Tabu Shabu Franchise in 2024: Costs, Fee & FDD

Tabu Shabu, founded in 2012 by Jeff Chon, emerged from a passion for quality Asian cuisine with a focus on fresh, carefully sourced ingredients. As a seasoned restaurant operator, Jeff noticed that his neighborhood lacked the Japanese-style hot pot experience he grew up enjoying. This inspired him to open Tabu Shabu in Eastside Costa Mesa, California. The restaurant quickly gained popularity, thanks to its emphasis on high-end cuts of beef and seafood, locally sourced produce, and signature homemade sauces made with freshly ground sesame seeds. Tabu Shabu has carved out a niche for itself in the dining scene, blending traditional flavors with a modern, fun, and affordable dining experience.

At its core, Tabu Shabu offers a Japanese hot pot dining experience, where customers can cook their own meals using fresh ingredients at the table. This interactive dining style caters to various dietary preferences, including Atkins, gluten-free, and vegan options. The menu is designed to appeal to a broad range of customers, from health-conscious diners to food enthusiasts seeking a unique experience. With its carefully curated selection of meats, seafood, and vegetables, Tabu Shabu brings a personalized and high-quality dining option to the modern American neighborhood.

As the franchise grows, Tabu Shabu has expanded its reach beyond Costa Mesa, though it remains focused on maintaining its high standards of quality and service. While the exact number of locations is still growing, the brand continues to attract a loyal customer base with its unique dining concept. The franchise’s commitment to fresh ingredients and exceptional customer service has helped it stand out in a competitive market, making it a sought-after option for diners looking for something different.

Franchisees benefit from Tabu Shabu’s comprehensive support system, which includes training programs designed to ensure consistency in quality and service across all locations. From sourcing ingredients to mastering the art of customer interaction, the training covers all aspects of running a successful franchise. Additionally, franchisees receive ongoing support to help navigate the challenges of the restaurant industry, making Tabu Shabu a compelling option for those looking to invest in a full-service restaurant franchise with a proven track record of success.

Tabu Shabu Franchise Insights

1. Tabu Shabu serves a growing demand for personalized, health-conscious dining, catering to various dietary needs such as vegan, gluten-free, and low-carb diets, making it a versatile option for modern consumers.
2. Founded in 2012, the franchise has built a strong customer base and continues to expand, thanks to its focus on high-quality ingredients and a unique dining experience, driving repeat business and brand loyalty.
3. The hot pot cooking style not only attracts food enthusiasts but also fosters a social dining experience, leading to higher customer engagement and satisfaction.
4. By sourcing fresh ingredients locally and from around the world, Tabu Shabu ensures a premium dining experience, differentiating itself from other casual dining options.

Tabu Shabu Franchise Key indicators

How much does it cost to open a Tabu Shabu franchise?

Understanding the potential investment size and capital requirements is crucial when considering opening a Tabu Shabu 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 Tabu Shabu 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 Tabu Shabu below from the most recent Item 7 below:

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 Tabu Shabu franchise or a similar full-service restaurant franchise, you need to consider several financial requirements. These figures can vary depending on location, market conditions, and specific franchise requirements, but here are some estimates:

• Initial Investment The total required capital, including initial setup, equipment, and working capital, generally ranges from $281,000 to $726,000 for a full-service restaurant like Tabu Shabu. This includes expenses such as leasehold improvements, furniture, fixtures, equipment, and initial inventory. 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 Franchisees are typically required to have at least $200,000 to $300,000 in liquid assets. This ensures that you have enough cash on hand to cover initial operational expenses and unforeseen costs during the startup phase.
• Net Worth Requirement A minimum net worth of $750,000 to $1 million is usually required. This demonstrates financial stability and the ability to support the business through potential challenges.

How much does a Tabu Shabu franchise owner make?

Calculating the salary of a Tabu Shabu 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 Tabu Shabu 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.

Tabu Shabu Revenue & Gross Sales

Tabu Shabu’s recent revenue performance demonstrates solid growth, with median gross sales reaching $722,823. The consistent performance across its locations reflects the brand’s commitment to quality and customer satisfaction, making it an attractive option for potential franchisees.

Which key factors impact the average revenue performance of Tabu Shabu franchisees?

The performance of U.S. franchisee median gross sales for Tabu Shabu can likely be attributed to several key factors. First, the brand’s commitment to high-quality, fresh ingredients appeals to health-conscious consumers and food enthusiasts alike. The unique Japanese hot pot dining experience also fosters social interaction, driving customer engagement and repeat business. Additionally, Tabu Shabu’s ability to cater to various dietary needs, including vegan and gluten-free options, broadens its customer base. The comprehensive franchise support and training programs help maintain consistency across locations, ensuring a reliable dining experience that encourages customer loyalty and steady sales growth.

Tabu Shabu Franchise Operational Costs

When opening a Tabu Shabu franchise, it’s essential to be aware of the primary ongoing operational costs that will impact your profitability. These costs are specific to the day-to-day management and operation of the restaurant.

• Labor Costs Employee wages, benefits, and payroll taxes are significant expenses, especially in the restaurant industry, where labor is a key factor in providing high-quality service.
• Food and Beverage Costs Sourcing fresh, high-quality ingredients, including premium cuts of meat, seafood, and produce, is a major ongoing expense that directly affects your menu pricing and profitability.
• Utilities and Maintenance Operating a full-service restaurant involves considerable utility costs, such as electricity, gas, and water, along with regular maintenance of kitchen equipment and dining areas.
• Lease or Rent Payments The cost of your location, whether through lease or rent, is a fixed ongoing expense that will vary based on your restaurant’s size and location.

These operational costs are critical to managing your Tabu Shabu franchise effectively, and understanding them will help you maintain a healthy bottom line.

Tabu Shabu Franchise Fees

When opening a Tabu Shabu franchise, it’s important to understand the ongoing fees associated with maintaining your business and staying aligned with the brand. These fees cover various aspects of the franchise system, from marketing efforts to necessary operational support, ensuring your business thrives within the larger network.

• Royalty Fee As a franchisee, you’ll pay a royalty fee of 5% of your gross sales, which is due on a monthly basis. This fee helps fund the continued development, support, and operational guidance provided by Tabu Shabu, ensuring your location benefits from the brand’s ongoing innovation and resources.
• Marketing Fee The marketing fee, currently set at 1% of gross sales but with the potential to increase to 2%, is due at the same time as the royalty fee. This contribution supports national advertising campaigns that help drive customers to your location and strengthen the overall brand presence.
• Local Marketing Expenditure In addition to the broader marketing efforts, you’ll need to allocate $1,500 per calendar quarter to local marketing activities. This ensures that your specific location is promoted within your community, allowing you to connect with local customers and build a loyal customer base.
• Additional Fees There are additional fees for training programs, technology, and other items provided by Tabu Shabu that may be applied.

Understanding these fees is key to managing your Tabu Shabu franchise effectively, ensuring you have the necessary resources to succeed while benefiting from the brand’s comprehensive support system.

Tabu Shabu Franchise Earnings

The earnings of a Tabu Shabu franchise owner can vary based on factors such as location, operational efficiency, and overall cost management. However, for an owner-operator, there is significant potential for profitability. With median gross sales of $722,823, the estimated yearly earnings for an owner-operator are around $72,000, reflecting an operating profit margin of 10%.

This profit margin suggests that hands-on management can yield favorable returns, especially for franchisees who are actively involved in day-to-day operations. By focusing on maintaining high sales volume and optimizing costs, a dedicated owner-operator can achieve strong financial results while benefiting from the brand’s established reputation and support system. Of course, there is potential for higher, or lower, operating profit depending on the location and owner management. These figures underline the opportunity for success in the Tabu Shabu franchise, particularly for those who are committed to managing their business closely.

How to Open a Tabu Shabu Franchise

Becoming a Tabu Shabu franchisee involves a series of steps designed to ensure you are well-prepared to launch and operate your business successfully. From the initial inquiry to the grand opening, here’s an overview of the process:

1. 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).
2. Franchise Application After the initial contact, you’ll complete a formal franchise application, providing details about your background, finances, and interest in the brand. This helps the franchisor assess your qualifications as a potential franchisee.
3. Discovery Day If both parties are still interested, you’ll be invited to attend a Discovery Day at Tabu Shabu’s headquarters. This event allows you to meet the leadership team, tour existing locations, and gain a deeper understanding of the business.
4. Signing the Franchise Agreement After completing Discovery Day, and if you’re ready to move forward, you’ll sign the franchise agreement. This formalizes your commitment and outlines the legal and financial terms of your franchise ownership.
5. Site Selection and Lease Negotiation Next, you’ll work with the franchisor to find and secure the ideal location for your restaurant. The franchisor typically assists with site selection, lease negotiation, and ensuring the space meets brand standards.
6. Training Program Before opening, you’ll participate in a comprehensive training program. This includes both classroom instruction and hands-on training at a Tabu Shabu location, covering everything from operations to customer service.
7. Build-Out and Setup With your location secured, you’ll begin the build-out process, including interior design, equipment installation, and setup. The franchisor usually provides guidance to ensure the space aligns with the brand’s specifications.
8. Pre-Opening Support In the weeks leading up to your grand opening, you’ll receive support with hiring staff, marketing, and final preparations. This ensures that you’re ready to open your doors smoothly.
9. Grand Opening Finally, with everything in place, you’ll host your grand opening event. The franchisor often provides additional marketing support during this time to help generate buzz and attract customers.

Pros & Cons

Pros

Established Brand with Unique Concept: Tabu Shabu offers a unique dining experience centered around Japanese-style hot pot, appealing to health-conscious and adventurous diners. This niche concept sets it apart in the competitive restaurant industry.

Flexible Diet Options: The menu caters to various dietary needs (Atkins, gluten-free, vegan, etc.), broadening its customer base and increasing repeat business potential.

Growing Popularity: With a successful track record and strong demand for high-quality Asian cuisine, Tabu Shabu is positioned for continued growth, making it a potentially lucrative opportunity.

Cons

Limited Expansion: The brand is still relatively small, so there might be limited opportunities for market expansion compared to larger, more established franchises.

Niche Market: While the unique concept is a strength, it also means that the franchise may not appeal to a broad demographic. Success could depend on finding the right location and target market.

Intensive Management: As a full-service restaurant, Tabu Shabu requires hands-on management and a significant time commitment, which might not suit all investors.