Capriotti’s Franchises: Excellent 3 Years Payback For Only $364K

If you’re considering opening a fast-casual restaurant, you should seriously consider the Capriotti’s franchise. Even though a smaller brand than the American sandwich shop giants like Jimmy John’s or Jersey Mike’s just to name a few, Capriotti’s has more than 175 restaurants in the US.

But Capriotti’s is also one of the most profitable restaurant franchises we found. Indeed, its payback period is only 2.8 years which is excellent..!

This can easily be explained by the fact that Capriotti’s has a high turnover per restaurant ($855,000 per year on average) and a relatively low initial investment upfront ($364,000).

Should you invest in a Capriotti’s franchise? How much profits can you make with this business?Let’s dive in!

Capriotti’s franchises: key figures

Franchise fee	$40,000
Royalty fee	7.0%
Marketing fee	4.0%
Investment (mid-point)	$365,000
Average sales	$856,000
Sales to investment ratio	2.3x
Payback period*	3 years
Minimum net worth	$500,000
Minimum liquid capital	$150,000

What is Capriotti’s Sandwich Shop?

Capriotti’s (also known as Capriotti’s Sandwich Shop) is an American fast-casual dining restaurant chain headquartered in Las Vegas, Nevada.

The chain was founded in 1976 by siblings Lois and Alan Margolet in Wilmington, Delaware. It is named after the founders’ grandfather, Philip Capriotti.

It serves sandwiches, subs, salads, desserts, and soft drinks.

Capriotti’s franchising journey began in 1991, and currently, it has more than 175 restaurants in the US, mostly in Nevada.

Capriotti’s franchises: pros and cons

Pros

• Innovation and technology: The brand embraces technology and innovative products and delivery methods to help franchises be efficient and boost sales. Franchisees benefit from innovative store design, pick-up, catering orders, and integration with mobile and online ordering. Also, the brand keeps exploring new technological trends to drive demand and stand out from the competition.
• Strong vendor network: Capriotti’s has a strong vendor relationship. It provides franchisees with consistent, high-quality food supplies, equipment, and inventory. Also, franchisees can leverage the brand’s purchasing power and get supplies at relatively low prices to increase their profitability.
• Marketing support: The brand has a strong, integrated marketing strategy to help franchisees create great product awareness. Franchisees can use national media, local store marketing strategies, targeted promotional campaigns, and social media advertising to achieve wide geographical coverage in their locations.
• Exclusive territory: The franchisor allows its franchisees a protected development market to operate their restaurants. It does not authorize any other franchise or operate a rival business in the area.
• Simplified operations: Capriotti’s has a simple and easy-to-follow proprietary system to cater to experienced and new franchisees in the sandwich industry. Franchisees are assured of a business model to create efficient and quality service for their customers.
• Quality pre-opening training: The brand has a simplified and detailed training program for franchisees to learn everything about its concept, from making its sandwiches to serving customers well and running a successful restaurant. It provides its franchisees with online and in-person training on retail sales, operations, and growth strategies at every stage of the restaurant’s growth.
• Ongoing support: The brand provides its franchisees with ongoing support and consultations to ensure they run their businesses smoothly. Franchisees get timely communications about new or existing product improvements, new procedural changes, and performance reviews.

Cons

• No financing: The brand does not directly or indirectly finance its franchisees. Also, it does not guarantee the leases, notes, or grants of its franchisees.
• Not a passive investment: The franchise does not offer an absentee ownership business opportunity. Franchisees are supposed to be actively involved in the restaurant’s daily operations.
• Not a part-time business: The franchisor requires franchisees to be open all the time as per the brand’s working hours.
• Strong competition from other Italian food franchises (and pizza franchises) like Rosati’s, Fazoli’s, Marco’s Pizza, Pizza Ranch, Blaze Pizza, Hungry Howie’s, Mountain Mike’s, just to name a few.

How much do you need to invest for a Capriotti’s franchise?

On average, you may need to invest around $364,650 to open a Capriotti’s restaurant.

The investment amount is an average that can vary depending on the type of restaurant you choose. For example, you would need to invest almost 4 times higher if you choose a traditional restaurant over a virtual kitchen restaurant. Generally, the investment amount ranges from $109,000 to $184,000 for a virtual kitchen restaurant and from $417,100 to $748,500 for a traditional restaurant.

What are you paying for?

The initial investment covers all the startup costs you would need to start a Capriotti’s franchise. It works like a headstart to your new business. In addition to the franchise fee of $40,000, your investment also covers:

• Formation Costs: development services fee, architectural fees, engineering fees, project management fees, professional services, permits & licensing, security deposits, leasehold improvements, furniture, fixtures, equipment, interior décor, exterior signage, menu boards, POS system, training, pre-opening mock operations, etc.
• Initial Marketing: shop launch marketing plan
• Operating Costs: opening inventory and supplies, 3 months’ rent, and an additional fund for 3 months as working capital.

Type of cost	Low	High
Initial Franchise Fee	$40,000	$40,000
Formation Costs	$41,000	$621,500
Initial Marketing	$12,000	$30,000
Operating Costs	$16,000	$57,000
Total	$109,000	$748,500

What is the turnover of a Capriotti’s franchise?

On average, a Capriotti’s franchise makes $855,868 in sales per year.

The sales number is the annual median sales of the franchised restaurants operating in 2021. 25% of Capriotti’s restaurants generate more than $1,213,659 in revenue per year.

How profitable is a Capriotti’s franchise?

We estimate that an average Capriotti’s franchise makes $256,675 in profits per year. This represents a 30% profit margin (adjusted EBITDA).

The 30% adjusted EBITDA margin is on the higher end compared to similar franchises as per our intelligence (~25-27% industry average). 

Although the prime cost is in line with the industry average (54% sales vs. ~54-56% industry average) the adjusted EBITDA margin is high because of lower rent costs (4.4% vs. 8%).

Note that Capriotti’s does not disclose any financial information regarding costs for its franchised-owned restaurants. Indeed, we had to use affiliated-owned restaurants’ data for COGS (29.9% sales) and labor costs (24.1%) to estimate profits instead.

Profit-and-loss	Amount ($)	As % of sales
Sales	$855,868	100%
COGS	$(255,733)	29.9%
Labor	$(206,521)	24.1%
Rent	$(42,793)	5.0%
Royalty + marketing fees	$(94,145)	11.0%
Adjusted EBITDA	$256,675	~30%

You should know that this adjusted EBITDA is not as same as net profit. That means you can’t keep 30% of the total revenue in your pocket. Instead, you may need to deduct taxes, debt interest expenses, and other costs from this number. Is this a good investment then?

Is a Capriotti’s franchise a good investment?

If you’re considering investing in a Capriotti’s franchised restaurant, well it’s a no brainer: we found the payback period is 2.8 years on average, which is excellent.

Actually it’s one of the best payback period we found for restaurant franchises in the US.

The payback period is the time (in years) it takes for an investment (like opening a restaurant) pays itself back with the profits.

How does it compare vs. other franchises?