Submit
Feedback

Jason’s Deli Franchises Are Closing Down (2022)

Written by: Parth Parth
Last Updated by Facundo Bermudez: November 16, 2022
Free Download Our Exclusive Food and Beverage Guide
Download Now
Jason's Deli

This article is based on its 2022 FDD

Jason’s Deli Franchise is a fast casual restaurant that offers a variety of delicatessen products, as well as sandwiches, soups, baked potatoes, pasta dishes, wraps, and a salad bar, as well as catering and delivery services.

It was founded in Beaumont, Texas on 30 November 1976 by Joe Tortorice Jr. Back in 2008, Jason’s Deli ranked #1 in annual sales in QSR Magazine’s Top Ten list of restaurant groups with under 300 locations.

It currently operates 248 restaurants, with the majority of locations being company-operated.

Table of Contents

How is Jason's Deli Franchise Positioned in the Food and Beverage Industry?

The Food and Beverage industry in the USA accounts for 13% of all manufacturing employment in the country. Around 1.46 million people get employed in this industry. Food franchises make up 36% of the total franchise establishments in the USA, 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.

Jason's Deli Franchise

How Much is a Jason's Deli Franchise?

The initial Jason’s Deli Franchise Fee is $35,000. You have to pay this upfront fee when opening a Jason’s Deli franchise.

Jason's Deli Franchise Cost

The estimated total investment necessary to begin the operation of a Jason’s Deli Franchise ranges from $1,020,759 to $1,554,891. The following costs are part of the upfront costs included in the initial investment for Jason’s Deli. Many of these are one-time fees that are needed to launch the franchise. Review the chart below to see how much it costs to buy a Jason’s Deli franchise in 2022.

Estimated Initial Investment

Type of expediture Amount To Whom Payment Is To Be Made
Initial Franchise Fee $35,000.00 Franchisor
Development Fee $17,500 per additional Deli (See Note 1). At least two delis are required, bringing total development fees paid by franchisor to $35,000. Franchisor
Travel and living expenses while training $15,000.00 Airlines, Hotels and Restaurants
Build out or remodeling of 4,500-5,000 sq. ft. premises $496,900.00 to 0- $766,132.00 Suppliers, Tradesman and Contractors
Equipment: *Fabricated Equipment Buyout Equipment; *Furniture; Small Wares Signage $300,000.00 – $25,000.00 – $24,753.63 – $18,000.00 to $100,000.00 Suppliers
Administrative and Miscellaneous: Pre-Opening Advertising Deposits (rent, utilities, and sales tax) $5,000.00 to $20,000.00 Suppliers and Landlords
Licenses Interim Interest Payments Pre-opening training personnel from existing Delis, if applicable $10,000.00 – $70,000.00 to $125,000.00 Governmental Entities, Suppliers Hotels, restaurants, and/or Travel Providers
Insurance $4,500.00 to $15,000.00 Insurance Company/ Agent
Online Ordering SetUp Costs and Monthly Hosting $450.00 per store and $130 Monthly per store Third Party Supplier Order Restaurant Revolution Technologies, Inc.
Point-Of-Sale System $3,600 to $6,000 per store & $600 to $1200 monthly per store Third Party Supplier – NCR
Customer Satisfaction/Feedback Software $60.00/monthly Per store Third Party Supplier
System Email $150.00/per user account per year Third Party Supplier Google
Initial Inventory $32,925.82 Suppliers or Franchisor
Additional Funds – 3 months $20,000.00 to $35,000.00 Vendors, Employees and other Third Parties
Total $1,020,759.45 to $1,554.891.45

Owning a Jason's Deli Franchise Requires Ongoing Fees

Operating Fee: 4% of gross sales but not less than $2,500 per month

Advertising Fee: When collected by us, 2% of gross sales, but not less than $500 per month. Also, a ½ of 1% Administrative Fee may be collected.

How much do Jason's Deli franchise owners make?

Jason’s Deli does not disclose financials, however, Restaurant Business Online estimates annual sales of $516,000,000 across all units. This amounts to an average unit volume of $2,080,645.

2022 Jason’s Deli Median Franchise Sales: $2,080,645

Initial investment (midpoint) %Profit margin of median franchise sales Estimated Profits Time to recoup investments
$1,287,825 10% $208,064 7.5 years
15% $312,096 5.5 years
20% $416,129 4.5 years

Based on the median sales provided by Jason’s Deli’s franchise locations, at an average of a 15% profit margin, it will take around 5.5 years to recoup your investment. This is the same time as other franchise opportunities. You may not get a 15% 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; the extent of market penetration and brand awareness that Jason's Deli stores have attained in your market. Also, the quality of management and service at your Franchised Store are major factors.

Jason's Deli Franchise

Is the Jason's Deli Franchise Profit Worth the Franchise Cost?

To assign a valuation multiple for Jason’s Deli 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 Jason’s Deli franchise based on the median multiple of .55 and net sales in 2022 of $2,080,645, it would sell for $1,144,354. This is just slightly lower than the midpoint investment of $1,287,825.

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.

Jason’s Deli (Franchisor) Income Statement Key Insights:

Years ended December 31,
2021 2020
REVENUE:
Sales – delis $341,495,238 $272,173,485
Sales – distribution centers 76,874,473 50,759,622
Franchise sales 8,000 23,000
Franchise royalties 7,104,517 5,520,118
Backhaul income 4,008,935 3,119,308
Total revenue 429,491,163 331,595,533
COST OF REVENUE 166,252,053 126,996,909
Gross profit 263,239,110 204,598,624
OPERATING EXPENSES, EXCLUDING OWNERS COMPENSATION 233,403,383 213,701,627
Operating income (loss) before owners compensation 29,835,727 (9,103,003)
OWNERS COMPENSATION 1,401,125 838,019
Income (loss) from operations 28,434,602 (9,941,022)
OTHER INCOME (EXPENSE):
Interest, net (8,630,324) (5,327,645)
Other income 618,489 507,509
Total other expense (8,011,835) (4,820,136)
STATE INCOME TAXES 448,771 247,045
Net income (loss) $19,973,996 $(15,008,203)

Jason’s Deli is a very profitable business for the franchisor, with retained earnings of $19.97 million in 2021. Compared to a loss of 15$ million in 2020, this is a good indication of a good recovery from COVID as a company overall.

How many Jason’s Deli 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 105 97 -8
2020 97 85 -12
2021 85 82 -3
Company-Owned 2019 174 186 12
2020 186 166 -20
2021 166 166 0
Total Outlets 2019 279 283 4
2020 283 251 -32
2021 251 248 -3

Over the last three years, the company has been in decline. Both franchising units and company-operated stores have decreased. Over the last three years, franchises have closed at a rate of 8 units a year. This is an indicator that these stores may not be performing well or their franchise term is up and they are not renewing it.

Why are stores decreasing when the financials seem strong?

While Jason’s Deli looks good on the surface and has an amazing payback period and resale value, it is mired in a lot of litigation. There is a class action and five lawsuits disclosed in the FDD. These disputes are about overtime wages, and this mess of lawsuits might be why franchisees are not eager to sign up for a Jason’s Deli franchise. Additionally, Jason’s Deli’s website currently has no mentions of franchising. It might mean that they have temporarily stopped franchising.

Conclusion

Jason’s Deli offers people the opportunity to be a part of a business that has amazing returns, but with the decline in units and multiple lawsuits, you should talk to at least 3-5 other franchisees before considering this business.

While this may be the business for you, make sure also to check out other Deli Franchises offered on Vetted Biz and in the Food and Beverage Industry.

franchise advisor

Your Suscription has expired!

Looks like your subscription is due. Please renew to keep using our services.

Share link

Or

Downgrade subscription

You are going to downgrade your subscription.This action will proceed the difference in cost of plans and reset subscription period after moneyback.

Vetted Member $79/month

Simple Start Free

Upgrade subscription

You are going to upgrade your subscription.This action will proceed the difference in cost of plans and reset subscription period after moneyback.

Simple Start Free

Vetted Member $79/month

Cancel subscription

You’re about to cancel your subscription. Please confirm by clicking on the “Cancel Subscription” button below.

Performing this action will delete your account.

Plan Updated

Your current subscription plan is:

Vetted Member $79/month

Support Form

Please fill out the form below with any technical issues, questions or feedback you might have.

Sorry. You must be logged in to view this form.

close
close

Help us to bring you more value

close

Franchise Specialist Request

close

Franchise Form - Food and Beverage

Name
Untitled