Why Franchises Cost What They Do
As youre seeking franchises that meet your investment level, you probably have found yourself wondering during your search, Why do some of these franchises cost so much?
The cost to open a franchise varies by the franchise system and location the franchise unit will be run from. For franchises where the estimated initial investment is under $10,000, the administrative responsibilities of the franchise can often be done from home. Since there is no need for a commercial lease or real estate purchase, the average initial investment for these franchises is drastically reduced as the purchase and renovation of real estate is commonly the most expensive and variable cost in opening a franchise.
Other factors that can influence the initial investment level of a franchise include whether the franchises operation requires specialized equipment or materials. With franchises where what is needed for operation is less specialized, the opening cost is lessened.
Steak N Shake Franchise Reviews
There are quite a few Steak N Shake franchise reviews online, and the majority of them are positive. This is usually because Steak N Shake is a great place to eat and the staff is always friendly and willing to help. franchisees also report that the business is very profitable, even in difficult economic times.
Some Steak N Shake franchises have also commented on the quality of the food. They say that the burgers, fries, and shakes are all delicious and that the franchisees make sure that the food is always fresh.
Overall, Steak N Shake is a great franchise to own and operate. The franchising is typically done by the right franchise systems and processes.
You can see this video on the Steak n Shake Franchise Partner Program by Alok Shivpuri.
How Much Profit Does A Steak N Shake Franchise Makes
The corporation has an annual revenue of $939,990,000 on average. In terms of per-unit sales, the system as a whole has a $1,027,000 average. Keep in mind that you are merely a franchise partner and do not receive 100% of the income.
You will earn a percentage of the revenues depending on the sort of franchise you open. The majority of the time, youll get half of the earnings.
Also Check: Buy Philly Cheese Steak Meat
Don’t Miss: Where Can I Buy Steak In Bulk
What Is The Cheapest Food Franchise To Own
In the United States, Chick-fil-A is one of the most successful fast food chains. In addition, it is a cheap way to open one. By the end of the year, the company had generated $700 million in revenue. In 2014, QSR magazine reported that it sold $8 billion worth of pizza, making it the largest brand in the country.
Steak N Shake Franchise Opportunity
When considering a franchise, the first thing that comes to mind is what you will receive in return. If we are trying to determine if a franchise is a good opportunity, can it provide good opportunities for investors?
More than 450 restaurants were open and the brand had outlets all over the country in 2020, according to data. The business provides numerous franchise opportunities in a variety of operating formats, including freestanding quick serve, in-line quick serve, non-traditional, and roadside.
Steak N Shake offers a unique and low-cost franchise opportunity with just a $10,000 investment, the shake and shake franchise owners can become franchise partners and start earning 50% of restaurant profits, unlimited earning potential , and guaranteed profits from the first few years. The business offers the chance to invest in a small amount of stock without becoming a significant shareholder.
Recommended Reading: Where To Buy Spinalis Steak
Steak N Shake Swot Analysis
Aside from the numbers, a potential franchisee must take into consideration the strengths and weaknesses of a business because getting into the franchise industry is a longterm commitment.
So before you sign a franchise agreement, make sure you familiarize yourself with the good and bad of a franchise. You want to be prepared for whatever this restaurant concept throws your way.
You May Like: Seasonings For Ribeye Steak
Steak N Shakes Change In Management
Experts point to a decline in the quality of service and food, starting in 2008, as the main culprit for the chains declining popularity. This was the same year that new owner, Biglari Holdings Inc., took over the company and implemented some major changes to Steak n Shakes operational model.
CEO Sardar Biglari had a fresh vision for the way Steak n Shake should operate: with high efficiency and low margins. As YouTuber Company Man explains, Biglari essentially wanted to sell more burgers for cheaper, where speed of service would be key in feeding the masses with not great, but good enough, burgers and shakes.
In order to achieve this, Steak n Shakes menu was pared down to the basicsburgers, fries, sodas, and shakesand its prices dropped to a uniform low across all locations. While sales started to rise for a while, they started slipping again in 2016.
Some of Biglaris changes have had a lasting impact on the burger chains appeal with customers. But thats not the only complaint.
You May Like: Seasoning Steak Overnight
Read Also: Omaha Steaks $49.99 Special 2020
Steak N Shake Franchisor Consolidated Statement Cash Flows
As seen in the table above both Steak n Shake franchise locations and company operated locations have declined over the past two years. In 2020 there was a significant decline of 97 closed company operated restaurants and 24 closed franchise locations. These numbers are concerning indicating the business overall is in decline or downsizing phase
What Kind Of Franchises Are Out There For Under $10000
Whether you’re looking for a more turn-key franchise that takes minimal time to run, or an online franchise that allows you the flexibility to work from home or elsewhere, there are plenty of franchise business opportunities out there starting under $10,000.
Some of the franchises that dont require large start-up costs or franchise fees include options in the industries of financial services such as tax preparation, vending machine ownership, lawn care, medical billing, cleaning and janitorial services, booking travel, even childrens dance instruction.
Also Check: Most Expensive Steak In Las Vegas
Key Franchise Ratios Comparables Computations And Analyses
To Access the Rest of This Article and Other Premium, Income-Enhancing Content, or Log In.Gain the Insider Information You Need to Make a Safe and Smart Franchise Investment. Click Here to Learn More.
Need help? Email
Your website and you have been instrumental in finding this franchise opportunity and I am overwhelmingly grateful.
The Chain Has Lost A Large Number Of Locations
Steak n Shake has been on a shrinking streak since 2018. In fact, earlier this year it was reported that it lost about 12% of its 550 nationwide locations.
The most recent filing shows that the trend continues. Steak n Shake shuttered an additional 16 stores between January and the end of September this year, while its corporate-owned store count, which brings in higher revenue, continues to shrink in favor of franchisee-owned restaurants.
Don’t Miss: What Kind Of Wine Goes With Steak
Challenges Of Steak N Shake
A potential challenge is the lack of 100% ownership of the franchise. As a franchise partner, you are given 50% of the profits, despite running 100% of the day-to-day operations. If you look at the financial requirements, however, you will see that the small investment fee could make up for the lack of total ownership among some operators.
Steak n Shake seems to be using a similar approach to franchising as Chick-fil-A. After all, Chic-fil-A franchise doesnt actually own their business. The owners are actually the operators of the business. One of the requirements of becoming a Chic-fil-A partner is youll need to actively operate the store you open and it cant be used as a passive investment.
Heres another reason you should be concerned about the Steak n Shake company. The company has been losing a significant amount of money in recent years. For example, in 2020 the franchise lost $4.6 million and shuttered 70 locations over the past two years. No company can continue losing money year after year and expect to remain in business.
- Not having 100% ownership over your site.
- The franchise wants a manager to take over the operations of the restaurant.
- You need to be working in the Steak n Shake and involved in the day-to-day.
- This is not a passive investment opportunity.
- The company has been losing money for the past few years. This isnt sustainable.
What Is Starbucks Franchise Fee
Youll need to pay an initial fee of somewhere between $40,000 and $90,000, and have a net worth of at least $250,000, with at least $125,000 of that liquid and ready to pour into the business. After all is said and done, you should expect to pay somewhere between $228,620 and $1,691,200, just to get the doors open.
Read Also: Omaha Steaks Dry Ice Disposal
Don’t Miss: How Do You Age Beef Steaks
Staying Away From Scams
Similar to how franchises are subject to providing a certain level of disclosure to buyers before agreements are signed, business opportunities are alsoto a certain extent.
To combat the risks, the FTC has taken steps to crack down on businesses that have provided false claims over the years. They are also working to educate those looking into business opportunities with a website with tips on spotting a potential fraud, and ways to contact them if you believe youve been misled by a company offering bogus business opportunities.
In addition, back in 2012 the Federal Trade Commission did enact the Business Opportunity Rule. Under the rule, sellers have to give youthe buyera disclosure document overviewing your potential investment before any binding agreement is made.
The business opportunity disclosure document is required to be produced in any language that a business opportunity is promoted in, and must be updated every quarter year.
Although not as thorough as the FDDfranchise disclosure documents can be hundreds of pages in length while business opportunity disclosure documents can be as short as one pagethe information from the document can be used to fact-check what the seller tells you about the opportunity and what youve discovered from your own due diligence .
How Much Does A Steak N Shake Franchise Cost
A traditional steak-and-shake free-standing quick service restaurant is expected to cost between $1,208,000 and $1,687,000 to open new locations. Their operational and other cost structures affect this initial investment differently.
Franchise costs of Steak N Shake formats are as follows
|Steak N Shake Franchise|
|50% of Initial Franchise fees|
You May Like: Crate And Barrel Wusthof Steak Knives
Trends And Facts About Franchise Opportunities For Sale Under $10000
Thinking about buying a franchise, but are concerned that you dont have enough money? We have good news! There are hundreds of franchise opportunities listed on our website, and many of them don’t require a huge cash investment. If you have the drive to start a business and run your own franchise, but are short on capital, youll still find many options here.
When Opening Any Business Its Paramount To Do Your Research And Understand That There Is Risk Involvedno Matter The Classification
Browse the several of the lowest initial investment level franchises out there on our site. You can view quick facts and request more information about the ones that look best for you. Happy searching!
Sign up here to get the latest franchise opportunity updates and more delivered directly to your inbox. Be the first to know!
Don’t Miss: 6 Slot Steak Knife Block
A Lower Acceptance Rate Than Stanford
According to Chick-fil-A, 60k people apply to be operators every year and only ~80 are selected.
With a 0.13% acceptance rate, its harder to become a Chick-fil-A franchisee than it is to get into Stanford University , get a job at Google , or even become a special agent for the Secret Service .
Zachary Crockett / The Hustle
Chick-fil-A Operators go through a screening process that often lasts months.
Quincy L.A. Springs IV, a Chick-fil-A Operator in Atlanta, had to complete 10 rounds of interviews, write 12 essays, and provide a copy of his high-school transcript. Once selected, he went through an extensive, multi-week training program covering everything from menu education to employment law.
In lieu of wealthy investors, Chick-fil-A selects franchisees who are involved in their local communities. The companys aim, says a spokesperson, is to find people who are willing to be highly involved in day-to-day operations. .
You run every aspect of the restaurant six days a week, says Jeremiah Cillpam, a Chick-fil-A franchise owner in Los Angeles. In return for 60-hour work-weeks, an operator might take home 5-7% of revenue .
But from an investment perspective, certain things about being a Chick-fil-A franchisee arent so enticing:
- They dont own the restaurant or equipment .
- They dont have any equity stake in the business.
- In most cases, they arent permitted to own multiple locations.
- They arent permitted to run any other business.
Is The Steak N Shake Worth The Cost To Invest
Becoming a franchisee isnt for everyone and no two franchises are the same which is why researching on your intended franchise is highly encouraged to prepare you for what you need and have to know about the business.
For Steak n Shake though, their franchise program acceptance is so low that thousands who apply get rejected all the time. According to the company, in order to be accepted, you must have a passion for excellence with great customer relations, want to please customers, are committed to high performance, and to delivering quality products. Lastly, you must be dedicated to guest service and prioritizing everything in their best interest.
Just because this is a low-investment opportunity, doesnt mean it will be easy to be accepted.
Related Reading: Can You Be Fired from a Franchise Business You Invested In?
If you think you are exactly what I just described, then what you need to do next is consider the money involved. Obviously, with their low franchise free program, anyone would be ecstatic to go and sign up for it. But keep in mind that the $10,000 means you will not be given 100% ownership of the business.
However, theres a reason that the company has successfully opened franchise stores for years. There are also several success stories from franchisees about growing their restaurant and earning so much more than what they initially put out.
Recommended Reading: Pee Dee Steak House Delivery
Food Franchises Under $10k
There are hundreds of different franchise opportunities out there, but some are more expensive than others. Many franchises include licensing fees and start up costs in the range of $50-100K. So if youre wondering to yourself, What franchise can I buy for $10,000?, the low cost franchise solution may lie in food.
When many people think of franchises, they immediately picture fast food joints. And rightfully so theyre prolific, found across the globe, and are the perfect example of a business format franchisethat is, one that comes with a business plan and complete system for effectively operating the business.
Requirements For The Opportunity
Now that you have an understanding of the basics on franchising Steak n Shake, lets talk about the requirements and fees that youll have to dish out for the opportunity.
Ill just jump right in and tell you the franchising fee for this company is currently anywhere between $25,000 and $40,000. Which honestly, that isnt too bad for getting started.
However, the total investment is calculated at around $460,000 to $2.7 million. That range is very extreme and probably depends on certain factors such as the location of the restaurant.
When you sign into an agreement as a franchise, you are agreeing to 20 years for the initial term. But luckily, they only require 5 years for renewal agreements.
So although that initial term is quite lengthy, it will certainly give you time to build your business and start earning reputation and money at your location.
While we are talking about the agreement term, I might as well let you in on the extra fees that youll be in charge of paying. The ongoing royalty fee is currently marked at 5.5% and they also require a 4% advertising fee from their franchisees.
Though the ad fee is a little high, the royalty fee is decently low compared to the competitors fees.
Read Also: Winn Dixie Ribeye Steak Price
Financial Requirements And Fees
As mentioned, you technically do not own the Steak n Shake franchise unit outright, but rather a portion of it. The benefit to this structure, however, is that you only need to invest invest $10,000 into the opening of your outlet. These numbers only give you a general idea of what you need to start the franchise and may not include the all additional costs needed.
Here is a base overview of what the essential finance requirements are for a Steak n Shake franchise. It is also important to remember that although you are opening a franchise, you are considered a franchise partner and will receive 50% of the store profits.
It is important to note that these are just the initial costs youll need to get your business started. There may also be additional fees that are not accounted for in these numbers that depend on the location or type of store you want to open. Also, take into consideration that the franchise model you open will influence the amount of money youll spend.
Here is a breakdown of fees required of a Steak n Shake franchise. Unfortunately, the costs of developing the franchise and maintaining it are not available to the public.
|Type of Fee|
Read Also: Did Mcdonalds Discontinue Egg White Delight