Togo’s Sandwiches is a beloved brand in the fast food industry, known for its fresh and flavorful sandwiches. With over 200 locations primarily on the West Coast, Togo’s has carved out a niche for itself as a go-to spot for hearty, made-to-order sandwiches. If you’re a fast food enthusiast considering diving into the franchise world, Togo’s could be a solid investment.
But before making any decisions, it’s crucial to understand the financial commitment required. This article will provide an in-depth look at how much it costs to open a Togo’s Sandwich franchise, breaking down the various fees and expenses involved in the process.
Togo’s Sandwich Franchise Overview
Togo’s Sandwiches was founded in 1971 in San Jose, California. What started as a small sandwich shop has grown into a well-known chain, loved for its high-quality ingredients and generous portions. The brand prides itself on offering a variety of sandwiches, salads, and wraps, all made fresh to order. Over the years, Togo’s has built a loyal customer base, making it an attractive option for potential franchisees.
Togo’s franchise model is designed to support franchisees through every step of the process, from site selection and training to marketing and operations. The company provides extensive training programs to ensure that franchisees are well-prepared to run their business successfully. Additionally, Togo’s offers ongoing support and guidance, helping franchisees navigate the challenges of the fast food industry.
SEE ALSO: How Many Branches Are There in Togo’s Franchise?
Initial Togo’s Franchise Cost
The first cost to consider when opening a Togo’s franchise is the initial franchise fee. This is a one-time payment made to Togo’s to secure the rights to operate a franchise under their brand. As of 2024, the initial franchise fee for a Togo’s Sandwich franchise is $30,000. This fee grants you the license to use Togo’s brand name, trademarks, and business model. It also covers the cost of initial training and support from the franchisor.
It’s important to note that the franchise fee is non-refundable, even if you decide not to proceed with opening the franchise after signing the agreement. Therefore, it’s essential to thoroughly evaluate your decision and consult with financial advisors before committing to this investment.
Total Initial Investment
Beyond the initial franchise cost, potential franchisees must also consider the total initial investment required to open a Togo’s Sandwich franchise. This includes costs for real estate, construction, equipment, inventory, and working capital. The total initial investment for a Togo’s franchise typically ranges between $240,500 and $563,500. This wide range accounts for various factors, such as location, size of the restaurant, and whether you’re leasing or purchasing the property.
Real Estate and Leasehold Improvements: The cost of leasing or purchasing a property for your Togo’s franchise will vary depending on the location. In high-demand areas, real estate costs can be significantly higher. Leasehold improvements, which include renovations and construction to make the space suitable for a Togo’s restaurant, can also add a substantial amount to the initial investment.
Equipment and Fixtures: Setting up a Togo’s franchise requires purchasing specialized equipment, such as ovens, refrigerators, and sandwich preparation stations. The cost for equipment and fixtures can range from $100,000 to $200,000, depending on the size and layout of the restaurant.
Inventory: You’ll need an initial supply of ingredients and other inventory items to start operations. The cost of inventory typically ranges from $10,000 to $15,000.
Working Capital: It’s essential to have sufficient working capital to cover operating expenses during the first few months of business. Togo’s recommends having at least $40,000 to $60,000 in working capital available.
Ongoing Fees And Royalties
In addition to the initial investment, Togo’s franchisees must also pay ongoing fees and royalties to the franchisor. These fees are typically a percentage of the franchise’s gross sales and are used to support the ongoing operations and marketing efforts of the Togo’s brand.
Royalty Fee: Togo’s charges a royalty fee of 6% of gross sales. This fee is paid on a weekly or monthly basis and covers the cost of ongoing support, training, and access to the Togo’s brand and business model.
Marketing Fee: Togo’s requires franchisees to contribute to a national marketing fund, which supports advertising and promotional campaigns for the brand. The marketing fee is typically 2% of gross sales. In addition to the national marketing fund, franchisees may also be required to contribute to local advertising efforts in their specific market.
Technology Fee: Togo’s franchisees are required to pay a technology fee to support the brand’s digital infrastructure, including the point-of-sale (POS) system, online ordering platform, and mobile app. The technology fee is usually around $250 per month.
Financing Options
For many potential franchisees, financing the initial investment is a significant concern. Fortunately, there are several financing options available to help you cover the costs of opening a Togo’s franchise.
SBA Loans: The U.S. Small Business Administration (SBA) offers loans specifically designed for franchisees. These loans typically offer favorable terms and interest rates, making them a popular choice for franchise financing. Togo’s is listed on the SBA Franchise Directory, which means that the brand is eligible for SBA financing.
Franchisor Financing: Togo’s may offer financing options for qualified franchisees. This could include assistance with the initial franchise fee, equipment costs, or working capital. Be sure to ask the franchisor about any available financing programs during your initial discussions.
Third-Party Lenders: Many franchisees choose to work with third-party lenders, such as banks or credit unions, to finance their franchise. These lenders may offer loans specifically designed for small businesses or franchises, with competitive interest rates and repayment terms.
Profitability And Return on Investment
Understanding the potential profitability and return on investment (ROI) is crucial when considering a Togo’s franchise.
While exact figures can vary based on location, management, and market conditions, it’s important to have realistic expectations about the revenue and profits you can generate from a Togo’s franchise.
Average Revenue: According to industry reports, the average Togo’s franchise generates between $500,000 and $800,000 in annual sales. However, high-performing locations can exceed this range, particularly in densely populated urban areas with high foot traffic.
Profit Margins: The profit margin for a Togo’s franchise can vary depending on factors such as food costs, labor expenses, and rent. On average, franchisees can expect a profit margin of 10% to 15% of gross sales. This means that a franchise generating $700,000 in annual sales could potentially earn a net profit of $70,000 to $105,000.
Break-Even Point: The break-even point for a Togo’s franchise typically occurs within 2 to 4 years of operation, depending on the location and initial investment. Achieving profitability sooner will depend on factors such as efficient management, effective marketing, and controlling costs.
Conclusion
Investing in a Togo’s Sandwich franchise can be a rewarding venture for those passionate about the fast food industry. With its established brand, loyal customer base, and comprehensive support system, Togo’s offers a promising opportunity for entrepreneurs. However, it’s essential to carefully evaluate the financial commitment required, including the initial franchise fee, total initial investment, and ongoing fees. By thoroughly researching and planning your investment, you can position yourself for success as a Togo’s franchisee.