Teriyaki Madness Franchise Cost Justified By Profits?
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.
Follow the podcast
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.
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
| Year | High Gross Sales | Low Gross Sales | Average Gross Sales (“AGS”) | Number of Teriyaki Shops at or above AGS | Percentage of Teriyaki Shops at or above AGS | Median Gross Sales (“MGS”) | Number of Teriyaki Shops at or above MGS | Percentage of Teriyaki Shops at or above MGS |
|---|---|---|---|---|---|---|---|---|
| 2021 | $2,275,568 | $525,289 | $1,161,201 | 17 | 47% | $1,101,124 | 18 | 50% |
| 2020 | $1,666,686 | $508,366 | $1,079,488 | 10 | 45% | $1,071,902 | 11 | 50% |
| 2019 | $1,564,146 | $720,371 | $1,154,180 | 8 | 53% | $1,183,295 | 8 | 53% |
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) |
|---|
| Asking Price: | $475,000 | Cash Flow: | $175,000 |
| Gross Revenue: | $800,000 | Inventory: | $6,000 |
| EBITDA: | N/A | Rent: | $5,700 per Month |
| FF&E: | $120,000 | Established: | 2020 |
Profitable Semi-Absentee Teriyaki Madness Franchise Netting Over $165k
| Nevada |
|---|
| Asking Price: | $466,095 | Cash Flow: | $165,419 |
| Gross Revenue: | $799,504 | Inventory: | $1,000 |
| EBITDA: | N/A | Established: | 2019 |
| FF&E: | $75,000 |
Teriyaki Madness (Franchisor) Income Statement Key Insights
| For the Years Ended December 31, | ||
|---|---|---|
| 2021 | 2020 (Restated) | |
| Revenue | ||
| Franchise fees | $1,703,382 | $1,491,041 |
| Costs and Expenses | ||
| Franchise commissions | 695,577 | 679,108 |
| Salaries, taxes and benefits | 336,235 | 218,813 |
| Amortization of franchise agreements | 121,822 | 121,825 |
| Advertising and promotion | 466,351 | 116,277 |
| Professional fees | 64,032 | 113,100 |
| Dues and subscriptions | 27,501 | 34,026 |
| Office rent | 34,741 | 28,068 |
| Office expenses | 43,265 | 16,768 |
| Travel, meals and entertainment | 18,364 | 6,535 |
| Total costs and expenses | 1,807,888 | 1,334,520 |
| 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 Type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2019 | 42 | 60 | +18 |
| 2020 | 60 | 88 | +28 | |
| 2021 | 88 | 100 | +12 | |
| Company-Owned | 2019 | 2 | 2 | – |
| 2020 | 2 | 0 | -2 | |
| 2021 | 0 | 1 | +1 | |
| Total Outlets | 2019 | 44 | 62 | +18 |
| 2020 | 62 | 88 | +26 | |
| 2021 | 88 | 101 | +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.
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.
