Huddle House Franchise in 2024: Costs, Fee & FDD
Discover the costs, fees, and investment potential of opening a Huddle House franchise. Learn about the brand’s legacy, menu offerings, and the financial commitments necessary to succeed in this iconic diner franchise.
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Huddle House, a beloved American diner franchise, began as a small neighborhood hangout in Decatur, Georgia in 1964, founded by John Sparks. Its origin was rooted in community – a place for locals to “huddle” after high school games and spend time together over a warm, hearty meal. From its modest beginnings, Huddle House has grown to over 270 locations across 25 U.S. states, gaining loyal fans by staying true to its core mission: serving delicious food with a family-like feel. Today, the brand stands as an iconic symbol of down-to-earth, community-focused dining.
Known for its comfort food and all-day menu, Huddle House serves a variety of homestyle favorites. While its breakfast offerings, including pancakes, waffles, and hearty omelets, are a cornerstone, the menu also includes lunch and dinner options like burgers, sandwiches, and homestyle dinners, plus a kids’ menu and indulgent desserts. By offering all four meal times – breakfast, lunch, dinner, and late-night snacks – Huddle House meets the needs of everyone, from early risers to late-night diners. Its customers are a blend of families, locals, and travelers who appreciate high-quality, affordable comfort food.
With over 60 years in the industry, Huddle House has grown into a nationally recognized brand while maintaining the warmth and charm that first made it popular. The chain operates solely in the U.S., but its reach spans diverse communities, from small towns to suburban hubs. This growth is a testament to its resilience and adaptability, having navigated economic downturns and global changes by consistently delivering value-priced meals that make customers feel at home.
For franchisees, Huddle House offers a well-developed support system. The franchise provides in-depth training programs covering restaurant operations, customer service, and community engagement to help owners succeed. There’s also ongoing marketing, operational support, and access to a trusted network of suppliers. This solid foundation, combined with Huddle House’s enduring brand and loyal customer base, makes it a compelling investment for those looking to bring a bit of “Americana” to their communities.
Huddle House Franchise Insights
- Huddle House has been serving communities for nearly 60 years, with a network of over 270 locations across 25 U.S. states, showing its resilience and popularity even through economic challenges.
- The franchise offers all-day dining for four dayparts—breakfast, lunch, dinner, and late night—giving it an edge over breakfast-only chains and allowing franchisees to capture business from early risers to late-night diners.
- A truly community-focused brand, Huddle House was originally founded as a place for people to “huddle” after high school games, a tradition it carries forward by encouraging franchisees to engage and connect with local customers.
- Huddle House’s extensive menu includes fan favorites like waffles, burgers, and homestyle dinners, helping it attract diverse customers and generating repeat visits from loyal patrons.
- Huddle House’s value-based pricing and extensive menu variety help it perform well in both strong and challenging economic conditions, supporting a stable customer base year-round.
Huddle House Franchise Key indicators
Growth YOY (%)
-6%
vs industry 1%
Total U.S. Franchised Units
216
3-Year Failure Rate
23%
vs industry 10%
Sales-to-Investment ratio
0.9:1
How much does it cost to open a Huddle House franchise?
Understanding the potential investment size and capital requirements is crucial when considering opening a Huddle House 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 Huddle House 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 Huddle House below from the most recent Item 7 below:
Type of Expenditure
Minimum Investment
Maximum Investment
Initial Franchise Fee
$35,000
$35,000
Training Fee and Travel and Living Expenses While Training
$23,000
$47,000
Real Estate – Rent for First 3 months
$16,600
$25,000
Improvements
$160,000
$723,000
Equipment and Seating
$170,000
$300,000
Signs and Décor
$32,000
$50,000
Site Engineering/Civil Plans
$8,000
$21,000
Architectural/MEP Drawings
$5,000
$30,000
Travel Expenses for Opening Guide Meeting
$0
$750
Smallwares, Small Equipment, Opening Inventory, and Uniforms
$28,000
$62,000
POS System
$5,500
$25,000
Help Desk and Maintenance (total for first 3 months)
$750
$900
Hardware and Software Components - Computer Security
$1,500
$2,500
Other Computer and Technology Expenses (first 3 months)
$2,100
$3,500
Grand Opening Promotion
$3,000
$5,000
Miscellaneous Opening Costs
$4,000
$8,500
Security Deposit
$7,500
$15,000
Additional Funds – 3 Months
$50,000
$75,000
Total Estimated Initial Investment
$551,950
$1,429,150
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
Opening a Huddle House or a similar full-service franchise requires a strong financial foundation. Here’s an overview of typical requirements, which include key investments essential for getting the business up and running.
- Initial Investment For a traditional Huddle House location, expect to invest between $552,000 and $1,429,000. This amount generally covers build-out, equipment, signage, and opening inventory, along with expenses like technology setup and initial marketing costs. 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 Around $200,000 in liquid capital is often required. This ensures you have accessible cash to cover immediate operational costs, such as payroll, supplies, and unexpected expenses in the early months.
- Net Worth A minimum net worth of approximately $600,000 is usually necessary. This reflects the need for long-term financial stability to weather the operational ups and downs typical of a full-service restaurant, covering personal and business financial obligations as needed.
How much does a Huddle House franchise owner make?
Calculating the salary of a Huddle House 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 Huddle House 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.
Huddle House Revenue & Gross Sales
Huddle House has shown steady revenue performance in recent years, underscoring its appeal as a franchise investment. The franchise reported a median gross sales figure of $833,116, reflecting its resilience and growth in the competitive dining sector. This figure highlights Huddle House’s ability to generate solid revenue through its homestyle dining concept, catering to a loyal customer base that appreciates the value and quality of its offerings.
Which key factors impact the average revenue performance of Huddle House franchisees?
Huddle House’s median gross sales performance likely reflects a combination of strategic factors. First, its all-day dining model, offering breakfast, lunch, and dinner around the clock, attracts a wide customer base and maximizes sales potential across all four dayparts. The menu’s appeal, centered around comfort food at affordable prices, resonates with families and community diners looking for a reliable and satisfying meal option. Additionally, Huddle House’s commitment to small-town and suburban markets allows it to serve communities with limited dining choices, enhancing loyalty and repeat visits. Finally, the brand’s emphasis on friendly, personalized service helps cultivate long-term relationships with guests, contributing to steady revenue growth. These factors together create a foundation for franchisees to achieve strong sales performance.
Huddle House Franchise Operational Costs
When opening a Huddle House franchise, it’s essential to prepare for key operational costs that contribute to the day-to-day success and sustainability of the business. These are the primary costs to keep in mind to ensure smooth operations:
- Labor Costs Covering wages, benefits, and training for employees is crucial for delivering consistent service quality, especially since Huddle House locations often operate 24/7.
- Food and Beverage Supplies Regularly stocking fresh ingredients for Huddle House’s wide-ranging menu is a significant, ongoing cost to maintain food quality and meet customer demand.
- Utilities Costs for water, electricity, and gas are substantial, especially given the long operational hours, which are common for this franchise.
- Maintenance and Repairs Upkeep of kitchen equipment, seating areas, and other facilities is essential for customer satisfaction and safety.
Effectively managing these costs can contribute to a smoother operation and ultimately support profitability.
Huddle House Franchise Fees
When considering the financial commitment involved in opening a Huddle House franchise, it’s crucial to factor in the ongoing fees that will be applied to your business operations. These fees are designed to support the continued growth of the brand and ensure that franchisees benefit from marketing, training, and system-wide support.
- Royalty Fee Huddle House charges a 4.75% royalty fee based on your franchise’s net sales. This fee contributes to the ongoing support and services the franchisor provides, including operational assistance and brand management.
- Advertising Fund Contribution Franchisees must contribute 3.0% of their net sales to the advertising fund for traditional units, which helps drive brand visibility and marketing efforts. For non-traditional units, this contribution is reduced to 1%.
- Additional Fees Beyond the primary fees, there are also additional costs for training programs, technology solutions, and other resources provided by Huddle House.
Understanding these fees and how they contribute to your franchise’s success will help you make informed financial decisions as you move forward with your investment.
Huddle House Franchise Earnings
The earnings potential for a Huddle House franchise owner varies depending on several factors such as location, sales volume, and how effectively the franchise is managed. With median gross sales of approximately $833,116, the estimated annual earnings for an owner-operator typically range around $83,000, assuming a 10% operating profit margin. This suggests that owners who actively manage their locations and control costs could see a solid return on their investment.
By staying involved in all aspects of the business, from staff training to customer service, franchisees can ensure their operation runs smoothly, helping them meet and exceed these earnings expectations. These figures highlight the potential for a rewarding investment, especially for those willing to commit to active ownership.
How to Open a Huddle House Franchise
Becoming a franchisee with Huddle House involves several steps that begin with an inquiry and culminate in the opening of your location. This process is designed to ensure that potential franchisees are well-prepared and have the necessary resources to run a successful business. Below are the general steps involved in becoming a Huddle House franchisee:
- 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 and Financial Review If you’re interested in moving forward, you’ll submit a formal franchise application. The franchisor will evaluate your financial qualifications, including your net worth, liquid assets, and other factors, to ensure you meet the financial requirements for ownership.
- Franchise Interview and Discovery Day After reviewing the FDD, you’ll be invited to participate in a Discovery Day, where you’ll meet the Huddle House team in person, learn more about the franchise operations, and ask any remaining questions. This is also an opportunity to tour existing locations and see the franchise model in action.
- Sign the Franchise Agreement After successfully completing the discovery process, you’ll sign the franchise agreement, which formally allows you to open a Huddle House location. You’ll also make the necessary financial commitment at this stage.
- Site Selection and Lease Negotiation You’ll work with Huddle House’s real estate team to select a location for your restaurant. This process includes reviewing potential sites, securing a lease, and ensuring the location meets brand standards.
- Training and Pre-Opening Support:Huddle House provides comprehensive training for franchisees, including operations, management, and marketing. You’ll also receive support with setting up your restaurant, from equipment installation to hiring staff.
- Opening and Operations Once your location is ready, Huddle House will assist with the grand opening, including marketing campaigns and operational support. After opening, you’ll continue receiving ongoing support to ensure your business thrives.
Pros & Cons
Pros
Established Brand: Huddle House has over 60 years of industry experience, offering a strong and trusted brand name that helps attract customers.
Wide Menu: The franchise serves all four dayparts (breakfast, lunch, dinner, and late-night), which appeals to a broad customer base and maximizes sales opportunities throughout the day.
Flexible Operation Hours: The ability to serve customers throughout all dayparts, including late-night, creates additional opportunities for revenue generation. It appeals to a wide range of customers, from early risers to late-night diners, helping drive higher sales volume.
High Customer Loyalty: Huddle House has a dedicated customer base that values the brand for its welcoming atmosphere and consistent quality. This can result in high repeat business, a critical factor for sustaining profitability.
Cons
Intense Competition: The diner and casual dining sector is highly competitive, with major brands like IHOP, Denny’s, and Waffle House dominating the space. Competing against these established players can be tough in certain markets .
Location-Dependent: Franchise success can heavily depend on the right location. Poorly chosen sites with low traffic or too much competition can significantly impact profitability.
Staffing Challenges: As with many full-service restaurants, staffing can be an ongoing challenge. Finding, training, and retaining skilled workers may be difficult in certain markets, which can impact service quality and operational costs.
