Hardee’s Franchises Make $1.1M Sales: 2022 Costs & Profits

With 1,720 restaurants in the US alone and over 3,800 locations worldwide, Hardee’s is one of the most recognisable fast food franchise brand, especially in the Southeastern and Midwestern US.

Yet, with a 10.25% marketing fee and a whooping $1.8 million investment cost, as a franchisee you may wonder whether opening a Hardee’s restaurant really is a good investment.

In this article we’ll answer this question by looking at Hardee’s and its financials. We’ll see how much you can really make with this business, how much it costs and whether this is a good investment. Let’s find out!

Key stats

Franchise fee	$25,000
Royalty fee	3.5%
Marketing fee	10.3%
Investment (mid-point)	$1,759,000
Average sales	$1,148,000
Sales to investment ratio	0.7x
Payback period*	10 years
Minimum net worth	$1,000,000
Minimum liquid capital	$300,000

What is Hardee’s?

Hardee’s franchise is an American fast-food chain with more than 1,720 locations located throughout the Southeastern and Midwestern United States.

The chain store was founded in 1960 by Wilber Hardee, with its headquarters in Greenville, North Carolina.

It is best known for its 100% Black Angus Thickburger sandwiches, hand-breaded chicken tenders, made-from-scratch biscuits, and other related quick-serve menu items.

Hardee’s started its franchising journey in 1961. Today, the chain is operated by CKE Restaurants Holdings, Inc. (“CKE”) which is headquartered in Franklin, Tennessee.

The chain has also expanded massively since its founding. As of today, Hardee’s franchise has over 3,800 franchised and company-operated restaurants in 44 states and 43 foreign countries.

Hardee’s franchise pros and cons

Operating a Hardee’s franchise has some advantages and disadvantages.

Pros

• Solid corporate support: Hardee’s has put in place strong franchisee support to ensure the success of its franchisees. The CKE support team provides new franchisees with site selection, restaurant design, construction, and equipment orders, as well as senior management support.
• Comprehensive training: The franchisor offers new franchisees extensive training to get them on board. They have an 8-week franchise training program which includes classroom and on-the-job training. This helps franchisees understand Hardee’s restaurant concept and be set for growth and profitability from the onset. 
• Wide and varied menu: Hardee’s is well known for its great menu of tasty foods. From its premium thick burgers, bacon-topped burgers, and crispy chicken sandwiches, as well as other tasty related foods, Hardee’s is well-packed and serves a diverse community. It sets the franchise apart from its competition by enabling it to open restaurants in locations with different religious and cultural beliefs, like the Middle East.
• Proven Business Model: Hardee’s brand has been operating for more than 60 years. Having served different localities and maintained their signature thick burgers and other delicacies, they have a well-established business culture. They advise new franchisees on which business strategies will work for them and which will not.
• Fast-growing brand: Hardee’s is a steadily growing brand. Currently, it has a presence in 44 US states and 43 locations globally and is still growing. This gives new franchisees the potential for growth and expansion of their business.
• Global presence: Hardee’s boasts of having locations all over the world. It is a well-known franchise with locations in the United States, the Middle East, Latin America, and Asia. New franchisees can easily market the brand’s products and are guaranteed easy market penetration.

Cons

• No financial assistance: Hardee’s does not offer franchisees any financial assistance to establish their restaurants. Also, the franchisor or its affiliates do not guarantee any lease, obligation, or note.
• Previous franchise or restaurant experience: To become a Hardee’s franchisee, you’re required to have run a franchise previously or have worked in the restaurant industry. This can be a limiting factor for investors drawn from the general industry. The franchisor also limits the number of initial units that can be opened to a minimum of three, which can be costly.
• No territory protection: Hardee’s franchise does not offer any exclusive territory protection to any franchisee. This is a big challenge for newly established franchisees. They face competition from franchises granted by the parent company or from competitive brands controlled by the franchisor.
• Competition: Just like any other business, competition is a big challenge for Hardee’s restaurant. The industry has seen the entrance of market leaders like Burger King, which leads to fewer sales and profitability.
• No absentee ownership: Hardee’s franchise does not allow semi-absentee ownership. Franchisees are required to fully manage their restaurants. As a result, Hardee’s franchise is not a good choice for investors seeking a passive investment. 

How much does a Hardee’s franchise cost?

To begin a Hardee’s franchise, you need to invest a total of $1,759,000. Including the initial franchise fee of $25,000, the investment amount covers $40,000-$95,000, which you must pay to the franchisor. 

The investment amount can vary depending on unique factors, as it is just an estimated average; for example, different locations (small towns or big cities) can cause differences in real estate/building costs. According to the latest FDD, the investment range is usually between $1,292,000 and $2,226,000.

The initial investment amount payable to you should cover all types of expenses ( required at the start of a fast-food restaurant). From build-out costs to preliminary operating expenses, as well as the fees to the franchisor, it covers it all. To be precise,

• Fees to the Franchisor include Initial Franchise Fee and Opening Training Support Team Fee.
• Build-Out Costs include building, site improvements, equipment, Soft Costs, Signage, and Point of Sale System. 
• Preliminary Operating Expenses include Initial Training, Pre-Opening Costs, and an additional fund as the runway for the first 3-6 months’ losses.

Here’s a summary of the various costs you should pay:

Type of cost	Low	Average	High
Initial franchise fees	$40,000	$67,500	$95,000
Build-out costs	$1,093,000	$1,459,500	$1,826,000
Operating expenses	$159,000	$232,000	$305,000
Total	$1,292,000	$1,759,000	$2,226,000

What is the turnover of a Hardee’s franchise?

On average, a Hardee’s franchise makes $1,147,975 in sales annually.

This number is the median sales of the 1,327 Hardee’s franchised restaurants in 2022. Sales increased by +4.2% from 2021 to 2022.

How profitable is a Hardee’s franchise?

On average, a Hardee’s franchise makes $229,021 in profits per year. This corresponds to an adjusted EBITDA margin of 20%, slightly below vs. the industry average.

What’s great about Hardee’s is that they provide a lot of financial information in their Franchise Disclosure Document. Unfortunately though, the information on costs (like COGS, labor costs, marketing rent, etc.) is only available for the 144 company-owned restaurants vs. the 2,000+ franchise-owned units.

That being said, we have estimated profits using the relevant company-owned restaurant metrics. For example, COGS represent on average 26.5% of sales, and labor costs represent 31.8% on average.

Note that the main reason why profit margins are lower for Hardee’s is because of the marketing royalty fees which are much higher vs. similar fast food franchises (10.25% vs. 5-6%).

Profit-and-loss	Amount ($)	As % of sales
Sales	$1,147,975	100%
COGS	$(304,213)	26.5%
Labor	$(365,056)	31.8%
Rent	$(91,838)	8%*
Royalty + marketing fees	$(157,847)	13.8%
Adjusted EBITDA	$229,021	~20%

Is a Hardee’s franchise a good investment?

You may be wondering whether Hardee’s franchises are a good investment as a franchisee. Indeed, the investment cost is on the higher side for similar fast food franchises ($1,759,000).

In order to answer this question, we need to calculate the payback period: how much time does it take for a franchisee to reimburse her/his initial investment?

As per our calculation (using a net profit margin of 15%), we found out that the payback period for a Hardee’s franchise is 10.2 years, which clearly isn’t a good metric.

Indeed, this means that, on average, it takes 10 years for someone to reimburse the initial investment of $1.8 million. So from that perspective, we can’t really say Hardee’s is a good investment.

But do note that this number is an average, and more importantly, it’s the average financial performance or all company-owned restaurant (even though we believe COGS and labor costs are the same for franchises and company-owned restaurants). So it’s possible that your franchise fares better vs. the average.

How does it compare vs. other franchises?

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