Five Guys Franchise Cost Worth It In 2022?



The Five Guys restaurant chain offers fast casual dining restaurants which specialize in the sale of freshly made hamburgers, french fries, and hotdogs. The restaurant offers a menu that is plain and simple and contains a variety of burgers made from 100% fresh never-frozen ground beef.

The Five Guys Burgers and Fries first opened in 1986, and began offering franchise opportunities in 2002. As of 2020, over 1400+ Five Guys franchises have opened across the country and they continue to expand.

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00:00 Introduction
00:23 Locations
01:02 Initial Investment, On-Going Royalty & Local Advertising Fee
01:43 Time to Recoup Investment
02:12 Average Net Loss
02:44 Locations In the Pandemic
02:56 Conclusion

#FiveGuysFranchiseCostWorthItIn2022 #VettedBiz

Victor J. Murrell is the current President of Five Guys. Victor has been serving in that role since April 2017. He has also served as secretary and treasurer of five guys inc. since 1997.

Five Guys competes in the fast-food market against big brand companies such as McDonald’s and Burger King. Five Guys franchisees (“Operators”) also compete against other nearby Five Guys locations.

The initial total investment required to establish a Five Guys Franchise ranges from $306,200 to $641,250 in all states apart from Alaska, Hawaii, and Puerto Rico where the initial investment ranges from $381,200 to $716,250.

Five Guys new locations are generally opened by existing franchisees. At this time, Five Guys is not actively recruiting franchisees who do not currently operate a Five Guys restaurant.

Royalty Fees: 6% of Weekly Gross Sales, *8% if franchise is located in Alaska, Hawaii, or Puerto Rico

Creative Fund: Up to 2% of weekly Gross Sales

Local Advertising: not less than 2% of Gross Sales annually

Five Guys does not make any representations about a franchisee’s future financial performance or the past financial performance of company-owned or franchised outlets. However, if you(franchisee) are purchasing an existing outlet, Five Guys may provide you with the actual records of that outlet.

Through our analysis of the Franchisor’s income statement we can estimate sales figures from the revenue depicted in the income statement.

2019 Five Guys Sales and Break-Even Point:

Royalty Fee: 6% of Gross Sales

2019 Five Guys Royalty Revenue: $77 million

Estimated Total Franchise Sales: $1.28 billion

Number of franchised outlets at the end of 2019: 941

Estimated Average Franchise Revenue: $1,363,443

2020 Five Guys Sales and Break-Even Point:

Royalty Fee: 6% of Gross Sales

2020 Five Guys Royalty Revenue: $80 million

Estimated Total Franchise Sales: $1.33 billion

Estimated Average Franchise Revenue: $1,319,444

It’s important to note that it takes about 2.5 years for a franchise in the food industry to scale up. This period is included in the calculation of the time it takes to recoup your initial investment.

Is the Five Guys Franchise Profit Worth the Franchise Cost?

To assign a valuation multiple for Five Guys franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We used the valuation of franchise food businesses in our calculations.

Under $1 Million Net Sales
Estimated Selling Price = Net Sales * 0.32
$1 – $5 Million Net Sales
Estimated Selling Price = Net Sales * 0.31
Over $5 Millions Net Sales
Estimated Selling Price = Net Sales * 0.69
When you go to sell a Five Guys franchise based on the median multiple of 0.31 and an average net sales of $1,341,443 from 2019 and 2020, it would sell for $415,847. The resale value is very close to the midpoint investment of $473,725 which indicates a low earning potential from reselling your business.

However, if you decide to own multiple Five Guys Franchises, you increase your earning potential since there is a higher median multiple of 0.69 for businesses making over $5 million dollars in net sales.

For example, if you own 5 franchises, you would be expecting ~$6 million in net sales. Selling this multi-unit franchise system would amount to about $ 4 million which is almost twice as much as the average initial investment of establishing the 5 franchises.

Visit the franchise profile on Vetted Biz: https://www.vettedbiz.com/five-guys-franchise/

Want to speak with a franchise specialist about Five Guys or another franchise? Click here: https://share.hsforms.com/1ZtNM19w4R8WIXyNa_97N7w4e0xw

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