One of the most popular bagel franchise, Einstein Bros. Bagels has over 700 stores in the US. If you’re considering owning a Einstein Bros. Bagels franchise yourself, you would need to prepare a business plan, and for that you’ll need to understand how much it costs and how much you can make with this business.
We found it costs on average $750,075 to open a new Einstein Bros. Bagels franchise, and it generates an average annual turnover of $885,011. Is this a good business? Let’s find out!
In this article we’re looking at Einstein Bros. Bagels franchises and their financial information disclosed in the latest Franchise Disclosure Document.
Einstein Bros. Bagels franchise: key figures
|Median annual sales||$885,011|
|Sales to investment ratio||1.2x|
|Investment payback*||5.7 years (good)|
|Minimum net worth||$1,000,000|
|Minimum liquid capital||$536,500|
What is Einstein Bros. Bagels?
Einstein Bros. Bagels is an American restaurant chain that operates the country’s largest casual fast bagel franchise. The brand offers bagels, breakfast sandwiches, lunch sandwiches, coffee, catering items, and related foods.
It was founded in 1995 under the parent company, Boston Chicken (now Boston Market), in 2004 in Golden, Colorado. Headquartered in Lakewood, Colorado, Einstein Bros. Bagels is part of the Panera family, along with Panera Bread and Caribou coffee.
It started its franchising journey in 2006 and now has over 700 stores in 40 states in the US of which 53% are franchised-owned.
Einstein Bros. Bagels franchises pros and cons
- Exclusive territory protection: Under its franchising agreement, the franchisor grants its franchisees the right to operate their businesses in a designated protected territory. It, therefore, does not grant any other franchises or operate a competing Einstein Bros. Bagels restaurant.
- Extensive training: Einstein Bros. Bagels provides the franchisees with initial training about its business concept and industry. Franchisees receive four weeks of training on restaurant operations and management. The franchisees also get assistance with their restaurant’s grand opening and ongoing mentorship.
- Franchise support: One of the reasons for starting an Einstein Bros. Bagels franchise is because the brand supports the franchisees to establish and run their restaurants smoothly and achieve growth and profitability. They provide them with industry experts as well as business ideas that work in the bagels industry and consultations on how to reduce costs, eliminate waste, and maximize revenues.
- Quality menu: The brand is well known for its freshly-baked bagels, available in various flavors. The brand is constantly introducing new bagels to keep up with market trends and serve a diverse customer audience. This gives the franchisees a competitive advantage over their competitors.
- Universal supply chain. The brand emphasizes the quality of its ingredients and products. Franchisees are allowed to make online orders from the brand’s supply chain, which makes the process efficient and less costly without compromising the quality of supplies.
- Multiple franchise formats: Einstein Bros. Bagels has several formats that the franchisees can choose to operate, giving them the flexibility to work within their budgets. The formats include company-owned, manufacturing and commissary, and franchise-owned segments.
- No financing: The brand does not directly or indirectly finance its franchisees for development or ongoing costs. It also doesn’t guarantee any lease, obligation, or note from any lender.
- Competition: Currently, many fast-casual restaurants are expanding their menus to include coffee items. Also, the market trends are changing, and the brand faces stiff competition from other chains with a bigger market share like McDonald’s.
- Not a passive investment. The franchise is not a passive investment opportunity. Franchisees must be fully involved in the daily operations.
Einstein Bros. Bagels franchises: how much it costs
You have to invest around $750,075 to open a Einstein Bros. Bagels franchise restaurant.
This is an average: the amount you would to pay to invest varies based on different factors such as the location of your restaurant, its size, whether you build from scratch or your retrofit an existing store, etc.
In addition to the initial franchise fee of $35,000 which you must pay to the franchisor, you would pay for the construction costs, furniture and fixtures, signage, equipment, professional fees, opening inventory, business licenses, etc.
There are 2 different types of startup costs when you open a new Einstein Bros. Bagels franchise: pre-opening costs and development costs.
Here’s the detailed breakdown of startup costs you can expect to pay:
|Type of expense||Amount|
|Initial franchise fees||$35,000|
|Real-estate leasing||$25,000 – $56,250|
|Opening Inventory and supplies||$15,000 – $25,000|
|Additional Funds 3 Months||$12,000 – $50,000|
|Other||$26,300 – $59,600|
|Total||$113,300 – $225,850|
|Type of expense||Amount|
|Construction costs||$210,000 – $310,000|
|Furniture, fixtures and equipment||$175,000 – $261,000|
|Signage and graphics||$10,000 – $50,000|
|Professional fees||$30,000 – $35,000|
|Other||$26,000 – $54,000|
|Total||$451,000 – $710,000|
How much can you make with a Einstein Bros. Bagels franchise?
On average, a Einstein Bros. Bagels franchise makes $885,011 in sales per year.
This number is the average of the franchised restaurants: drive thru ($964,996) and without drive thru restaurants ($791,695). This is also a significant increase of 25.4% year-on-year vs. 2020 ($705,836) mostly due to the pandemic: a good sign that business is back on track.
Note that these numbers have been calculated using 53 franchised-owned restaurants operating for all weeks of 2021. As such, it does not all franchised-owned restaurants, most of which have had their operations stopped for a few days or a few weeks due to the pandemic.
How profitable are Einstein Bros. Bagels franchises?
On average, a Einstein Bros. Bagels franchise makes $273,554 profits per year. This corresponds to a 31% adjusted EBITDA margin.
Einstein Bros. Bagels is a profitable franchise. Indeed, we found that 31% profit margin is higher than the average for similar restaurant franchises (25-27%).
We calculated this number using the information available in the latest Franchise Disclosure Document. Note that we used company-owned restaurants numbers instead as Einstein Bros. Bagels doesn’t disclose cost information for its franchise-owned restaurants (for example, cost of goods sold and labor costs)
|Profit and loss||Amount ($)||% sales|
|Royalty + marketing fees||($79,651)||9.0%|
Are Einstein Bros. Bagels franchises good investments?
So should you buy a Einstein Bros. Bagels franchise? Is this worth the $273,554 profits?
In order to answer that question, we need to look at the payback period: the time it takes on average to repay your investment.
We found that the payback period for a Einstein Bros. Angels franchise was 5.7 years on average. In other words, it would take you on average 6 years to repay the initial $750,075 investment cost.
This is a good payback period, and as such a good investment.
Do you want to own a Einstein Bros. Bagels franchise? Download our business plan template below to get pre-built 5-year financial projections, your breakeven point, return on investment and more.
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