How Much Can I Make?
Togo’s has higher average sales than most sandwich franchises, as reported in its FDD
Togo’s has above-average sales in the sandwich franchise segment of the restaurant industry, and our support team works extensively with franchisees to help them control costs and boost bottom-line performance. There are hundreds of tiny things you can do when running a restaurant to reduce costs and improve margins. You can invest in LED light bulbs, which cost more initially but yield massive savings in electricity costs. You can also work with your soft drink supplier to regularly recalibrate your fountain drink machine’s sensors, ensuring that the right amount of syrup is being used and your drinks taste great. Guests certainly notice, and their paying for that great-tasting fountain drink provides a big boost to your margins. Those are two small examples; our field support team regularly helps franchisees analyze their businesses and find these types of opportunities.
Togo’s had 250 restaurants open as of Dec. 26, 2015, and 181 of those were “traditional” locations in either online retail or freestanding locations — offering full service and our full menu. The other locations were either co-branded locations or nontraditional locations such as college campuses or stadiums, which offer a limited menu. The tables below focus on the financial performance of our traditional locations.
Average Togo’s franchise earnings
Togo’s had 153 traditional restaurants that operated during the entire 52-week period ending Dec. 26, 2015, and reported weekly sales reports to us each week. The average unit volume for these 153 restaurants was $669,117. Here’s how revenues broke down among our top-performing and lower performing locations:
|SALES||HIGH SALES||MEDIUM SALES||LOW SALES|
|Number and %|
at or above
|20 (39.2%)||25 (49.0%)||28 (54.9%)|
How much of the revenue becomes profit?
Togo’s cannot project profits for individual sandwich franchise owners because of the myriad factors that are involved in running a successful business. A strong operator can reduce their average cost of goods and labor by managing their business, and franchisees may choose to spend extra on marketing to drive growth.
142 franchisee-owned restaurants submitted P&L reports for part or all of the 52-week period ended Dec. 26, 2015. They reported that the total cost of food and paper for their restaurants equaled 33.5% of revenue, on average. More than half of franchisees had a lower percentage devoted to food and paper. Togo’s food and paper costs are slightly higher than the average for the sandwich industry. That’s because we invest in quality ingredients, and we consider quality and the resulting word-of-mouth to be part of our marketing spend. Our royalty fees, in turn, are lower than our competitors’.
These restaurants reported that total average direct labor costs equaled 19.95% of revenue. This does not include manager salary, franchisee salary or draw, payroll tax, or benefits.
How did Togo’s do with its own restaurants?
Togo’s owns 12 restaurants that had been open for 24 months or more at the end of 2015. Here’s a look at average sales and P&L data:
|TOTAL AVERAGE||# AND % ABOVE OR BELOW AVERAGE SALES|
|EBITDA||13.51%||7(58.3%) at or Above Average|
|Average Sales||$958,047||7(58.3%) at or Above Average|
|Food and Paper Cost||31.96%||10(83.3%) at or Below Average|
|Direct Labor||21.65%||6(50%) at or Below Average|
|Management Labor||5.85%||7(58.3%) at or Below Average|
|Gross Margin||40.54%||7(58.3%) at or Above Average|
|Rent||8.65%||5(41.6%) at or Below Average|
|Utilities||2.66%||6(50%) at or Below Average|
|Credit Card Fees||1.85%||3(25%) at or Below Average|
|Operating Supplies||1.11%||6(50%) at or Below Average|
|Other Operating Expenses||12.76%||6(50%) at or Below Average|