The Human Bean Franchise in 2024: Costs, Fee & FDD
Discover the true cost of opening a The Human Bean franchise, including franchise fees, setup expenses, and ongoing costs. Dive into our analysis to see if this popular drive-thru coffee brand is the right investment for you!
Table of Contents:
The Human Bean, launched in 1998 in Ashland, Oregon, by Danny and Rhonda Hawkins, has grown from a single coffee stand into a respected name in the coffee industry. Known for its ethical sourcing and sustainability efforts, the brand prioritizes direct relationships with coffee farmers, ensuring both quality and fair trade.
Offering a range of beverages like gourmet coffees, espressos, and smoothies, as well as snacks and pastries, The Human Bean primarily serves busy professionals, students, and families. Their drive-thru model appeals to those seeking quality and convenience, drawing a loyal customer base looking for quick, delicious options.
With over 300 locations across the U.S., The Human Bean continues to expand, particularly in states like Oregon, Colorado, and Arizona. The brand’s emphasis on efficient service allows it to reach thousands of customers daily, securing its place in the competitive coffee market.
Franchisees benefit from a strong support system, including thorough training and help with site selection. The Human Bean also promotes community engagement and corporate social responsibility, appealing to both franchisees and customers alike.
The Human Bean Franchise Insights
- The average drive-thru coffee location can serve up to 250-300 customers daily, aligning well with their target market of busy individuals.
- With 145 total U.S. locations—133 franchised and 12 corporate-owned—The Human Bean has established a solid footprint while maintaining control over a select number of corporate units.
- Founded in 1998 and offering franchises since 2002, The Human Bean has over two decades of experience in the coffee industry, providing a stable foundation for franchisees.
- With a focus on community involvement, The Human Bean regularly hosts local fundraisers and donation drives, making it a meaningful choice for franchisees interested in community engagement.
The Human Bean Franchise Key indicators
Growth YOY (%)
15%
vs industry 1%
Total U.S. Franchised Units
133
3-Year Failure Rate
4%
vs industry 10%
Sales-to-Investment ratio
1.1:1
How much does it cost to open a The Human Bean franchise?
Understanding the potential investment size and capital requirements is crucial when considering opening a The Human Bean 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 The Human Bean 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 The Human Bean below from the most recent Item 7 below:
| Type of Expenditure | Minimum Investment | Maximum Investment |
|---|---|---|
| Site Analysis Fee (non-refundable) | $5,000 | $5,000 |
| Initial Franchise Fee | $30,000 | $30,000 |
| Optional Area Development Fee (per additional location) | $10,000 | $10,000 |
| Training Expenses | $8,700 | $22,440 |
| Real Property Lease Payment | $3,500 | $10,000 |
| Equipment, Fixtures, Construction, Leasehold Improvements, etc. | $460,000 | $895,000 |
| Inventory | $24,000 | $26,000 |
| POS Software (monthly) | $350 | $450 |
| Security Deposits, Utility Deposits, Business Licenses | $4,800 | $10,000 |
| Working Capital | $1,000 | $5,000 |
| Advertising and Promotion | $5,000 | $10,000 |
| Additional Funds – Initial 90 Day Period | $15,000 | $50,000 |
| Total Estimated Initial Investment | $552,350 | $1,058,890 |
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 The Human Bean franchise, the required capital involves both the initial investment costs and a net worth requirement set by The Human Bean. Let’s take a closer look below:
- Initial Investment As shown above, the total estimated initial investment ranges from $552,350 to $1,058,890. 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.
- Liquid Assets Many coffee drive-thru franchises require franchisees to have a minimum of $50,000 to $100,000 in liquid assets, although The Human Bean’s exact requirement isn’t specified here. This ensures that the franchisee has enough cash on hand to cover operating expenses and unforeseen costs during the startup period.
- Net Worth A common net worth requirement in the coffee franchise industry is around $250,000 to $500,000, providing a financial safety net for both the franchisee and franchisor. However, this figure is an estimate, as exact details for The Human Bean aren’t available.
How much does a The Human Bean franchise owner make?
Calculating the salary of a The Human Bean 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 The Human Bean 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.
The Human Bean Revenue & Gross Sales
Based on the most recent data, The Human Bean franchises achieved a median gross sales of $859,940. This financial performance underscores the brand’s robust consumer demand and potential for lucrative returns for franchisees.
Which key factors impact the average revenue performance of The Human Bean franchisees?
The performance of U.S. franchisee median gross sales for The Human Bean this past year could have been influenced by several key factors. First, the increased demand for drive-thru services in the wake of changing consumer habits has likely boosted sales, as more people seek convenient and contactless options. Additionally, The Human Bean’s focus on high-quality coffee and efficient service resonates well with busy consumers, strengthening customer loyalty and repeat visits. Economic factors, such as inflation and rising operational costs, may have also impacted pricing strategies, which could lead to higher revenue per transaction. Furthermore, the brand’s commitment to community involvement and sustainability efforts likely appeals to socially-conscious customers, enhancing brand loyalty and contributing to sales stability or growth.
The Human Bean Franchise Operational Costs
Operational costs for a franchise like The Human Bean are the ongoing expenses required to run the day-to-day operations of the business. These costs are essential for maintaining the business’s functionality and ensuring smooth operations. For a The Human Bean franchise, operational costs include:
- Inventory Regular expenses for coffee beans, syrups, milk, and other beverage ingredients.
- Labor Costs associated with hiring and retaining skilled employees for consistent service.
- Utilities Expenses for electricity, water, and waste management, especially important for drive-thru operations.
- Equipment Maintenance Ongoing maintenance for coffee machines, blenders, and other essential equipment.
- Local Marketing & Community Engagement Funds for promoting the franchise locally and building community relationships to attract and retain customers.
Careful planning and budgeting for these operational costs are crucial for the financial health and success of your The Human Bean franchise.
The Human Bean Franchise Fees
Owning a The Human Bean franchise is different from owning an independent, non-franchised business. All franchises tend to charge ongoing fees that franchisees are required to pay to operate. The Human Bean requires their franchisees to pay the below fees:
- Renewal Fee $3,000, due before signing any successor franchise agreements if you decide to renew.
- Audit Fee You may incur the cost of an audit if the franchisor requires one to verify compliance.
- Brand Fee 1% of gross revenue (excluding taxes, promotional discounts, and delivery fees), paid monthly via electronic funds transfer; this fee may increase up to 2%.
These ongoing fees are essential to consider when planning the financial aspects of owning and operating a The Human Bean franchise. They cover the costs of brand support, advertising, and ongoing operational assistance provided by The Human Bean.
The Human Bean Franchise Earnings
With a median gross sales figure of $859,940, a The Human Bean franchise can offer promising earnings potential for owner-operators. Assuming an average profit margin for coffee drive-thru businesses of around 15-20%, owner-operators might expect annual net earnings in the range of $128,991 to $171,988. These estimates can vary based on location, operational efficiency, and cost management, but they provide a reasonable range for a well-performing franchise.
For an owner-operator, being hands-on with the day-to-day operations can further optimize profitability by reducing labor costs and ensuring quality control. This involvement can increase customer loyalty, driving up sales and enhancing the bottom line. However, it’s essential to consider factors such as initial investment, ongoing fees, and local market conditions when evaluating potential earnings.
How to Open a The Human Bean Franchise
Becoming a The Human Bean 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 The Human Bean 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).
- Franchise Application After the initial inquiry, you’ll complete a franchise application to provide details about your financial qualifications, experience, and suitability as a franchisee. The Human Bean team reviews your application to ensure you meet their requirements.
- Discovery and Due Diligence If approved, you’ll engage in a discovery process, which may include meetings, phone calls, and a visit to an operating location. This stage allows you to learn more about the brand, ask questions, and assess whether it aligns with your goals.
- Interview and Approval The franchise team may conduct an interview or assessment to ensure you’re a good fit for The Human Bean. Upon approval, you’ll sign the franchise agreement and pay any initial fees required to secure your franchise rights.
- Location Selection and Build-Out After signing, you’ll work with The Human Bean team on site selection and lease negotiation. They will guide you through the design and build-out process to meet brand standards.
- Training Program The Human Bean offers a comprehensive training program covering operations, customer service, and marketing to ensure you’re fully prepared to run the business.
- Pre-Opening and Marketing Before opening, you’ll implement a pre-opening marketing strategy to create buzz and attract initial customers. The franchise team may provide support with this launch phase.
- Grand Opening and Operations Once everything is set up, you’ll open your doors to customers. The Human Bean provides ongoing support to help you succeed as you start daily operations and grow your franchise.
Pros & Cons
Pros
Established Brand with Strong Reputation: The Human Bean has built a loyal customer base and solid reputation, which can be advantageous for new franchisees entering the coffee industry.
Drive-Thru Focus: With a proven drive-thru model, The Human Bean appeals to convenience-seeking customers, especially in busy or commuter-heavy areas, helping to maintain steady foot traffic.
Lower Fees: A relatively low franchise fee and a manageable brand fee of 1% of gross revenue make it a cost-effective choice for those concerned about ongoing expenses.
Cons
Hands-On Involvement Needed: For optimal success, owner-operators may need to be actively involved in daily operations, which may not be ideal for investors looking for a more passive business model.
Market Saturation in Certain Areas: In regions with high competition among coffee chains, The Human Bean might face challenges in gaining market share, especially in urban locations dominated by established brands.
Drive-Thru Dependence: The drive-thru model is highly efficient, but it may limit growth opportunities in locations where drive-thru setups are challenging to establish.
