Cheba Hut Franchise in 2024: Costs, Fee & FDD
Discover how Cheba Hut’s unique toasted sub concept and counter-culture vibe have fueled its growth to over 50 locations nationwide. Dive into our detailed analysis of costs, fees, and franchisee benefits to see if Cheba Hut is the right fit for your entrepreneurial ambitions. Read more to find out!
Table of Contents:
Cheba Hut, founded by Scott Jennings in 1998, brings a unique twist to the sub sandwich game by embracing a counter-culture theme that’s as flavorful as its menu. Jennings wanted to fuse great food with a laid-back, unconventional vibe, and that vision has led to Cheba Hut becoming a standout player in the fast-casual dining industry. From its inception, Cheba Hut has celebrated a “Toasted” sub concept, curing munchies with creativity and a nod to a particular culture that loves to keep things chill.
At the heart of Cheba Hut’s menu are over 30 signature sub sandwiches, all toasted to perfection. These subs come in three sizes: Nug, Pinner, and Blunt, ensuring there’s something for every appetite. Alongside the subs, customers can enjoy a range of munchies, including Rice Krispy treats, salads, and sides. Many locations also feature craft beer bars, highlighting local brews, which adds a unique community connection to the Cheba Hut experience. The brand attracts a diverse customer base, but it especially appeals to those who appreciate good food in a laid-back, unpretentious environment.
As of now, Cheba Hut has grown to over 50 locations across the United States, making its mark primarily in college towns and urban areas where the vibe resonates. While the brand remains rooted in the U.S., it has plans for expansion that could take its quirky, fun atmosphere to new markets. On a daily basis, Cheba Hut serves thousands of customers who are drawn to its distinctive approach to dining.
Franchisees benefit from a robust support system, which includes comprehensive training programs, marketing support, and operational assistance. New franchise owners are trained not just on the technical aspects of running a Cheba Hut, but also on how to maintain the unique culture that sets the brand apart. With a franchise model that prioritizes quality and consistency, Cheba Hut continues to grow, offering opportunities for entrepreneurs who want to invest in something with both flavor and flair.
Cheba Hut Franchise Insights
- Cheba Hut has expanded to over 50 locations across the U.S., with a strong presence in college towns, indicating a solid growth trajectory and opportunities for further expansion.
- The brand’s “Toasted” sub concept and counter-culture theme resonate strongly with its target market, particularly among young adults, making it a niche yet highly appealing option in the fast-casual space.
- Many locations feature craft beer bars, emphasizing local partnerships and giving franchisees a chance to tap into the growing craft beer trend while enhancing customer experience.
- With a dedicated customer base that appreciates both the food and the vibe, Cheba Hut locations see consistent foot traffic, driven by a loyal following that enjoys the brand’s unique atmosphere.
Cheba Hut Franchise Key indicators
Unit Growth YOY (%)
16%
vs industry 1%
Total U.S. Franchised Units
58
3-Year Failure Rate
4%
vs industry 11%
Sales-to-Investment ratio
1.4:1
How much does it cost to open a Cheba Hut franchise?
Understanding the potential investment size and capital requirements is crucial when considering opening a Cheba Hut 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 Cheba Hut 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 Cheba Hut below from the most recent Item 7 below:
| Type of Expenditure | Minimum Investment | Maximum Investment |
|---|---|---|
| Initial Franchise Fee | $50,000 | $50,000 |
| Leasehold Improvements | $275,000 | $1,300,000 |
| Furniture, Fixtures, Décor and Equipment | $150,000 | $275,000 |
| Point-of-Sale Systems and Other Equipment | $0 | $15,000 |
| Pre-Opening Technology Fee | $900 | $2,400 |
| Opening Team Expenses | $0 | $20,000 |
| Training Expenses | $15,000 | $25,000 |
| Architectural and Engineering Fees | $17,500 | $40,000 |
| Site Survey Fee | $1,750 | $3,500 |
| Signs | $10,000 | $50,000 |
| 3-Months’ Lease Payments | $20,000 | $50,000 |
| Miscellaneous | $15,000 | $30,000 |
| First Party | $3,500 | $10,000 |
| Additional Funds - 3 Months | $50,000 | $100,000 |
| Initial Inventory - Food & Bar | $15,000 | $30,000 |
| Professional Fees | $5,000 | $15,000 |
| Liquor License Costs | $2,500 | $150,000 |
| Extension Fee | $0 | $6,000 |
| Total Estimated Initial Investment | $631,150 | $2,174,900 |
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 Cheba Hut franchise, or a similar fast-casual concept in the industry, there are certain financial requirements you need to meet. These costs cover everything from build-out to initial inventory and marketing. Here’s a breakdown:
- Initial Investment The total investment for Cheba Hut ranges from $631,000 to $2.18 million, depending on the location, size, and specific needs of the franchise. This includes costs for construction, equipment, initial inventory, and working capital. 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 Requirement While Cheba Hut doesn’t specifically list this requirement, most fast-casual franchises with similar investment levels typically require potential franchisees to have at least $200,000 to $500,000 in liquid assets. This ensures you have the necessary cash flow to manage operations in the early stages.
- Net Worth Requirement For a franchise investment of this scale, a net worth of $1 million or more is often required. This provides confidence to both the franchisor and lenders that you have the financial stability to support the business.
How much does a Cheba Hut franchise owner make?
Calculating the salary of a Cheba Hut 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 Cheba Hut 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.
Cheba Hut Revenue & Gross Sales
Cheba Hut’s recent revenue performance is impressive, with median gross sales of $2,127,616 across its locations. This strong performance underscores the brand’s appeal and potential profitability within the fast-casual dining space. Franchisees benefit from consistent customer traffic, particularly in college towns and urban areas, contributing to robust revenue figures and showcasing the franchise’s potential for sustained financial success.
Which key factors impact the average revenue performance of Cheba Hut franchisees?
Several factors likely contributed to the strong performance of U.S. franchisee median gross sales for Cheba Hut. The brand’s unique and appealing concept, which combines a relaxed, counter-culture vibe with high-quality, toasted subs, resonates with a broad customer base, particularly in college towns and urban markets. The addition of craft beer bars at many locations enhances the dining experience, encouraging longer visits and higher ticket sales. Cheba Hut’s strong brand loyalty, driven by its fun atmosphere and distinctive menu, helps ensure consistent customer traffic. Additionally, the franchise’s focus on quality and local engagement likely supports repeat business and positive word-of-mouth, further boosting sales.
Cheba Hut Franchise Operational Costs
When opening a Cheba Hut franchise, it’s important to consider the ongoing operational costs that will impact your bottom line. These costs are crucial to ensuring smooth day-to-day operations and maintaining profitability. Below are the key primary costs you should plan for:
- Labor Costs Employee wages, benefits, and payroll taxes are significant expenses. Managing labor efficiently is essential to keep your operating costs in check.
- Food and Beverage Supplies Keeping your inventory stocked with fresh ingredients for sandwiches, snacks, and drinks is a continuous cost that directly impacts your profit margins.
- Rent and Utilities Monthly rent for your location, along with utility bills like electricity, water, and gas, will be regular expenses you need to budget for.
- Maintenance and Repairs Regular maintenance of kitchen equipment, dining areas, and other facilities is necessary to ensure smooth operations and avoid costly breakdowns.
These operational costs will be a regular part of running your Cheba Hut franchise, so keeping them in mind will help you manage your business effectively.
Cheba Hut Franchise Fees
When opening a Cheba Hut franchise, it’s important to understand the various fees associated with maintaining the franchise relationship and brand standards. These fees not only support the broader Cheba Hut network but also help you benefit from the brand’s ongoing growth and development. Below are the key fees you should be aware of:
- Royalty Fee You’ll be required to pay 5% of your net sales as a royalty fee. This fee is due weekly and covers the ongoing support, branding, and operational guidance provided by Cheba Hut.
- Brand Fund Contribution To support national marketing efforts, you’ll contribute 2% of your weekly net sales to the brand fund. This ensures consistent marketing that benefits all franchisees by raising brand awareness and driving customer traffic.
- Additional Fees There are additional fees for training programs, technology, and other items provided by Cheba Hut that may be applied.
Understanding these fees is crucial for financial planning and ensuring your Cheba Hut franchise operates smoothly while benefiting from the support and resources the brand provides.
Cheba Hut Franchise Earnings
The earnings of a Cheba Hut franchise owner can vary based on factors like location, sales volume, and operational efficiency. However, for owner-operators who actively manage their business, the potential for significant income is strong. With median gross sales of approximately $2,127,616, Cheba Hut offers a solid revenue base for franchisees.
For those taking on a hands-on management role, the estimated earnings are around $213,000, reflecting a 10% operating profit margin. This profitability suggests that dedicated owner-operators who focus on efficient operations and cost management can achieve substantial returns. These figures highlight the potential for financial success in the Cheba Hut franchise model, particularly for those committed to daily involvement and driving growth.
How to Open a Cheba Hut Franchise
Becoming a Cheba Hut franchisee involves a series of steps that take you from the initial inquiry to opening your doors for business. This process ensures that both you and the franchisor are aligned for success. Below is an overview of the steps involved:
- 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).
- Franchise Application Submit a detailed franchise application that outlines your financial qualifications, business background, and interest in the brand. This helps the franchisor assess your suitability as a potential franchisee.
- Discovery Day Attend a Discovery Day at Cheba Hut’s headquarters or a local franchise location. This is your opportunity to meet the corporate team, ask questions, and see the brand in action. It’s also a chance for the franchisor to evaluate you as a potential franchisee.
- Signing the Franchise Agreement If both parties are satisfied after Discovery Day, you’ll sign the franchise agreement. This legally binds you to operate under the Cheba Hut brand and terms.
- Securing Financing Arrange for financing if needed, using the financial estimates provided by Cheba Hut. This could involve personal savings, loans, or other funding options.
- Site Selection and Build-Out Work with Cheba Hut’s real estate team to select the ideal location for your franchise. Once approved, begin the build-out process, which includes construction, interior design, and equipment installation.
- Training Program Complete Cheba Hut’s comprehensive training program, which covers everything from daily operations to marketing strategies. This training ensures you’re fully prepared to run your franchise effectively.
- Grand Opening and Marketing Launch With everything in place, you’ll prepare for your grand opening. Cheba Hut’s marketing team will assist with pre-launch promotions and help attract customers from day one.
- Start of Operations Once your doors are open, you’ll begin day-to-day operations. Cheba Hut provides ongoing support to ensure your business runs smoothly and successfully.
Pros & Cons
Pros
Unique Concept: Cheba Hut’s “Toasted” sub sandwiches and counter-culture theme set it apart from other fast-casual chains, appealing to a niche market, especially in college towns and urban areas.
Strong Brand Recognition: The brand’s distinctive vibe and menu have helped establish a loyal customer base and drive consistent traffic, contributing to solid revenue performance.
Growth Potential: With over 50 locations and plans for further expansion, Cheba Hut offers growth opportunities in both existing and new markets.
Community Engagement: Many locations feature craft beer bars with local brews, enhancing the customer experience and fostering community connections.
Cons
Competition: The fast-casual segment is highly competitive, with numerous well-established brands. Cheba Hut must continuously innovate and adapt to stay ahead of competitors.
Operational Complexity: Running a franchise with a distinct theme and additional features like craft beer bars may involve more complex operations and management compared to simpler fast-casual concepts.
High Initial Investment: The total investment required can be substantial, ranging from $631,000 to $2.18 million, which may be a barrier for some potential franchisees.
