Fat Shack Franchise in 2024: Costs, Fee & FDD
Explore how Fat Shack, a Shark Tank-backed franchise, has grown into a unique quick-service powerhouse. With indulgent late-night offerings and strong franchisee support, it’s an exciting opportunity for entrepreneurs in the food industry.
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Fat Shack is a growing name in the quick-service restaurant industry, founded in 2010 by Tom Armenti in New Jersey. Built on the concept of serving indulgent comfort food with a creative edge, the brand quickly gained popularity for its over-the-top menu and late-night hours. With its emphasis on bold flavors and a fun, laid-back atmosphere, Fat Shack has carved out a unique space in the competitive fast-food market, appealing especially to college students and night owls.
At its core, Fat Shack offers an exciting menu of deep-fried delights, including burgers, sandwiches, wings, and their iconic Fat Sandwiches, which pack a variety of ingredients like mozzarella sticks, fries, and chicken fingers into one epic bite. In addition to these indulgent staples, the menu includes desserts like deep-fried Oreos and milkshakes. Its core customers include millennials, college students, and anyone looking to satisfy late-night cravings with decadent, high-calorie comfort food.
Today, Fat Shack operates 30+ locations across the United States, with a heavy concentration in college towns and urban centers. The franchise continues to expand its footprint, focusing on markets where its late-night concept resonates most strongly. Each location serves a steady flow of customers, especially during peak late-night hours, making it a go-to destination for those craving indulgent food options.
For franchisees, Fat Shack offers a comprehensive support system that includes training programs, guidance on site selection, and ongoing operational assistance. New owners receive detailed training on food preparation, customer service, and managing a quick-service restaurant. The franchisor also provides marketing support, leveraging the brand’s strong social media presence to drive local traffic. With its unique concept, proven business model, and strong support structure, Fat Shack is an enticing opportunity for those looking to enter the quick-service restaurant industry.
Fat Shack Franchise Insights
- Founded in 2013 and franchising since 2015, Fat Shack has grown to 30 U.S. locations, including 24 franchised units and 6 corporate-owned units.
- The Fat Sandwiches, loaded with combinations like mozzarella sticks, fries, and chicken fingers, are a major draw, creating strong customer loyalty and repeat business.
- Fat Shack capitalizes on the underserved late-night dining market, with extended hours catering to post-dinner crowds and night owls.
Fat Shack Franchise Key indicators
Growth YOY (%)
0%
vs industry 1%
Total U.S. Franchised Units
24
3-Year Failure Rate
0%
vs industry 10%
Sales-to-Investment ratio
2.8:1
How much does it cost to open a Fat Shack franchise?
Understanding the potential investment size and capital requirements is crucial when considering opening a Fat Shack franchise. These financial commitments, including initial franchise fees, equipment costs, and ongoing operational expenses, impact the feasibility and profitability of the venture. Thoroughly evaluating these factors ensures that potential franchisees are prepared for the financial responsibilities and can make informed decisions about their ability to sustain and grow the business, ultimately contributing to long-term success.
Min & Max Investment
Opening a Fat Shack franchise involves several key costs, which are outlined in Item 7 of the Franchise Disclosure Document (FDD). you can see a breakdown of the costs to open a Fat Shack below from the most recent Item 7 below:
| Type of Expenditure | Minimum Investment | Maximum Investment |
|---|---|---|
| Initial Franchise Fee and Development Fee | $25,000 | $25,000 |
| Lease Costs | $4,000 | $15,000 |
| Space Acquisition and Leasehold Improvements | $50,000 | $200,000 |
| Architectural Design and Professional Fees | $2,500 | $20,000 |
| Furnishings and Equipment | $40,000 | $90,000 |
| Signs | $5,000 | $12,500 |
| Computer, Software and Office Equipment | $750 | $2,000 |
| POS System | $6,000 | $12,000 |
| Security Surveillance System | $500 | $4,000 |
| Opening Inventory and Supplies | $6,000 | $15,000 |
| Smallwares and Print Materials | $9,500 | $9,500 |
| Security Deposits, Utility Deposits, Business Licenses | $3,000 | $10,000 |
| Lease Review Fee | $0 | $750 |
| Pre-Opening Hiring and Training of Employees | $3,000 | $10,000 |
| Opening Marketing | $1,000 | $10,000 |
| Business Insurance | $2,000 | $6,000 |
| Additional Funds – 3 months | $15,000 | $30,000 |
| Total | $173,250 | $471,750 |
Item 7 in the Franchise Disclosure Document (FDD) is the “Estimated Initial Investment” section. It outlines the total costs a franchisee can expect to incur when starting a franchise, including the initial franchise fee, equipment, inventory, real estate, and other startup expenses. This section is crucial because it provides potential franchisees with a detailed understanding of the financial commitment required, helping them assess affordability and plan their investment strategy effectively.
Required Capital
To open a Fat Shack franchise, the required capital involves both the initial investment costs and a net worth requirement set by Fat Shack. Let’s take a closer look below:
- Initial Investment As shown above, the total estimated initial investment ranges from $173,250 to $471,750. This includes all the startup costs such as the franchise fee, real estate, construction, equipment, initial inventory, and additional funds for initial operating expenses. Assuming that you will finance your franchise investment, you should plan to have 20% of the total investment amount in the form of equity (cash) for the investment.
- Required Liquid Assets Most franchises in the quick-service restaurant (QSR) industry require liquid capital between $75,000 and $150,000 to ensure sufficient working capital for initial operations.
- Net Worth Requirement Franchisees are typically expected to have a net worth of $300,000 to $500,000, depending on the market and location.
How much does a Fat Shack franchise owner make?
Calculating the salary of a Fat Shack franchise owner involves analyzing gross sales to determine total revenue, assessing operational efficiency to understand profit margins, and accounting for franchisor fees and additional expenses such as rent, utilities, and payroll. Effective management of these factors can significantly impact the profitability and financial success of a Fat Shack franchise owner. This comprehensive financial analysis helps estimate net profits, from which the owner’s salary can be derived. A clear understanding of these factors ensures accurate salary projections and financial planning for sustainable business operations.
Fat Shack Revenue & Gross Sales
Fat Shack has demonstrated strong revenue performance, with median gross sales of $889,873, as disclosed in its most recent Franchise Disclosure Document (FDD). This impressive figure underscores the brand’s ability to attract a loyal customer base, particularly in the late-night dining niche. The franchise’s focus on indulgent comfort food and strategic locations in high-traffic areas, such as college towns and urban centers, contributes to its consistent growth. These results highlight Fat Shack’s strong revenue potential for franchisees looking to invest in a thriving quick-service restaurant brand.
Which key factors impact the average revenue performance of Fat Shack franchisees?
The impressive median gross sales of $889,873 for Fat Shack franchisees can be attributed to several key factors. The brand’s unique focus on indulgent comfort food, particularly its signature Fat Sandwiches and late-night menu, resonates strongly with its target demographic of college students and young professionals. Strategic location selection in high-traffic areas, such as urban centers and near campuses, ensures consistent customer flow. Additionally, Fat Shack’s ability to leverage social media and grassroots marketing helps build brand loyalty and attract repeat customers. The growing demand for quick-service dining options with a fun, shareable menu further boosts its sales performance. Franchisee support, including training, operational guidance, and local marketing tools, ensures efficient operations and optimized customer experiences, contributing to consistent year-over-year growth.
Fat Shack Franchise Operational Costs
When opening a Fat Shack franchise, here are the key primary ongoing operational costs specific to running a quick-service restaurant:
- Food and Beverage Costs Managing inventory for core ingredients like proteins, bread, and fry items is essential, as food costs typically make up a significant percentage of revenue in quick-service restaurants.
- Labor Costs Salaries and wages for kitchen staff, cashiers, and managers represent a major expense, particularly during late-night hours when staffing needs may vary.
- Rent and Utilities Leasing a space in a high-traffic location, along with utilities like electricity, gas, water, and internet, is a consistent operational cost.
- Equipment Maintenance Regular servicing of fryers, grills, refrigerators, and other kitchen equipment ensures smooth operations and minimizes downtime.
- Packaging and Supplies Ongoing expenses for takeout packaging, utensils, napkins, and cleaning supplies to maintain quality service and hygiene standards.
- Local Marketing While general advertising is covered by the brand fund, franchisees may invest in local promotions, events, or social media campaigns to drive foot traffic.
- Insurance Business insurance, including liability and property coverage, is a critical recurring expense to protect your operation.
These costs will vary based on your location, sales volume, and operational efficiency, so careful budgeting is essential for profitability.
Fat Shack Franchise Fees
Understanding ongoing fees is essential for managing your Fat Shack franchise successfully. Below are the key fees outlined in the provided data:
- Royalty Fee Franchisees pay 6% of gross sales weekly, ensuring access to the franchisor’s ongoing support and the rights to use the Fat Shack brand and operational systems.
- Marketing and Promotion Fee Currently set at 0% but may increase to up to 1.5% of gross sales. This fee will support national advertising programs to enhance brand awareness.
- Potential Additional Fees Other costs, such as training, technology upgrades, or operational support, may apply based on specific needs.
These fees are structured to provide franchisees with the tools, resources, and branding power necessary to operate effectively while maintaining consistency across the Fat Shack system. Budgeting for these costs will help ensure your financial success.
Fat Shack Franchise Earnings
Based on the most recent data, Fat Shack franchisees report median gross sales of $889,873, with owner-operator earnings estimated at $133,481. These earnings reflect the profitability potential of the franchise, driven by its unique focus on indulgent comfort food and strategic late-night service hours. Franchisees who effectively manage food costs, labor expenses, and marketing efforts can maximize their take-home income while benefiting from the brand’s established operational systems.
The owner-operator earnings represent a strong return on investment, particularly in the quick-service restaurant sector. Factors such as prime location selection, customer engagement, and adherence to operational best practices contribute significantly to profitability. Prospective franchisees should also account for variable costs, such as rent and utilities, which can vary by market, but the provided figures demonstrate the robust earning potential of a Fat Shack franchise. This data makes it a compelling option for those looking to invest in the growing quick-service niche.
How to Open a Fat Shack Franchise
Becoming a Fat Shack franchisee is a rigorous process that involves financial scrutiny, extensive training, and thorough evaluation. However, it offers the potential for a lucrative business opportunity backed by a globally recognized brand and comprehensive support system.
The full process for how to open a Fat Shack franchise is outlined below:
- Initial Inquiry You or your franchise specialist submits an initial inquiry basic information about your interest and background. You should also conduct thorough research on the franchise, including seeing all of the information available on the Vetted Biz franchise intelligence platform, including access to the most recent Franchise Disclosure Document (FDD).
- Initial Interview and Discovery Call Participate in a one-on-one discussion with the franchisor to discuss your goals, ask questions about the business model, and determine mutual compatibility.
- Discovery Day Attend Discovery Day, where you’ll visit a corporate location or headquarters to meet the Fat Shack team. This is an opportunity to learn about daily operations, interact with leadership, and experience the brand firsthand.
- Financial Approval Demonstrate your financial readiness to meet the $173,250 to $471,750 investment range and other capital requirements. This may involve providing proof of liquid assets and net worth or securing financing.
- Franchise Agreement Signing Once approved, you’ll sign the franchise agreement, officially committing to the brand. At this point, you’ll pay the franchise fee of $25,000 to secure your territory.
- Training and Onboarding Complete Fat Shack’s comprehensive training program, which covers menu preparation, customer service, marketing, and restaurant operations to ensure your business is set up for success.
- Site Selection and Build-Out Work with the franchisor to identify an optimal location and complete the build-out process, including interior design and kitchen setup, ensuring alignment with brand standards.
- Pre-Opening Marketing and Hiring Begin recruiting staff and implementing local marketing campaigns to generate buzz ahead of your grand opening. This includes outreach to the community and establishing an online presence.
- Grand Opening and Operations Begin Host a grand opening event to introduce your Fat Shack location to the community. From this point, you’ll begin full-scale operations with ongoing support from the franchisor to ensure long-term success.
Pros & Cons
Pros
High Revenue Potential: The franchise boasts median gross sales of $889,873, with strong owner-operator earnings of $133,481, making it a promising investment in the quick-service industry.
Unique Concept: The indulgent menu and focus on late-night dining cater to an underserved market, creating strong customer loyalty and repeat business.
Flexibility in Locations: Fat Shack thrives in college towns and urban centers, offering adaptability to a variety of markets.
Cons
High Operating Costs: Expenses for labor, food inventory, and equipment maintenance can significantly impact profit margins, requiring careful cost management.
Limited Brand Recognition: With 30 U.S. locations, the franchise has a smaller footprint compared to established fast-food giants, which may require franchisees to focus heavily on local marketing.
Late-Night Operational Demands: The business model targets late-night customers, which could require extended hours and additional staffing, adding operational complexity.
Market Saturation Risk: While the brand is growing, competition from larger quick-service chains with broader menus may pose challenges in some areas.
