In this exclusive Franchise Chatter FDD Talk post, you’ll learn the following:

Section I – Estimated initial investment (franchise costs) for a Culver’s franchise, based on Item 7 of the company’s 2024 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a Culver’s franchise, based on Items 5 and 6 of the company’s 2024 FDD

Section III – Number of franchised and company-owned Culver’s outlets at the start of the year and the end of the year for 2021, 2022, and 2023, based on Item 20 of the company’s 2024 FDD

Section IV – News updates on the Culver’s franchise opportunity

Section V – Presentation and analysis of Culver’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2024 FDD, including information on the:

• 2023 average, median, high, and low sales for the 884 franchised Culver’s Restaurants open for the entire 12-month period ended December 31, 2023

• 2023 average sales, food cost, paper cost, gross profit, salaries and wages, employee benefits, direct operating expenses, supplies and chemicals, utilities, general and administrative expenses, repairs and maintenance, advertising royalty, local advertising, service royalty, and income as a percentage of sales, for the 6 company-owned Culver’s Restaurants open for the entire 12-month period ended December 31, 2023

Section VI – Key ratios, comparables, computations, and analyses for the Culver’s franchise opportunity (exclusive content for Platinum subscribers)

Section I – Culver’s Franchise Costs

• Initial Franchise Fee:  $20,000 to $55,000
• Land:  $425,000 to $1,500,000
• Site Work:  $90,000 to $1,465,000
• Building:  $1,525,000 to $2,616,000
• Travel, Living, and Other Expenses During Training:  $20,000 to $80,000
• Initial Inventory:  $50,000 to $65,000
• Furniture, Fixtures, Equipment, and Supplies (excluding sign package and POS cash register system):  $461,000 to $602,000
• Sign Package:  $112,000 to $293,000
• POS System:  $38,500 to $51,000
• Miscellaneous Expenses:  $20,000 to $40,000
• Additional Funds (Working Capital) for 3 Months:  $50,000 to $100,000
• Total Estimated Culver’s Franchise Costs:  $2,811,500 to $6,867,000

Section II – Culver’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Initial Franchise Fee:  $20,000 to $55,000
• Service Fee (i.e., Royalties):  4% of Gross Sales
• Advertising Fee:  2.5% of Gross Sales
• Cooperative Advertising:  up to 4% of Gross Sales, as approved by a majority vote of the members of the Co-op Advertising Region

Section III – Number of Franchised and Company-Owned Culver’s Outlets

Franchised

2021

• Outlets at the Start of the Year:  776
• Outlets at the End of the Year:  831
• Net Change:  +55

2022

• Outlets at the Start of the Year:  831
• Outlets at the End of the Year:  886
• Net Change:  +55

2023

• Outlets at the Start of the Year:  886
• Outlets at the End of the Year:  937
• Net Change:  +51

Company-Owned

2021

• Outlets at the Start of the Year:  6
• Outlets at the End of the Year:  6
• Net Change:  0

2022

• Outlets at the Start of the Year:  6
• Outlets at the End of the Year:  6
• Net Change:  0

2023

• Outlets at the Start of the Year:  6
• Outlets at the End of the Year:  7
• Net Change:  +1

Section IV – News Updates on the Culver’s Franchise

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Culver’s Franchise (Item 19, 2024 FDD)

Schedule of Restaurant Financial Data

• The following information discloses sales of the 884 franchised Culver’s Restaurants (“Franchised Restaurants”) and the 6 company-owned Culver’s Restaurants (“Company-Owned Restaurants”) open for the entire 12-month period ended December 31, 2023, and also selected cost percentages for the 6 Company-Owned Restaurants for the entire 12-month period ended December 31, 2023.

• This includes information about non-typical locations (including 3 Culver’s Restaurants that do not have a drive-thru window, 6 Culver’s Restaurants that share a building with a convenience store, and 4 Culver’s Restaurants that occupy an end-cap of a multi-tenant building).

• The following information does not include information from Restaurants that did not operate for the entire 12-month period, including the 52 franchised Culver’s Restaurants that opened in 2023 and the 1 Company-Owned Restaurant that opened in 2023, nor does it include information from 1 franchised Culver’s Restaurant that closed permanently during 2023, or 1 franchised Culver’s Restaurant that was closed for a period of time during 2023 due to a substantial remodel, rebuild, or relocation of the Restaurant, and therefore none of these Restaurants operated for the entire 12-month period.

• The Company-Owned Restaurants are located in Sauk City, Spring Green, Richland Center, Baraboo, Middleton, and Madison, Wisconsin.

• The buildings housing the Company-Owned Restaurants are single-purpose, one story, and freestanding, seating 88 to 120 guests at one time, which is comparable to the Culver’s Restaurants expected to be operated under the Franchise Agreement.

• Substantially the same services were offered to the Company-Owned Restaurants as are provided to the Franchised Restaurants. The franchisor does not, however, provide certain services to franchisees such as financing, accounting, legal, personnel, construction, management, financial, and food and labor cost systems.

• The Company-Owned Restaurants also offered substantially the same products and services to the general public as will the Culver’s Restaurants to be operated under the Franchise Agreement.

• The following tables were prepared on a basis consistent with generally accepted accounting principles and the same accounting system was used for each Company-Owned Restaurant.

• The figures used in the tables are based on an annual performance. The information presented in the tables has not been audited, and the franchisor has not independently verified that the information provided by Franchised Restaurants is correct.

Part 1 – Franchised Restaurants Open 12 Months

• $4,500,000 and Above:  81 Restaurants
• $4,250,000 to $4,499,999:  64 Restaurants
• $4,000,000 to $4,249,999:  70 Restaurants
• $3,750,000 to $3,999,999:  103 Restaurants
• $3,500,000 to $3,749,999:  88 Restaurants
• $3,250,000 to $3,499,999:  131 Restaurants
• $3,000,000 to $3,249,999:  110 Restaurants
• $2,750,000 to $2,999,999:  87 Restaurants
• $2,500,000 to $2,749,999:  70 Restaurants
• $2,250,000 to $2,499,999:   43 Restaurants
• $2,000,000 to $2,249,999:  23 Restaurants
• Below $2,000,000:  20 Restaurants

• Highest Sales:  $7,390,655
• Lowest Sales:  $1,033,214
• Average Sales:  $3,488,853
• Median Sales:  $3,430,013

• Of the 884 Franchised Restaurants, 410 (or 46%) met or exceeded the average sales.

• Average sales were taken from Franchised Restaurants open for the 12-month period ended December 31, 2023.

• “Sales” are defined as the total revenue received from the sale of goods and services, whether by cash or by check or credit card, at or through a Culver’s Restaurant, less sales tax, customer refunds, and unreimbursed amounts involving the franchisor’s approved coupon or discount programs.

Part 2 – Company-Owned Restaurants Open 12 Months

• Average Sales:  $4,024,575 (100.0%)

Select Cost Percentages

• Food Cost:  $1,267,390 (31.5%)
• Paper Cost:  $121,029 (3.0%)
• Total Food and Paper Cost:  $1,388,419 (34.5%)

Gross Profit:  $2,636,156 (65.5%)

• Salaries and Wages:  $1,324,497 (32.9%)
• Employee Benefits:  $224,814 (5.6%)
• Direct Operating Expenses:  $20,297 (0.5%)
• Supplies and Chemicals:  $43,629 (1.1%)
• Utilities:  $61,719 (1.5%)
• General and Administrative:  $128,402 (3.2%)
• Repairs and Maintenance:  $73,526 (1.8%)
• Advertising Royalty:  $100,614 (2.5%)
• Local Advertising:  $40,246 (1.0%)
• Service Royalty:  $160,983 (4.0%)
• Total Operating Expenses:  $2,178,727 (54.1%)

Income:  $457,430 (11.4%)

• “Sales” are defined as the total revenue received from the sale of goods and services, whether by cash or by check or credit card, at or through a Company-Owned Restaurant, less sales tax, customer refunds, and unreimbursed amounts involving the franchisor’s approved coupon or discount programs.

• “Food Cost” includes costs of food and beverage items, as reduced by vendor rebates.

• “Paper Cost” includes paper product expenses.

• “Gross Profit” is Sales less Food Costs and Paper Costs.

• “Salaries and Wages” includes wages paid to Company-Owned Restaurant managers and crew. Hourly Manager wages range from $17.50/hour to $27.46/hour. Salaried Manager wages range from $78,000/yr to $90,000/yr. Crew wages range from $10.00/hour to $22.42/hour. Franchised Restaurants may incur higher percentages depending on wages paid and staffing levels.

• “Employee Benefits” includes payroll taxes and workers’ compensation, health, vision, dental, life, hospital indemnity, accident, critical illness, STD and LTD insurance, health savings accounts, as well as a 401K plan and a flexible spending account, and team instruction and education account. Franchised Restaurants may incur different expenses depending on benefits offered to employees and staffing levels.

• “Direct Operating Expenses” includes licenses, permits, uniforms, laundry, music and cable, printed supplies, auto expenses, team recruitment, background checks, and miscellaneous expenses. Franchised Restaurants may incur different expenses for auto or travel expenses.

• “Supplies and Chemicals” includes supplies and chemicals used at the Company-Owned Restaurants.

• “Utilities” includes electricity, fuel, water and sewer, and garbage collection. Franchised Restaurants may incur different expenses depending on rate differences.

• “General and Administrative” includes bank charges, credit card fees, dues and subscriptions, liability insurance, office supplies, postage, telephone, POS support, internet, payroll service, and legal and accounting service. Franchised Restaurants may incur higher expenses because the Company-Owned Restaurants are supported by office personnel, and the personnel wages and benefits are not included in this expense.

• “Repairs and Maintenance” includes repair and maintenance expenses actually incurred. Franchised Restaurants may incur different expenses depending on the repairs and maintenance needed at the Franchised Restaurant.

• “Advertising Royalty” represents the percentage of sales that a Franchised Restaurant will pay to the Advertising Fund under the Franchise Agreement. This percentage will be 2.00% for all Franchise Agreements signed prior to March 31, 2012 and 2.50% for all Franchise Agreements signed on or after March 31, 2012.

• “Local Advertising” represents 1.00% which is the minimum percentage of sales that a Franchised Restaurant must spend on local advertising expenses under the Franchise Agreement.

• “Service Royalty” represents 4.00% which is the percentage of sales that a Franchised Restaurant would pay to the franchisor as a service royalty under the Franchise Agreement.

• “Income” is sales less the expenses listed above. The income above is before deductions for rent, real estate taxes, personal property taxes, interest costs, depreciation and amortization, or income tax.

• The statements shown in the table do not include the following expense items, which must be calculated and included separately for every Culver’s Restaurant:

• Depreciation of property and equipment;
• Rent, interest, or other financing cost for land, buildings, equipment, and inventory;
• Initial franchise fee and organization costs;
• Any management fees;
• Income taxes and property taxes;
• Travel and entertainment;
• Other employee benefits, such as incentive, other team member compensation, team events, and team recognition;
• Other expenses, such as furniture and equipment, technology software and equipment, flowers and decoration, meeting expense, cash over/short, and credit card chargebacks and discrepancies.

• These excluded items will affect the net income and/or cash flow of any Culver’s Restaurant and must be carefully considered and evaluated by any prospective franchisee. The actual performance of any Culver’s Restaurant will depend on a number of factors specific to the property, including the above factors.

Section VI – Culver’s Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️