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Teriyaki Madness Franchise Cost Justified By Profits?

Written by: Parth Parth
Last Updated by Rocio Somoza: November 11, 2022
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This article is based on its 2022 FDD

Teriyaki Madness businesses operate fast-casual restaurants that make and sell Japanese-style teriyaki dishes and other specialty food items, beverage items, and other items.

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How is Teriyaki Madness 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 are employed in this industry. Food franchises make up to 36% of the total franchise establishments in the USA and it is expected to create 1.6million more jobs by 2027. The annual growth rate in the industry is around 2% and the EBITDA multiplier is around 3x.

teriyaki madness franchise

How Much is a Teriyaki Madness Franchise?

The initial Teriyaki Madness Franchise Fee is between $45,000 and $150,000. You have to pay this upfront fee when opening a Teriyaki Madness franchise.

Teriyaki Madness Franchise Cost

The estimated total investment necessary to begin the operation of a Teriyaki Madness Franchise ranges from $346,400 to $768,760. The following costs are part of the upfront costs included in the initial investment for a Teriyaki Madness. 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 Teriyaki Madness franchise in 2022.

Type of Expenditure Amount – Low Amount – High To Whom Payment is to be Made
Initial Franchise Fee $45,000 $150,000 Us
Shop Opening Assitance Fee $27,500 $27,500 Our Affiliate
Site Investigation $1,000 $1,000 Approved Suppliers
Site Survey $2,000 $5,000 Approved Suppliers
Rent, Security Deposit, Utility Deposit $7,000 $13,000 Landlord, Utility Companies
Permit Expeditor $1,000 $2,000 Approved Suppliers
Leasehold Improvements $100,000 $260,000 Landlord, Contractors, Other Suppliers
Furniture, Fixtures and Equipment $90,000 $170,000 Approved Suppliers
Architect $11,500 $15,000 Approved Suppliers
Initial Inventory and Supplies $12,500 $17,000 Approved Suppliers
Insurance $1,500 $5,000 Insurance Providers
Business Licenses and Permits $500 $9,860 Third Parties
Professional Fees $2,500 $4,000 Attorney, Accountant
Signage $9,000 $23,900 Approved Suppliers
Security and Music System $1,600 $2,000 Approved Suppliers
Office Equipment and Supplies $12,000 $15,000 Approved Suppliers
Grand Opening Promotion $10,000 $10,000 Approved Suppliers
Uniforms $600 $1,000 Approved Suppliers
Initial and Hands-On Training Expenses $1,200 $4,500 Airline, Hotel, Restaurants, etc.
Opening Extension Fee $0 $3,000 Us
Additional Funds – 3 Months $10,000 $30,000 Third Parties
Total Estimated Initial Investment $346,400 $768,760

Teriyaki Madness Franchise Requirements

You need a minimum net worth of $500,000 and at least $150,000 – $200,000 in liquid assets.

Owning a Teriyaki Madness Franchise Requires Ongoing Fees

Royalty: 6% of Net Sales

Marketing Fee: 3% of Net Sales

Technology Fee: Up to $600 per month per Teriyaki Shop

How much do Teriyaki Madness franchise owners make?

Gross Sales Table

YearHigh Gross SalesLow Gross SalesAverage Gross Sales (“AGS”)Number of Teriyaki Shops at or above AGSPercentage of Teriyaki Shops at or above AGSMedian Gross Sales (“MGS”)Number of Teriyaki Shops at or above MGSPercentage of Teriyaki Shops at or above MGS
2021$2,275,568$525,289$1,161,2011747%$1,101,1241850%
2020$1,666,686$508,366$1,079,4881045%$1,071,9021150%
2019$1,564,146$720,371$1,154,180853%$1,183,295853%
teriyaki madness franchise

2021 Teriyaki Madness Median Franchise Sales: $1,101,124

Initial Investment (midpoint) %Profit margin of average franchise sales Estimated profits Time to recoup investment
$557,580 10% $110,112 6.5 years
15% $165,168 5 years
20% $220,224 4 years

Based on the median sales provided by Teriyaki Madness’s 34 franchise locations, at an average of a 15% profit margin it will take around 5 years to recoup your investment. This is shorter than many franchise opportunities. You may not get a 15% profit margin which would elongate getting a return on your investment.

Keep in mind that Teriyaki Madness failed to report the financials of more than 50% of their locations! They chose a specific subset of the restaurants to report on. It is definitely advised to speak to 5+ franchisees of restaurants outside of the reporting set to see how they are performing.

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 Teriyaki Madness stores have attained in your market. Also, the quality of management and service at your Franchised Store are major factors.

Is the Teriyaki Madness Franchise Profit Worth the Franchise Cost?

To assign a valuation multiple for Teriyaki Madness 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.

Estimated Selling Price = Net Sales * 0.35

When you go to sell a Teriyaki Madness franchise based on the median multiple of .35 and net sales in 2021 of $1,101,124, it would sell for $385,393. This is lower than the midpoint investment of $557,580.

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.

Below are some examples of how much you might be able to earn from the sales of your Teriyaki Madness franchises:

Profitable Fast Casual Restaurant Franchise

Wilmington, DE (New Castle County)
teriyaki madness franchise
Asking Price:$475,000Cash Flow:$175,000
Gross Revenue:$800,000Inventory:$6,000
EBITDA:N/ARent:$5,700 per Month
FF&E:$120,000Established:2020
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Profitable Semi-Absentee Teriyaki Madness Franchise Netting Over $165k

Nevada
teriyaki madness franchise
Asking Price: $466,095 Cash Flow: $165,419
Gross Revenue: $799,504 Inventory: $1,000
EBITDA: N/A Established: 2019
FF&E: $75,000
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Teriyaki Madness (Franchisor) Income Statement Key Insights

 For the Years Ended December 31,
 20212020 (Restated)
Revenue  
Franchise fees$1,703,382$1,491,041
Costs and Expenses  
Franchise commissions695,577679,108
Salaries, taxes and benefits336,235218,813
Amortization of franchise agreements121,822121,825
Advertising and promotion466,351116,277
Professional fees64,032113,100
Dues and subscriptions27,50134,026
Office rent34,74128,068
Office expenses43,26516,768
Travel, meals and entertainment18,3646,535
Total costs and expenses1,807,8881,334,520
Net income (loss)$(104,506)$156,521

Teriyaki Madness is a very loss-making business for the franchisor with losses of $104,506 in 2021. Compared to a profit of $156,201 in 2020, they have seen a decrease in revenue. This is not a good sign.

How many Teriyaki Madness units have opened and closed?

Outlet TypeYearOutlets at the Start of the YearOutlets at the End of the YearNet Change
Franchised20194260+18
20206088+28
202188100+12
Company-Owned201922
202020-2
202101+1
Total Outlets20194462+18
20206288+26
202188101+13

Over the last three years, the company has expanded. Over the last three years, franchises have opened at a rate of 19 units a year. This is an indicator that these stores may be performing well. From 44 outlets in 2019 to 101 in 2021, the company has grown more than 2x.

teriyaki madness franchise

Conclusion

Teriyaki Madness is growing and taking advantage of the consumer’s shift to take out/ delivery. It might be best to buy an existing Teriyaki Madness instead of going through the lengthy process of identifying a location, build out, etc.

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.

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