Clean Eatz Franchise Has Amazing Returns in 2024
Clean Eatz franchise is a healthy restaurant concept that features weekly meal plans and individual meals for in-café and take-home eating. It launched in 2011 and started franchising in 2015. It was co-founded by husband and wife Don and Evonne Varady.
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How Is Clean Eatz Franchise Positioned in the Food and Beverage Industry?
The Food and Beverage industry in the U.S. 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 U.S., and it is expected to 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.
How Much Is a Clean Eatz Franchise?
The initial Clean Eatz Franchise Fee is $49,500. You have to pay this upfront fee when opening a Clean Eatz franchise
Clean Eatz Franchise Cost
The estimated total investment necessary to begin the operation of a Clean Eatz Franchise ranges from $256,000 to $662,000. The following costs are part of the upfront costs included in the initial investment for a Clean Eatz. Many of these are one-time fees that are needed to launch the franchise. Review the chart below to see how much it cost to buy a Clean Eatz franchise in 2022.
Estimated Initial Investment
| Type of expediture | Amount | To Whom Payment Is to Be Made | |
|---|---|---|---|
| Low | High | ||
| Initial Franchise Fee | $49,500 | $49,500 | Us |
| Travel and Living Expenses | $500 | $2,000 | Airlines, Hotels, Restaurants. etc |
| Rent or Real Estate | $2,500 | $16,000 | Lessor |
| Cafe Construcction | $140,000 | $377,000 | General contractors, subcontractors |
| Furniture | $0 | $5,000 | Vendors |
| Signage | $5,000 | $20,000 | Vendors |
| Miscellaneous Opening Costs | $4,000 | $10,000 | Suppliers, Utilities, etc |
| Initial Inventory | $10,000 | $12,000 | Approved suppliers |
| Equipment | $14,500 | $110,000 | Exclusive equipment vendor |
| Advertising/Marketing | $5,000 | $10,000 | Distribution service and media |
| Insurance | $2,500 | $5,000 | Insurance Company / Agent |
| Technology Package | $2,500 | $4,000 | Vendors |
| Additional Funds for Initial Three Months | $20,000 | $40,000 | Suppliers, Professional Advice, Utilities |
| Delayed Opening Fee | $0 | $1,500 | Us |
| TOTALS | $256,000 | $662,000 | |
Ongoing Fees
Royalty: The Royalty Fee is 6% of Gross Sales, $100 weekly minimum
Regional Advertising Co-Op: 1%–3% of Gross Revenues
Local Marketing: Minimum of 1% of Gross Revenues per week
National Marketing: 2% of Gross Revenues per week
Technology Fee: $150 per month
How Much Do Clean Eatz Franchise Owners Make?
| Category | Average of Category | Top 25% of Category | Bottom 25% of Category | Median of Category |
|---|---|---|---|---|
| Gross Sales | $1,050,858 | $1,313,468 | $649,477 | $1,054,946 |
| Cost of Goods Sold | $416,979 | $556,088 | $264,116 | $404,261 |
| Labor | $138,116 | $260,373 | $80,138 | $162,631 |
| Occupancy Cost | $63,284 | $118,425 | $42,323 | $77,059 |
| Other Operating Costs | $236,871 | $309,036 | $239,837 | $193,524 |
| Miscellaneous Income | $52,861 | $0 | $100 | $92,584 |
2021 Clean Eatz Median Franchise Sales: $1,054,946
| Initial investment (midpoint) | %Profit margin of median franchise sales | Estimated Profits | Time to recoup investments |
|---|---|---|---|
| $459,000 | 20% | $210,989 | 3.75 years |
| 22.5% | $237,362 | 3.5 years | |
| 25% | $263,737 | 3.25 years |
Based on the median sales provided by Clean Eatz’s franchise locations, at an average of a 22.5% profit margin it will take around 3.5 years to recoup your investment. This is longer than other franchise opportunities. You may not get a 22.5% profit margin, which would elongate getting a return on your investment.
Many factors affect the sales, costs, and expenses of your Franchised Store, such as the Franchised Store’s size, geographic location, menu mix, and competition in the marketplace; the presence of other Food and Beverage stores; and the extent of market penetration and brand awareness that Clean Eatz stores have attained in your market. Also, the quality of management and service at your Franchised Store are major factors.
Is the Clean Eatz Franchise Profit Worth the Franchise Cost?
To assign a valuation multiple for Clean Eatz franchises, 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 $5 Million Net Sales
- Estimated Selling Price = Net Sales * 0.55
When you go to sell a Clean Eatz franchise based on the median multiple of .55 and net sales in 2021 of $1,054,946, it would sell for $580,220. This is significantly higher than the midpoint investment of $459,000.
The more franchises you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators.
Clean Eatz (Franchisor) Income Statement Key Insights
Clean Eatz Franchising LLC Statements of Operations and Member’s Equity:
| Years ended December 31, | ||
|---|---|---|
| 2021 | 2020 | |
| SALES | ||
| Franchise Fees | $ 832,838 | $ 257,072 |
| Royalty Fees | 3,223,397 | 1,989,034 |
| Advertising Fees | 645,719 | 334,698 |
| Tech Fees | 105,300 | 21,750 |
| Other Income | 110,293 | 165,215 |
| Total Sales | 4,927,547 | 2,767,769 |
| COST OF SALES | ||
| Sales comission | 681,177 | 77,734 |
| Gross Profit | 4,246,370 | 2,690,035 |
| OPERATING EXPENSES | ||
| Advertising | 512,891 | 563,679 |
| Office Expenses | 84,782 | 65,849 |
| Other operating expenses | 423,317 | 338,622 |
| Payroll & Payroll Taxes | 511,288 | 386,266 |
| Rent | 39,764 | 41,198 |
| Professional Fees | 198,386 | 154,760 |
| Events | 3,100 | – |
| Interest expense | 2,324 | 2,969 |
| Depreciation | 17,569 | 17,886 |
| Amortization | 6,667 | 2,667 |
| Total Operating Expenses | 1,800,118 | 1,573,896 |
| Net Operating Income | 2,446,252 | 1,116,139 |
| Extinguishment of debt | 50,600 | |
| Gain on disposal of assets | 8,179 | |
| Employee Retention Tax Credit | 123,113 | |
| Net Income | 2,569,365 | 1,174,918 |
Clean Eatz is a profitable business for the franchisor with retained earnings of $2.56 million in 2021. Compared to $1.17 million in 2020, they saw an increase of 124% from 2020 to 2021. This is a good indication of high growth as a company overall.
How Many Clean Eatz 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 | 2019 | 39 | 41 | +2 |
| 2020 | 41 | 48 | +7 | |
| 2021 | 48 | 67 | +19 | |
| Company-Owned | 2019 | 3 | 3 | 0 |
| 2020 | 3 | 3 | 0 | |
| 2021 | 3 | 2 | -1 | |
| Total Outlets (United States) | 2019 | 42 | 44 | +2 |
| 2020 | 44 | 51 | +7 | |
| 2021 | 51 | 69 | +18 |
Over the last three years, the company has been in expansion. Over the last three years, franchises have opened at a rate of 9 units a year. Considering it is a relatively newer franchise, this rate of growth is good.
Conclusion
Clean Eatz is a good offering on the market. Their average EBITDA is amazing and can be attributed mostly to their five revenue streams – café menu, Grab ‘N’ Go options, weekly meal plans, Marketplace products, and catering.
While this may be the business for you, make sure also to check out other companies offered on Vetted Biz and in the Food and Beverage industry.
