Starting a breakfast franchise can be an exciting venture, but it’s important to understand the financial commitment involved. Whether you’re considering a family-friendly spot like Jimmy’s Egg or another popular breakfast franchise, knowing the initial costs, ongoing fees, and potential for profitability is crucial. Here’s what you need to know about the financial aspects of opening a breakfast franchise.
Initial Investment
Initial Investment: $480,000-$2,330,000 (Varies greatly depending on location and building)
The initial investment for starting a breakfast franchise varies significantly depending on the brand and location. For instance, franchises like Another Broken Egg Cafe and Denny’s have a broad range of startup costs. You might expect to invest anywhere from $847,100 to $1,226,000 for starting a franchise like Another Broken Egg Cafe. On the other hand, a Denny’s might require an investment ranging from $1,428,422 to $2,326,537 (Small Business Trends).
Specific Example: Jimmy’s Egg
For a more specific example, opening a Jimmy’s Egg franchise, a well-established name in the breakfast and brunch industry, generally requires an initial investment ranging from $627,800 to $978,000 — which is less than half the amount it could take to start a Denny’s (on the low end). This cost includes the franchise fee, construction, equipment, initial supplies, and advertising for the grand opening.
Franchise Fees and Royalty Rates
Franchise Fees: $30,000-$50,000
Franchise fees are upfront costs paid to the franchisor for the rights to use the brand and its business model. For many breakfast franchises, this fee can vary. For example, the franchise fee for IHOP ranges from $40,000 to $50,000, while Jimmy’s Egg’s individual restaurant franchise fee is $30,000.
Royalty Fees: 4%-12%
Royalty fees are ongoing payments made to the franchisor, typically a percentage of the franchise’s weekly or monthly gross sales. These fees cover ongoing support services provided by the franchisor and the right to continue using the brand name. For instance, IHOP charges a royalty fee of 4.5%, which is quite common in the industry (Top Franchise). Jimmy’s Egg’s royalty fee, however, is just 4% — slightly less than the industry norm and far less than the highest rates.
Additional Costs to Franchise a Restaurant
Beyond the initial investment and franchise fees, potential franchisees should also consider other costs such as:
- Real Estate: Depending on whether you are leasing or buying, location costs can significantly affect your startup budget.
- Equipment and Supplies: Kitchen equipment, furniture, and initial food supplies are critical startup costs.
- Staffing: Salaries and training costs for your initial team are essential for a smooth operation.
- Marketing and Advertising: Although some franchisors include marketing in their fees, additional local marketing efforts may require more budget.
Profitability and Return on Investment
While the initial costs might seem high, the potential for profitability in the breakfast franchise industry is promising, especially as breakfast and brunch continue to grow in popularity. Franchises like Jimmy’s Egg offer a proven business model with support in operations, marketing, and continuous training, which can significantly aid in achieving a good return on investment.
Find a full breakdown of investments on our information page.
Opening a breakfast franchise requires careful financial planning and a clear understanding of the costs involved. It’s essential to conduct thorough research, possibly consult with a financial advisor, and review the Franchise Disclosure Document (FDD) carefully before committing to any franchise agreement. With the right planning and execution, a breakfast franchise can be a lucrative and rewarding business.
