Biggby Coffee Franchise in 2024: Costs, Fee & FDD
Discover the investment potential of Biggby Coffee, a community-focused coffee franchise with strong growth, extensive franchisee support, and a flexible business model. Learn about costs, earnings, and why it’s a competitive option in today’s market.
Table of Contents:
Biggby Coffee is a popular and growing coffee franchise founded in 1995 by Bob Fish and Mike McFall in Lansing, Michigan. The duo initially launched the company with the vision of creating a welcoming environment where people could gather over high-quality coffee. Over the years, Biggby has become a staple in the coffee franchise world, known for its community-focused approach and its commitment to providing a positive customer experience. It’s significant because it carved out a niche as a friendly and approachable coffee shop, where baristas genuinely care about their customers.
Biggby Coffee specializes in a wide variety of coffee drinks, teas, and smoothies, catering to both the casual coffee drinker and the die-hard caffeine enthusiast. Its signature lattes and flavored beverages, along with customizable options, are the brand’s main draws. The menu also includes breakfast sandwiches, bagels, and assorted baked goods, appealing to a wide audience. The core market for Biggby tends to be young professionals, students, and families looking for a comfortable and lively space to enjoy their coffee or grab a quick bite.
In terms of scale, Biggby has grown substantially since its inception. As of today, it operates over 280 locations across the U.S., particularly concentrated in the Midwest and expanding rapidly to other regions. The franchise serves thousands of customers daily, thanks to its strong brand recognition and loyalty. The expansion of Biggby is ongoing, with a focus on becoming a community-driven coffee chain with a national presence.
Biggby Coffee offers franchisees extensive support, including initial training and ongoing coaching. New franchise owners undergo a comprehensive program covering store operations, customer service, and product quality. There’s also a robust marketing system in place to help franchisees drive customer traffic. One standout feature is Biggby’s emphasis on work-life balance for its owners, aiming to create a sustainable, enjoyable business model for franchisees.
Biggby Coffee Franchise Insights
- Biggby Coffee was founded in 1998 and started offering franchises in 1999, making it a well-established brand with over two decades of franchising experience.
- The brand has a unique “B Happy” philosophy that emphasizes work-life balance for franchisees, making it attractive for those seeking a supportive business environment.
- There are currently 383 franchised units in the U.S., with no corporate-owned locations, showcasing the brand’s focus on franchise-driven growth.
- Biggby’s focus on customer loyalty is reflected in its strong social media presence and a loyalty program that drives repeat business from thousands of customers daily.
Biggby Coffee Franchise Key indicators
Growth YOY (%)
15%
vs industry 0%
Total U.S. Franchised Units
383
3-Year Failure Rate
5%
vs industry 10%
Sales-to-Investment ratio
1.2:1
How much does it cost to open a Biggby Coffee franchise?
Understanding the potential investment size and capital requirements is crucial when considering opening a Biggby Coffee franchise. These financial commitments, including initial franchise fees, equipment costs, and ongoing operational expenses, impact the feasibility and profitability of the venture. Thoroughly evaluating these factors ensures that potential franchisees are prepared for the financial responsibilities and can make informed decisions about their ability to sustain and grow the business, ultimately contributing to long-term success.
Min & Max Investment
Opening a Biggby Coffee franchise involves several key costs, which are outlined in Item 7 of the Franchise Disclosure Document (FDD). You can see a breakdown of the costs to open a Biggby Coffee below from the most recent Item 7 below:
Type of Expenditure
Minimum Investment
Maximum Investment
Initial Franchise Fee
$20,000
$20,000
Leasehold Improvements
$165,000
$295,000
Site Improvements
$83,000
$323,000
Construction Costs
$193,500
$398,000
Equipment, Furniture, and Decor
$43,000
$125,000
Architectural and Engineering
$7,500
$24,000
Building Permits
$7,500
$15,000
Signage (Interior and Exterior)
$10,000
$24,000
Real Property Rental or License
$6,000
$18,500
Initial Inventory
$10,000
$15,000
Insurance – General Liability, Property, Workers Compensation
$1,500
$2,000
Utility Expense
$500
$5,000
License Permits and Other
$1,000
$2,500
Initial Advertising and Grand Opening Promotions
$9,500
$9,500
Miscellaneous Travel and Living Expenses for Training
$500
$5,000
Organizational Expenses
$2,000
$2,500
Additional Funds – 3 Months
$10,000
$40,000
Total Estimated Initial Investment
$328,000
$792,750
Item 7 in the Franchise Disclosure Document (FDD) is the “Estimated Initial Investment” section. It outlines the total costs a franchisee can expect to incur when starting a franchise, including the initial franchise fee, equipment, inventory, real estate, and other startup expenses. This section is crucial because it provides potential franchisees with a detailed understanding of the financial commitment required, helping them assess affordability and plan their investment strategy effectively.
Required Capital
To open a Biggby Coffee franchise, the required capital involves both the initial investment costs and a net worth requirement set by Biggby Coffee. Let’s take a closer look below:
- Initial Investment As shown above, the total estimated initial investment ranges from $328,000 to $792,750. This includes all the startup costs such as the franchise fee, real estate, construction, equipment, initial inventory, and additional funds for initial operating expenses. Assuming that you will finance your franchise investment, you should plan to have 20% of the total investment amount in the form of equity (cash) for the investment.
- Liquid Assets Many coffee franchises, including Biggby Coffee, often expect franchisees to have liquid assets in the range of $150,000 to $200,000 to ensure they can cover initial costs and operational expenses.
- Net Worth A reasonable estimate for net worth to open a franchise like Biggby Coffee would be around $400,000 to $800,000, as the total investment typically corresponds with a net worth requirement on the higher end of the scale.
How much does a Biggby Coffee franchise owner make?
Calculating the salary of a Biggby Coffee franchise owner involves analyzing gross sales to determine total revenue, assessing operational efficiency to understand profit margins, and accounting for franchisor fees and additional expenses such as rent, utilities, and payroll. Effective management of these factors can significantly impact the profitability and financial success of a Biggby Coffee franchise owner. This comprehensive financial analysis helps estimate net profits, from which the owner’s salary can be derived. A clear understanding of these factors ensures accurate salary projections and financial planning for sustainable business operations.
Biggby Coffee Revenue & Gross Sales
Based on most recent analysis, Biggby Coffee franchises have a median gross sales of $691,110. This financial performance underscores the brand’s robust consumer demand and potential for significant revenue generation.
Which key factors impact the average revenue performance of Biggby Coffee franchisees?
Several factors are likely contributing to the performance of Biggby Coffee’s U.S. franchisee median gross sales. One key factor is the ongoing shift in consumer behavior post-pandemic, where more people are returning to daily routines like grabbing coffee on their way to work or school. Additionally, Biggby’s focus on local community engagement and its expanding product offerings, such as seasonal drinks and food items, may have boosted customer retention and attracted new patrons. Furthermore, improved digital marketing strategies and partnerships with delivery platforms have likely played a role in driving up sales, as convenience has become increasingly important for coffee consumers. Lastly, the broader economic environment, including inflation and supply chain challenges, may have influenced pricing and operational costs, impacting overall sales performance.
Biggby Coffee Franchise Operational Costs
When opening a Biggby Coffee franchise, the key primary ongoing operational costs to consider include:
- Labor Costs Payroll for baristas, shift leaders, and potentially store managers will be a significant ongoing expense. This includes wages, taxes, and any benefits you may offer.
- Cost of Goods Sold (COGS) The cost of sourcing coffee, milk, syrups, pastries, and other menu ingredients. This can fluctuate with supplier pricing and seasonal changes in demand.
- Rent and Utilities Your store location’s lease, along with utilities like electricity, water, and internet, will be ongoing expenses that can vary based on the size and location of your store.
- Equipment Maintenance Regular upkeep of espresso machines, refrigerators, and other equipment is essential to avoid costly repairs or replacements, so setting aside funds for maintenance is necessary.
- Marketing and Local Advertising Although there is a brand-wide marketing fee, you may need additional local advertising efforts to drive foot traffic and engage your community.
Biggby Coffee Franchise Fees
Based on the provided data, here’s a breakdown of relevant ongoing fees you can expect when opening a Biggby Coffee franchise. These fees are important to consider as part of your operational costs:
- Royalty Fee Biggby Coffee charges a 6% royalty fee on gross sales, with a 5% royalty for certain existing operators in Michigan. This fee is paid the next business day via electronic funds transfer.
- Advertising Fund Contribution You’ll contribute the greater of $100 per week or 3% of gross sales to the Advertising Fund. This helps support national and regional marketing efforts, and payments are also made via EFT the next business day.
- Minimum Local Advertising Franchisees must spend up to 3% of gross sales on local advertising each month. You can spend this individually or through cooperative advertising arrangements.
- Additional Fees There may be other fees such as technology fees, training fees, or additional marketing costs that can arise as part of ongoing operations.
These ongoing fees are essential to keep in mind as they directly impact your profitability and ability to operate within Biggby Coffee’s brand guidelines.
Biggby Coffee Franchise Earnings
Based on the most recent available data, Biggby Coffee franchisees operating under an owner-operator model reported median gross sales of approximately $691,110. From these gross sales, owner-operators earned an estimated $103,667 annually in operating profits (EBITDA) based on industry margins. This figure provides a solid income opportunity for hands-on franchisees who actively manage their location.
It’s important to note that this earnings figure reflects an average scenario, and actual earnings can vary depending on factors such as location, operating efficiency, and local market conditions. Additionally, ongoing costs like labor, rent, and cost of goods sold will impact net profitability, so managing expenses carefully is key to maximizing your income as a franchise owner.
How to Open a Biggby Coffee Franchise
Becoming a Biggby Coffee franchisee involves several key steps, from your initial inquiry to the start of operations. Here’s an overview of the process:
- Initial Inquiry You or your franchise specialist submits an initial inquiry basic information about your interest and background. You should also conduct thorough research on the franchise, including seeing all of the information available on the Vetted Biz franchise intelligence platform, including access to the most recent Franchise Disclosure Document (FDD).
- Preliminary Discussion You’ll have an initial conversation with the franchise team to assess whether your goals align with the Biggby Coffee brand and to answer any preliminary questions about financial requirements and expectations.
- Discovery Day Next, you’ll be invited to a Discovery Day at Biggby Coffee’s headquarters. This is an opportunity to meet the leadership team, tour facilities, and gain deeper insights into operations and support.
- Franchise Agreement Once you’ve completed Discovery Day and all parties agree to move forward, you’ll sign the franchise agreement. This finalizes your commitment to becoming a franchisee.
- Training and Site Selection You will then undergo a comprehensive training program, which lasts about seven weeks. During this time, you will also work with the Biggby team to select a suitable site for your store.
- Build-Out and Permitting After training, the location build-out begins, including interior design and obtaining necessary permits. Biggby offers guidance during this phase to ensure your store meets brand standards.
- Grand Opening Once the build-out is complete, you’ll prepare for your grand opening, with support from Biggby’s marketing team to create buzz around your new location. From here, your business will be ready to operate!
Pros & Cons
Pros
Strong Brand with Community Focus: Biggby Coffee has a well-established brand, particularly in the Midwest, with a strong emphasis on community engagement and customer loyalty.
Scalable Model: With a focus on expanding into new regions, there’s potential for growth and opening multiple locations as the brand continues to scale.
Work-Life Balance Philosophy: Biggby emphasizes a franchisee-friendly business model that prioritizes work-life balance, making it attractive for those seeking a manageable investment.
Cons
High Initial Investment: The total investment can range from $328,000 to $792,750, which may be a barrier for some potential franchisees with limited access to capital.
Seasonal Demand Fluctuations: Coffee franchises often experience fluctuating demand based on the time of year, with higher sales in colder months and slower traffic during warmer seasons, which could affect cash flow.
Competitive Coffee Market: The coffee industry is highly competitive, with major brands like Starbucks and Dunkin’ dominating the landscape, which could impact profitability.
