Zaxby’s is a popular fast-casual restaurant chain specializing in chicken dishes, known for its unique flavor and Southern hospitality. Founded in 1990 by Zach McLeroy and Tony Townley in Statesboro, Georgia, Zaxby’s has grown to over 900 locations across the United States. The franchise model has allowed for rapid expansion, making it an appealing option for potential franchisees. This article explores the financial aspects of owning a Zaxby’s franchise, focusing on the earnings potential for franchise owners.
Initial Investment And Costs
Before diving into potential earnings, it is crucial to understand the initial investment required to open a Zaxby’s franchise.
The total investment typically ranges from $1.4 million to $3.3 million. This investment covers various expenses such as:
Franchise Fee: $35,000
Construction Costs: $1 million to $2 million
Equipment and Inventory: $200,000 to $300,000
Initial Marketing Contribution: $5,200 to $10,000
Training Expenses: $10,000 to $25,000
Additional Operating Expenses: Varies widely based on location and operational scale
These costs can vary significantly based on factors like location, size of the restaurant, and whether the franchisee opts to lease or buy property.
see also: What Are The Different Fatburger Franchise Models?
Revenue Generation
One of the most attractive aspects of owning a Zaxby’s franchise is its revenue potential. On average, a Zaxby’s restaurant generates approximately $2.6 million in annual revenue. This figure is notably higher than many competitors in the chicken fast-food sector, which average around $1.66 million in yearly revenue.
Average Gross Sales
The reported median gross sales for Zaxby’s franchises are around $2,651,111 per year. This strong performance can be attributed to several factors:
Brand Recognition: Zaxby’s has established itself as a leader in the fast-casual dining market.
Quality Offerings: The menu features high-quality chicken dishes that appeal to a wide demographic.
Effective Marketing Strategies: Consistent marketing efforts help maintain customer interest and drive traffic.
Profit Margins
Understanding profit margins is essential for estimating how much money a franchise owner can make. On average, Zaxby’s franchises operate with an estimated profit margin of around 15%. This translates into an annual profit of approximately:
Annual Profit=Annual Revenue×Profit Margin
Annual Profit=2,600,000×0.15=390,000
Thus, a franchise owner can expect an annual profit of about $390,000 before deducting operational costs and fees.
Ongoing Fees
Franchise owners must also consider ongoing fees that impact their net earnings:
Royalty Fee: 6% of gross sales
Marketing Fee: 4% of gross sales
These fees are crucial for maintaining brand standards and supporting national marketing efforts.
Calculating Net Earnings
To calculate net earnings after fees and expenses:
Start with annual revenue: $2,600,000
Subtract royalty fees (6%):2,600,000×0.06=156,000
Subtract marketing fees (4%):2,600,000×0.04=104,000
Subtract estimated operating expenses (assumed at 15%):2,600,000× 0.15=390,000
The calculation would look like this:
Net Earnings=Revenue−(Royalty Fee+Marketing Fee+Operating Expenses)
Net Earnings=2,600,000−(156,000+104,000+390,000)=1,950,000
Thus,Net Earnings=1,950,000
Net Earnings=1,950,000
This simplified model shows that after accounting for fees and expenses from gross sales of around $2.6 million per year, a franchise owner could potentially take home about $1.95 million annually before taxes.
Franchisee Earnings Breakdown
The earnings for Zaxby’s franchise owners can vary based on their level of involvement in daily operations and management efficiency:
For owner-operators actively involved in management: Approximately $398,000 annually.
For less involved owners or those who hire management: Earnings may drop to around $313,000 annually.
This variability underscores the importance of effective management practices and operational efficiency in maximizing profits.
Conclusion
Owning a Zaxby’s franchise presents significant financial opportunities for prospective business owners. With an average annual revenue of approximately $2.6 million and potential profits ranging from $313,000 to $398,000 depending on management involvement and operational efficiency, Zaxby’s stands out as a lucrative investment in the fast-casual dining sector.
However, prospective franchisees should carefully consider the initial investment costs and ongoing fees associated with operating a Zaxby’s restaurant. By understanding these financial dynamics and committing to effective management practices, franchise owners can optimize their earnings potential while contributing to the growth of this beloved brand.
In summary:
Initial investment: $1.4 million to $3.3 million.
Average annual revenue: $2.6 million.
Estimated profit margin: 15%, translating into potential profits between $313K and $398K annually.
With strategic planning and effective execution of business operations, owning a Zaxby’s franchise can be both rewarding and profitable in today’s competitive fast-food landscape.
Related topics:
- Why Did Burger King Discontinue Chicken Fries in 2012?
- What New Flavor Milkshakes Does Burger King Have in 2024?
- Does Burger King Have Biscuits And Gravy for Breakfast?