Saladworks Franchise Continues to Grow 8 Years After Bankruptcy (2023)
Written by: Roxane Zhao
Last Updated by
María Fernández Amato: January 19, 2023
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Saladworks was founded on October 1, 1986, by John Scardapane, who served as the company’s CEO until 2015. On February 17, 2015, Saladworks filed a Chapter 11 bankruptcy petition and listed Commerce Bank and Metro Bank founder Vernon Hill as a major creditor. The bankruptcy filing said it was looking for an investor. Saladworks was acquired by Centre Lane Partners in June 2015, and promoted the new President Paul Steck to CEO, replacing founder John Scardapane. At the end of 2022, Saladworks has 93 franchises in total.
Contents
At Saladworks you will operate a restaurant featuring a variety of salads, sandwiches, wraps, panini, soups, grain bowls, bread, desserts, and beverages for lunch, dinner, catering, and take-home. Saladworks offers a franchise opportunity in the United States for those who wish to open their restaurant. Their franchisees benefit from a proven business model, initial and ongoing training, marketing support, and more. As a franchisor, Saladworks is committed to the success of their franchisees. They offer a variety of resources to help you get their business up and running and continue to grow. Their franchisees benefit from a proven business model, initial and ongoing training, marketing support, and more.
How Is Saladworks Franchise Positioned in the Food and Beverage Industry?
The Food and Beverage industry is a significant contributor within 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. In addition, it employs 14.6 million workers and accounts for about 13% of all U.S. service employment. It is an industry that has developed important innovations over time, quickly responding to the changes in consumer demand and meeting the needs of 330 million American consumers.
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.
Entering a new decade, the Food and Beverage industry continues to change. From flexible menu types of delivery and takeout playing a huge part in the industry, customers are becoming more demanding. With that said, the public is requesting several new types of dining experiences, including customization, dietary options, global foods, sustainability, ethical sourcing, value, and convenience. The solution is for businesses in the industry to adapt and always innovate together with the trends positioned by the consumers.
The main competitors of Saladworks in the market include Just Salad, Subway, Panera Bread, and so on.
How Much Is a Saladworks Franchise?
The initial Saladworks Franchise Fee is $35,000. You have to pay this upfront fee when opening a Saladworks franchise.
Saladworks Franchise Cost
The estimated total investment necessary to begin the operation of the Saladworks is $233,797 – $598,386 including tenant allowance paid by your landlord within 90 days of opening.
The following costs are part of the upfront costs included in the initial investment for Saladworks. 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 Saladworks franchise in 2022.
Estimated Initial Investment
| Type of Expediture | Amount | To Whom Payment Is to Be Made | |
|---|---|---|---|
| Low | High | ||
| Initial Franchise Fee | $35,000 | $35,000 | Us |
| Architectural Plan Review | $0 | $1,000 | Our preferred architect |
| Architect Fees | $5,200 | $19,000 | Our preferred architect or your local architect |
| Permits & License Fee | $1,200 | $4,500 | Contractors or government agencies |
| Leasehold Improvements | $45,000 | $295,000 | Contractors |
| Equipment | $55,000 | $145,000 | Designated Vendor |
| Furniture | $9,356 | $13,450 | Designated Vendor |
| Millwork | $20,000 | $35,000 | Vendors |
| Samllwares | $7,000 | $8,000 | Designated Vendor |
| Exterior Signage | $4,871 | $10,125 | Vendor |
| Menu Board, Graphics and Interior Signage | $1,634 | $12,124 | Vendors |
| Technology Systems | $1,050 | $1,863 | Us |
| Grand Opening Marketing | $15,000 | $15,000 | Vendors |
| Uniforms, Menu Materials, Office Supplies | $3,757 | $,757 | Vendors |
| Travel & Living Expenses while Training | $0 | $2,500 | Trasportation, motels & restaurants |
| Opening Inventory | $7,500 | $7,500 | Designated Vendors |
| Insurance | $2,229 | $3,750 | Insurer |
| Additional Funds – 3 months | $20,000 | $40,000 | Landlord, utilities, suppliers, etc. |
| TOTAL (excluding tenant allowance) | $233,797 | $652,569 | |
| TOTAL PROJECT COST | $233,797 | $598,386** | **based on our experience, you may receive an average of $54,183 in tenant improvement allowance, which will be paid back to you by your landlord within 90 days of opening. We have incorporated this average into the high range for total project cost. While you may need the Total amount up front, this estimate is representative of total project cost after allowances. Not getting tenant improvement dollars would increase your overall project cost. The range for tenant allowance, if received, for stores built in 2021 was $50,000 to $90,000 |
Requirements
- The minimum liquid capital to own a Saladworks franchise is $125,000
- The net worth required is $350,000
- Traditional floor plans starting at 1,500 sq. ft
Ongoing Fees
Use the Item 6 table and Item 11 to record the Royalty Fee, Marketing Fee, and other important ongoing fees that the franchisor has. This shouldn’t be more than 3-7 fees.
Royalty: 6% of Gross Sales
Marketing Fee: 3% of Gross Sales
The royalty fee for Saladworks is a little higher compared with the 5.3% in the Food and Beverage industry as a whole, and the marketing fee for Saladworks is also comparably higher compared to the 2.3% of gross sales in the whole industry.
How Much Do Saladworks Franchise Owners Make?
| Trade Channel | # of Stores | Average Square Footage | Average Net Sales | Median Net Sales | Highest Net Sales | Lowest Net Sales |
|---|---|---|---|---|---|---|
| Mall | 7 | 794 | 628,731 | 648,574 | 970,835 | 326,313 |
| Pad Site | 4 | 2,567 | 912,641 | 877,430 | 1,238,179 | 516,682 |
| Strip Mall | 60 | 2,419 | 781,188 | 920,400 | 1,765,260 | 75,540 |
| All Others | 6 | 1,408 | 501,319 | 497,238 | 886,055 | 108,421 |
2021 Saladworks Weighted Average of Median Franchise Sales: $860,482
| Initial investment (midpoint) | %Profit margin of median franchise sales | Estimated Profits | Time to recoup investments |
|---|---|---|---|
| $416,092 | 10% | $86,048 | 6.5 years |
| 15% | $129,072 | 4.5 years | |
| 20% | $172,096 | 3.5 years |
Based on the weighted average of median sales provided by Saladworks’s franchise locations, at an average of a 20% profit margin it will take only 3.5 years to recoup your investment. This is sooner than other franchise opportunities. For the profit margin for the whole industry, which is around 15%, it will also only take around 4.5 years to recover the initial investment.
This is just an estimated sale based on the franchisor’s income statement and can vary greatly depending on the length that the particular franchise location has been open and how well the business is run.
Is the Saladworks Franchise Profit Worth the Franchise Cost?
As seen in the sales figures above, it takes a relatively short time to recoup your investment if you own one singular Saladworks. In a best-case scenario, based on 2021 sales figures and a 20% profit margin, you would recoup your investment in 3.5 years.
This exemplifies the opportunity cost of investing your money in this franchise. The median profit margin of Saladworks is 15%, so based on 2021 Saladworks sales it would take 4.5 years to recoup your investment.
When you are going to sell Saladworks, based on the information from BizQuest, the asking price is around $65,000, which is far less than the initial investment, so it is a little hard to recover the initial investment by selling the current business.
REDUCED! Must Sell-Saladworks for Sale $65,000
| New Jersey |
|---|
| Asking Price: | $65,000 | Cash Flow: | 101,724 |
| Gross Revenue: | $762,725 | Inventory: | $15,000 |
| EBITDA: | N/A | Rent: | N/A |
| FF&E: | $145,000 | Established: | N/A |
Hence, it seems that based on the data for the year 2021, the initial investment will be recovered in around 3.5 to 6.5 years, and even if you want to give up the Saladworks within that time and sell it, you might be able to get the initial investment recovered based on the existing market data.
Based on the information from Entrepreneur, Saladworks had 93 units in 2022, and we could find that in the past 9 years, the number of units is stable, although there are some decreases from 2016 to 2020. Since 2021, the number of units rose to the original level in 2015. Hence, the change of units in the past years might indicate that Saladworks is profitable.
Saladworks Income Statement Key Insights:
Statement of Income
| (in thousands) | For the Year Ended | |
|---|---|---|
| September 26, 2021 | September 27, 2020 | |
| (Unaudited) | ||
| Revenues | ||
| Franchise and royalty | $5,319,205 | $3,125,562 |
| Food and beverage | 6,925,861 | 1,788,528 |
| Support and marketing fees | 4,644,218 | 2,878,310 |
| Rental income from subleases | 389,948 | 386,010 |
| $17,279,232 | $8,178,410 | |
| Operating Costs | ||
| Selling, general and administrative | 9,628,087 | 6,636,042 |
| Food and beverage | 2,115,453 | 613,568 |
| Restaurant operating | 3,218,824 | 941,641 |
| Rental expense from subleases | 389,948 | 386,010 |
| Depreciation and amortization | 729,669 | 474,129 |
| $16,081,981 | $9,051,390 | |
| Income (Loss) Before Other Expenses and Provision for Income Tax | 1,197,251 | (872,980) |
| Other (Income) Expenses | ||
| Interest expense | 525,078 | 740,633 |
| Loss on property closures | 1,225,000 | – |
| Acquisition expenses | 1,071,805 | – |
| Paycheck Protection Program loan forgiveness | (1,019,260) | (728,300) |
| Gain on bargain purchase of Garbanzo, LLC and Fruta Bowls LLC | (2,178,691) | – |
| Management fees | 250,000 | 250,000 |
| Other (income) expense | 15,148 | (36,035) |
| $ (110,920) | $226,298 | |
| Income (Loss) Before Provision for Income Tax | 1,308,171 | (1,099,278) |
| Provision for Income Tax | 5,223 | |
| Net Income (Loss) | $1,302,948 | $(1,103,235) |
Saladworks is a very profitable business for the franchisor with a net income of $1,302,948 in 2021. Although in the year 2020, there was a $1,103,235 loss for Saladworks, which can be explained by the impact of COVID-19. Then, compared to the $1,103,235 loss in 2020, Saladworks saw a dramatic increase from 2020 to 2021. This shows the potential profitability of Saladworks and is a good indication of high growth as a company overall.
How Many Saladworks Units Have Opened and Closed?
How many [brand] 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 | 84 | 84 | 0 |
| 2020 | 84 | 85 | +1 | |
| 2021 | 85 | 88 | +3 | |
| Company-Owned | 2019 | 6 | 6 | 0 |
| 2020 | 6 | 8 | +2 | |
| 2021 | 8 | 15 | +7 | |
| Total | 2019 | 90 | 90 | 0 |
| 2020 | 90 | 93 | +3 | |
| 2021 | 93 | 103 | +10 |
Over the last three years, the company has been in growth. The total outlets have been increasing. Overall, in the last three years, the franchises have opened at a rate of around 5 units a year. This is an indicator that the existing Saladworks were performing well in the past few years, which could represent the profitability of the franchise.
Conclusion
Investing in a Saladworks franchise is an interesting opportunity, especially for individuals looking to make their way into the Food and Beverage industry. The prospects for growth and success within the industry and the Saladworks brand itself are extensive, and some markets continue to be available as they move forward with growing their presence across the country. If you are an individual with a passion for owning a restaurant and are willing to invest an amount ranging from $233,797 – $598,386 or more, Saladworks might be the right fit for you.
We strongly recommend you speak to at least 5 Saladworks franchisees to better understand the financials (see questions to ask).
Think Saladworks is the right franchise for you, or are you interested in other franchise opportunities in the Food and Beverage Industries? Check out our page on the Vetted Biz website for thousands of franchises available for your investment.
