Swig Franchise Cost and Profit Explained (2024)
Swig Franchise is known for its innovative and refreshing drinks. It was established in 2010 by Nicole Tanner and her husband in Saint George, Utah. The idea for a drive-by drink shop came up during a brainstorming session, and they both agreed it had the potential for success. In April of the same year, Swig’s first location opened across from Dixie State University.
Since then, Swig has gained popularity among both locals and tourists due to its convenient location and wide range of refreshing drinks. Swig’s Facebook page is filled with requests from people asking for an expanded presence in Salt Lake City.
Due to the overwhelming demand, they quickly sought out new locations to serve our growing customer base. In the spring of 2013, Swig opened its second store on Saint George Boulevard.
According to Nicole Tanner, “We recognized that there was a demand for an enjoyable drive-thru experience and knew that others like us appreciated quality fountain drinks.” As for the name Swig? It originated from a simple question posed by her husband: “Can I have a swig of your drink?”
How is Swig Franchise Positioned in the Food and Beverage Industry?
Swig Franchise is positioned as a unique and innovative player in the food and beverage industry. With its focus on refreshing drinks and drive-thru convenience, Swig has carved out a niche for itself.
In terms of growth, Swig has experienced significant expansion since its founding in 2010. According to the 2023 Swig Franchise Disclosure Document (FDD), there are currently over 40 locations across multiple states, with plans for further expansion. This demonstrates the brand’s success and appeal among both customers and potential franchisees.
Additionally, Swig’s social media presence indicates strong customer demand and enthusiasm for the brand. Their Facebook page is filled with requests from individuals asking for more locations, particularly in Salt Lake City. This showcases the popularity of their products and suggests that there is room for further growth within their target market.
Overall, Swig Franchise is well-positioned within the food and beverage industry due to its unique concept, a growing number of franchise locations, and high customer demand.
How Much is a Swig Franchise?
The initial Swig Franchise Fee is $39,500. You have to pay this upfront fee when opening a Swig franchise.
Swig Franchise Cost
The estimated total investment necessary to begin the operation of a Swig Franchise ranges from $534,900 to $1,118,000. The following costs are part of the upfront costs included in the initial investment for a Swig. Many of these are one-time fees that are needed to launch the franchise. Review the chart below to see how much it costs to buy a Swig franchise in 2023.
Estimated Initial Investment
| TYPE OF EXPENDITURE | LOW AMOUNT | HIGH AMOUNT |
|---|---|---|
| Initial franchise fee | $39,500 | $39,500 |
| Initial training | $3,000 | $10,000 |
| Real estate improvements | $260,000 | $700,000 |
| Site development fee | $35,000 | $35,000 |
| Rent (3 months of rent, plus a security deposit) | $6,400 | $33,000 |
| Equipment, furniture, fixtures, décor, and supplies | $78,500 | $115,000 |
| Uniforms and Tumblers | $4,000 | $7,000 |
| POS system, computer hardware, and software | $12,000 | $18,500 |
| Signs | $18,000 | $25,000 |
| Miscellaneous opening costs | $5,000 | $25,000 |
| Opening inventory | $8,500 | $15,000 |
| Grand opening assistance fee | $10,000 | $15,000 |
| Grand opening marketing | $25,000 | $35,000 |
| Additional funds | $30,000 | $45,000 |
| Total | $534,900 | $1,118,000 |
Swig Franchise Requirements
Swig franchise requires a minimum of 5 stores to be eligible for franchising. In addition, the franchisee must have a minimum liquidity of $300,000 and a net worth of at least $750,000.
Owning a Swig Franchise Requires Ongoing Fees
Royalty: 7% of Net Sales
Marketing Fee: 2% of Net Sales
How much do Swig Franchise owners make?
At the time of the release of Swig’s 2023 FDD, they had 0 franchised locations. However, we use the financials from their company-owned stores below. Take note that your mileage may vary, especially with the 9% in ongoing fees you will pay.
2022 Swig Median Sales: $900,000
| Initial investment (midpoint) | %Profit margin of median franchise sales | Estimated Profits | Time to recoup investments |
|---|---|---|---|
| $825,000 | 15% | $135,000 | 7.5 years |
| 20% | $180,000 | 6 years | |
| 25% | $225,000 | 5 years |
Based on the median sales provided by Swig’s company-owned locations, at an average of a 20% profit margin, it will take around 6 years to recoup your investment. This is longer than other franchise opportunities. You may not get a 20% profit margin, which would elongate getting a return on your investment.
Many factors affect the sales, costs, and expenses of your Franchised Store. Such as the Franchised Store’s size, geographic location, menu mix, and competition in the marketplace. The presence of other Food and Beverage stores; the extent of market penetration and brand awareness that Swig stores have attained in your market. Also, the quality of management and service at your Franchised Store are major factors.
Is the Swig Franchise Profit Worth the Franchise Cost?
To assign a valuation multiple for Swig franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems where more transaction data is available.
Under $5 Million Net Sales
Estimated Selling Price = Net Sales * 0.55
When you go to sell a Swig franchise based on the median multiple of .55 and net sales of $900,000, it would sell for $495,000. This is significantly lower than the midpoint investment of $825,000.
The more franchises you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators. Since Swig requires you to operate at least 5 locations, you can sell the whole chain of your stores for significantly more.
How many Swig units have opened and closed?
Swig does not have franchised stores at the moment. But operates 46 company-owned locations. At the start of 2020, the franchisor had 21 location, representing an average growth rate of around 33% over the last three years.
Summary
Swig offers people the opportunity to be a part of a business that focuses on refreshing drinks and drive-thru convenience. The brand has experienced significant growth since its founding in 2010, with over 40 locations across multiple states and plans for further expansion. The initial franchise fee is $39,500, and the estimated total investment ranges from $534,900 to $1,118,000. Swig requires a minimum of 5 stores to be eligible for franchising. Ongoing fees include a royalty of 7% of net sales and a marketing fee of 2% of net sales.
While there are no franchised locations at the moment, based on financials from company-owned stores, it may take around 7.5 years to recoup your investment with an average profit margin of 15%. When selling a Swig franchise based on median multiples and net sales of $900,000, it would sell for significantly less than the initial investment cost. Overall, owning a Swig Franchise offers potential opportunities but also comes with risks associated with profitability and return on investment.
While this may be the business for you, make sure also to check out other companies offered on Vetted Biz and in the Food and Beverage industry.
