Jason’s Deli Franchises: $2.2M AUV and 4 Years Payback (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 $2,247,000 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!

Jason’s Deli franchises: key figures

Franchise fee	$35,000
Royalty fee	4.0%
Marketing fee	2.0%
Investment (mid-point)	$1,352,000
Average sales	$2,247,000
Sales to investment ratio	1.7x
Payback period*	4 years
Minimum net worth	$35,000
Minimum liquid capital	$35,000

What is 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 $1,352,329 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 $1,127,159 and $1,577,498.

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.
• Initial Marketing:  pre-opening advertising
• Operating Costs: initial inventory and supplies, insurance, utilities, rent, working capital for first 3 months, etc.

Type of cost	Low	High
Initial Franchise Fee	$35,000	$35,000
Formation Costs	$1,031,734	$1,447,573
Initial Marketing	$3,000	$12,000
Operating Costs	$57,425	$82,925
Total	$1,127,159	$1,577,498

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

On average, a Jason’s Deli franchised restaurants have an Average Unit Volume (AUV) of $1,586,000 per year.

Though, pre pandemic AUV was much higher ($2,247,000 in 2019). Even though we are using the $1.6M AUV as per the latest FDD, it’s reasonable to assume AUV has come back to pre pandemic levels.

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 at the end of 2021.

How profitable is a Jason’s Deli franchise?

We estimate that an average Jason’s Deli franchise makes $507,597 in profits per year. This represents a 32% profit margin (adjusted EBITDA margin).

The 32% profit margin is on the higher end compared to similar franchises as per our intelligence (~25-27% industry average). This is mainly due to rather low royalty and marketing fees (6% of AUV vs. ~10% for the industry average).

Note that Jason’s Deli doesn’t provide any financial information regarding costs for its franchise. Instead we estimated this number by using the industry average for COGS (25%), labor costs (29%), and rent costs (8%) as per our benchmarks of 200+ restaurant franchises.

Profit and loss	Amount	% of sales
Sales	$1,586,241	100%
COGS	$(396,560)	25.0%*
Labor	$(460,010)	29.0%*
Rent	$(126,899)	8.0%*
Royalty + marketing fees	$(95,174)	6.0%
Adjusted EBITDA	$507,597	~32%

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 32% of the 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? Assuming a 15% net profit margin (after deducting all expenses), we found Jason’s Deli has a payback period of 4 to 6 years (depending on whether you use the $2.2M or $1.6M Average Unit Volume).

In any case, a payback period of 4 to 6 years is a good investment: you would recoup your investment and pay back all creditors within 4 to 6 years maximum.

How does it compare vs. other franchises?