Jason’s Deli Franchise: $2.6M AUV and High Profits (2023)

With over 250 restaurants in the US, Jason’s Deli is a strong brand among fast casual franchises. It’s also a very popular franchise among franchisees due to its financial profile: one restaurant makes on average $2,559,000 in sales per year but the required investment is (only) $1.3M.

You would have guessed it: with such a good sales to investment ratio, investing in a Jason’s Deli can be a very profitable venture. On average, you would repay your investment within 4 years only.

How much it really costs to open a new Jason’s Deli franchised restaurant? How much profits can you really make with this franchise? Let’s dive in!

Key stats

Franchise fee$35,000
Royalty fee4.0%
Marketing fee2.0%
Investment (mid-point)$1,286,000
Average sales$2,559,000
Sales to investment ratio2.0x
Payback period[franchise_value_investment_payback]
Minimum net worth$35,000
Minimum liquid capital$35,000
Source: Franchise Disclosure Document 2023

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About Jason’s Deli

Jason’s Deli is an American fast-casual restaurant chain with more than 250 stores in 28 US states.

The chain was founded by Joe Tortorice, Jr., in 1976 in Beaumont, Texas, where it is based.

Jason Deli serves sandwiches, wraps, baked potatoes, pasta, soups, salads, and desserts, as well as catering items such as boxed lunches.

Its franchising journey began in 1988 with its first franchise in Tucson, Arizona, and is owned and operated by the parent company, Deli Management Inc.

Jason’s Deli franchises pros and cons

Pros

  • Site selection and construction: The brand has experienced in-house real estate experts and retail real estate brokers. Franchisees get guidance on the site selection criteria to identify a convenient business location considering traffic and future expansion potential. Also, it helps them with the standard specifications, design, development, and lease negotiations of the restaurants.
  • Marketing support: Jason’s Deli utilizes a dedicated marketing and advertising team. Franchisees can leverage the brand’s popularity, national media, regional advertising, targeted local store marketing, and social media promotional tools to reach a wider market segment.
  • Ongoing support: The franchisor offers its franchisees ongoing support and coaching to enable them to operate their restaurants smoothly. Franchisees get periodic franchise inspections by field operation managers, as well as meetings and conventions, safety and security procedures, and timely products and procedural updates.
  • Multiple earning channels: The brand utilizes different dining options to offer its customers a great dining experience. Franchisees can combine online ordering for deliveries or pickups, dine-in, and group orders with catering options to improve customer service and revenue channels.
  • Third-party financing: The franchisor provides its franchisees with third-party financing sources for start-up fees, equipment, and inventory.
  • Extensive training: The brand provides its franchisees with a detailed on-site, online, and classroom training curriculum. It trains them about making its products, hospitality, staff management, and growth strategies.

Cons

  • Not a passive investment: Jason’s Deli does not allow for absentee ownership. Franchisees are required to take active roles in the day-to-day operations of their restaurants.
  • Not a part-time business: The franchise is not a part-time business opportunity. Franchisees must adhere to the working schedule of the parent company.
  • Not a home-based business: the restaurant cannot be run from home or a mobile unit. Franchisees must have an office facility within the business.

How much do Jason’s Deli franchises cost?

On average, you may need to invest around $1,286,000 to open a Jason’s Deli restaurant.

This investment amount is an average that will vary depending on various factors like location, restaurant size, the current market price of required equipment, etc.

For example, real estate prices vary, which in turn has a direct impact on the total investment. As per the Financial Disclosure Document, the required investment ranges between $1,016,759 and $1,554,891.

Jason’s Deli franchises startup costs

This initial investment covers all the startup costs you may need to start a restaurant business. In addition to the franchise fee of $35,000, the initial investment covers: 

  • Formation Costs: licenses, deposits, point-of-sale system, build or remodeling of premises, etc.
  • Operating Costs: initial inventory and supplies, insurance, utilities, rent, working capital for first 3 months, etc.
Type of ExpenditureLowHigh
Initial Franchise Fee$35,000$35,000
Formation Costs$599,334$1,111,966
Equipment and furniture$325,000$325,000
Operating Costs$57,425$82,925
Total$1,016,759$1,554,891
Source: Franchise Disclosure Document 2023

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What’s the AUV of a Jason’s Deli franchise?

We estimate that Jason’s Deli franchises have an Average Unit Volume (AUV) of $2,559,000 per year on average.

Jason’s Deli does not disclose franchise sales data on its FDD. Indeed, we had to calculate the AUV by dividing Jason’s Deli’s total revenue by the number of franchises (see below).

2019202020212022
Royalty fee paid to Franchisor$8.7M$5.5M$7.1M$8.4M
Total revenue of all franchises$217M$138M$177M$210M
Total$2,247,315$1,623,564$2,166,011$2,558,787
Source: FDD

How profitable is a Jason’s Deli franchise?

We estimate that a Jason’s Deli franchise makes $486,000 in profits per year on average. This represents a 19% EBITDA margin.

Note that Jason’s Deli doesn’t provide any detailed information about the financial performance of its franchises in its latest Franchise Disclosure Document. Instead we had to make assumptions which we have summarized below.

Profit and lossAmount% Sales
Sales$2,558,787100%
COGS$(639,697)25%
Gross Profit$1,919,09075%
Labor$(742,048)29%
Marketing and royalty costs$(153,527)6%
Occupancy$(153,527)6%
Other OpEx$(383,818)15%
EBITDA$486,17019%
Source: Estimates

Should you invest in a Jason’s Deli franchise?

You should keep in mind that this adjusted EBITDA does not represent the net profit you would earn as a Jason’s Deli franchise owner.

Indeed, your compensation will of course be much lower than 19% of total revenue. Instead, you may need to deduct taxes, debt interest expenses, and other costs before you can pay yourself dividends as the franchisee / owner.

So is investing in a Jason’s Deli franchise a good idea? Is this a profitable investment? We estimate that Jason’s Deli franchises have a 4 payback on average: you would recoup your investment and pay back all creditors within 4 years as per our estimates.

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Disclaimer

Disclaimer: This content has been made for informational and educational purposes only. We do not make any representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the information presented in the article. You should not construe any such information or other material as legal, tax, investment, financial, or other professional advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.

All content in this article is information of a general nature and does not address the detailed circumstances of any particular individual or entity. Nothing in the article constitutes professional and/or financial and/or legal advice, nor does any information in the article constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this article before making any decisions based on such information or other content.

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