 641,155
Franchise operations and other expenses 2,357 2,284 3,901
Ad fund expense franchise 3,524 2,519 6,655
Franchise and commercial product cost of goods sold 94,319 84,296 87,489
Depreciation and amortization 41,502 49,795 48,290
General and administrative expenses 71,892 73,216 93,654
Pre-opening expenses 1,109 804 1,276
Total costs and expenses 792,409 736,656 882,420
Operating income (loss) 65,055 (761) 32,044
Interest expense, net 17,831 19,163 20,889
Other (income) expense (1,029) 8,516
Pre-tax income (loss) 48,253 (19,924) 2,639
Income tax expense (benefit) 10,741 (2,826) (1,301)
Net income (loss) $37,512 $(17,908) $3,940
Less net income (loss) attributable to noncontrolling interest 1,480 (536) 490
Net income (loss) attributable to Caribou Coffee Company, Inc. and Affiliates $36,032 $(16,562) $3,450

Caribou Coffee Cash Flows Statement Takeaways

Liquidity is one of the most important measurements of a company’s ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund business operations, operations, and expansion of franchised restaurant locations. According to the cash flows statement, Caribou Coffee has a $24,701,000 increase in cash and cash equivalents. At the end of the fiscal year, its total cash and cash equivalents amounted to approximately $100 million.

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Fiscal Year Ended
December 28, 2021 December 29, 2020 December 31, 2019
Net income (loss) $37,512 $(17,098) $3,940
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 40,509 45,374 47,777
Amortization of deferred financing fees 1,797 967 706
Stock-based compensation 3,656 4,026 5,324
Deferred income taxes 6,371 (3,964) (115)
Impairment of restaurant assets 993 2,111 108
Right of use asset impairment charges 824 2,310 405
Impairment of notes receivable 8,516
Losses on disposal of assets 1,398 4,992 1,841
(Benefit from) provision for losses on accounts receivable (1,224) 1,407 6
Other 1,932 160 (33)
Changes in operating assets and liabilities:
Trade and other accounts receivable, net (1,247) 408 429
Inventories (2,124) 2,095 (623)
Prepaid expenses and other (2,269) 1,223 3,572
Deposits and other 4,005 1,892 (3,070)
Accounts payable 15,287 (7,770) 3,827
Accrued expenses 6,328 3,938 18,583
Operating lease assets and lease liabilities (15,893) 16,567 2,240
Other long-term liabilities (6,073) (974) 229
Net cash provided by operating activities 91,782 57,664 93,662
Payments for property and equipment (28,802) (20,807) (34,822)
Proceeds from disposal of property and equipment 14 4 48
Notes receivable 1,600
Net cash used in investing activities (28,788) (19,203) (34,774)
Distribution of noncontrolling interest (272) (31) (557)
Issuances of noncontrolling interests subject to put provisions 2,450 801 1,195
Repurchases of noncontrolling interests subject to put provisions (1,159) (489) (27,633)
Proceeds on line of credit 78,000 32,375
Repayments on line of credit (21,000) (55,000) (66,375)
Settlement of shareholder promissory notes (12,703)
Term loan repayments (5,000) (2,500) (2,500)
Dividends (4,848)
Proceeds from Payment Protection Program 596 426
Payment of debt financing fees (1,205) (1,220)
Net cash (used in) provided by financing activities (38,293) 19,987 (68,343)
Net increase in cash, cash equivalents & restricted cash 24,701 58,448 (9,455)
Cash, cash equivalents and restricted cash, beginning of period 75,537 17,089 26,544
Cash, cash equivalents and restricted cash, end of period $100,238 $75,537 $17,089


Investing in a Caribou Coffee franchise can be an interesting and viable opportunity. By opening a “Kiosk” location, you are able to appropriate the large consumer traffic while limiting your initial investment. However, our analysis shows that the profit for opening a multi-unit Caribou Coffee is not significant. If you are interested in stepping into the food and beverage industry, particularly coffee, Caribou Coffee can be your first stop, with a relatively lower initial investment and stable revenues.

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