Is Whole Foods Franchising in 2024? Whole Foods Franchise Alternatives
This article is based on the video featured above, originally recorded for Vetted Biz Youtube Channel.
Have you considered owning your Whole Foods? It’s a grocery store chain that’s known for selling healthy food options such as having products that are organic, local, and plant-based. Whole Foods sells a wide range of food products but it also has a food market where customers can grab fresh, hot food. This grocery store can be quite pricey and compared to the competitors they are the most expensive. But because of this their products are top quality and are even considered upscale and elite.
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Why Is Whole Foods Not a Franchise?
Unfortunately, Whole Foods is not a franchise. They prefer to maintain close controls and have very strict operations.
History of Whole Foods
Whole Foods was founded in Austin, Texas and the first one opened in 1980. It was founded by John Mackey, Renee Lawson Hardy, Craig Weller, and Mark Skiles. These founders wanted to create a business to have a natural food industry in the grocery store style. Whole Foods has been around for 40 years and it’s growing globally.
Who Owns Whole Foods?
Amazon has owned Whole Foods since 2017 and spent over $13 billion to buy this grocery store
During the pandemic, Amazon shifted its focus to food delivery and Whole Foods‘ value at the time was decreasing due to competition and the high cost of their products. Amazon bought it to encourage people to sign up for Prime membership to get discounted food.
If Whole Foods Were a Franchise-Estimated Franchise Costs
Franchise Fee
The estimated cost of a Franchise fee of Whole foods would cost around $40,000. This was estimated from the Nikko franchise which is a supermarket and their franchise fee costs $35,000 to $50,000. This is a bit more expensive than the average franchise fee which is around $25,000 but Whole Foods and grocery stores, in general, are usually bigger than restaurants.
Additional Costs
There are also additional costs such as leasehold improvements, furniture and fixtures, and additional work capital. The leasehold improvements can cost between $3,000,000 to $5,000,000. The furniture and fixtures can range from $2,000,000 to $3,000,000. Lastly, the additional work capital is estimated to cost $1,000,000 to $1,500,000. These costs will vary depending on the location and how large your Whole Foods will be but keep the cost in mind if they ever becomes a franchise.
Whole Foods Expansion Plan
Amazon’s goal within the grocery store industry is to have the same delivery service for their customers and to take over the online grocery store delivery service. Amazon may use Whole Foods to do this or may build up a different grocery store to complete this goal. This is important to think about because this could rapidly increase the stock of Whole Foods or the opposite if Amazon gets rid of this grocery store.
They are expanding its stores rapidly and they have 43 new stores in development across 19 states. This is a good sign where Whole Foods is a prosperous business which could lead them to create franchises.
Whole Foods Franchise Alternatives
Smoothie King
Smoothie King is a healthy food franchise that sells smoothies that can be customized and there are 1,000 locations across the United States. It first opened in 1986 in New Orleans, Louisiana. The initial franchise fee is from $25,000 to $30,000.
Smoothie King’s initial investment is $269,000 to $545,000 which is due to leasehold improvements which cost from $312,700 to $428,535. That is a huge chunk of the initial investment, as well as equipment which costs between $70,600-$115,500. Although the majority of Smoothie King franchises made $593,329 in net sales over a year.
The bottom 10% of Smoothie King had net sales of $247,246 which probably is not enough to cover rent and employee costs.
The net sales percentage is increasing each year and this shows that Smoothie King is not only profitable but growth in sales.
Jamba
Another healthy smoothie franchise is Jamba Juice which sells smoothies, juices, and food items. Jamba Juice was founded in San Luis Obispo, California on March 31, 1990. Jamba Juice’s initial franchise fee for a store is $35,000 which is more expensive than Smoothie King but less expensive than Whole Foods.
The initial investment is between $290,450 to $560,500 which is the average cost of most food franchises. This cost is due to construction and build-out costs which range from $101,500 to $204,000, as well as an equipment package that costs between $47,500 to $90,000.
This is similar to the Smoothie King franchise in which the more expensive items involve the build out and the equipment to supply the store which can all depend on the location and franchise itself.
The average net sale of the franchise is $680,658 and the average gross profit is $532,525. This shows that Jamba juice is quite profitable and the lowest you could make is $186,142 which is still a profit.
Although the operating expenses are quite high which the average costs around $439,014 which doesn’t leave much profit for yourself. This could be a problem where it could take several years to earn back your initial investment. This is another alternative to look at when looking for healthy food franchises.
Tropical Smoothie Cafe
Lastly, another smoothie franchise is Tropical Smoothie Cafe which sells smoothies, sandwiches, and other various food items. Tropical Smoothie Cafe first opened in 1997 in Destin, Florida. Tropical Smoothie Cafe’s initial franchise fee is $30,000 which is in between what Jamba and Smoothie King’s fee is.
The initial investment is between $257,500 to $560,500 which is due to leasehold improvements which cost $143,500 to $260,500 and furniture/fixtures/equipment which ranges from $76,500 to $134,000.
Although these costs are quite expensive you may not have a say on how much you pay for these costs since there is a set price for furniture/equipment that you need to buy and leasehold improvements which can be necessary depending on the location.
The average sales is $840,622 but there is only a profit margin of 15% which leaves $126,000 for compensation. With this compensation, this may take several years to recoup your capital. The highest-earning franchises have $2.5 million per year in sales and the lowest at $244,000. There is a large gap that can allow your franchise to either flourish or fall.
Are you thinking about investing in a healthy food franchise, or interested in exploring more options? Make sure to check out Vetted Biz’s website for listings of other similar franchises in the Food and Beverage industry.
