L&L Hawaiian BBQ Franchises Profits are Worth the $334K Cost

Undeniably the most popular hawaiian restaurant franchise, L&L Hawaiian Barbecue has 210 restaurants in the US and abroad. Beyond its unique menu, L&L Hawaiian Barbecue is also a profitable business.

Indeed, we found it has a payback period of only 5.5 years, which is a good payback. In other words, the profits are worth investing the initial investment of $334,350 (on average).

Want to know more? In this article we’ll tell you everything you should know about L&L Hawaiian Barbecue from the perspective by looking at its latest Franchise Disclosure Document. Let’s dive in!

L&L Hawaiian Barbecue: key figures

Franchise fee	$30,000
Royalty fee	3.0%
Marketing fee	1.0%
Investment (mid-point)	$334,000
Average sales	$613,000
Sales to investment ratio	1.8x
Payback period*	5 years
Minimum net worth	$500,000
Minimum liquid capital	$150,000

What is L&L Hawaiian Barbecue?

L & L Hawaiian Barbecue is an American fast-food restaurant chain that serves Asian American-inspired dishes such as chicken katsu and kalua pork and Hawaiian dishes such as the Loco Moco and Saimin.

It is also known for the “Hawaiian plate lunch” concept: two scoops of rice, a scoop of macaroni salad, and a meat or seafood entrée.

Headquartered in Honolulu, Hawaii, the brand first started in 1952 as L & L Hawaii Drive-inn before being converted into a Hawaiian-themed restaurant and branded as L & L Hawaiian Barbecue by Johnson Kam and Eddie Flores Jr. in 1976.

The brand’s franchising journey began in 1990, and it now has more than 210 stores in the US and worldwide.

L&L Hawaiian Barbecue franchises: pros and cons

Pros

• Effective marketing support: L&L Hawaiian Barbecue has dedicated marketing and advertising strategies. It provides its franchisees with efficient promotional campaigns and targeted local store marketing tools to create a loyal customer base in their locations.
• Hands-on training: The brand is keen on franchisees’ success and ability to run their businesses smoothly. It provides them with extensive on-the-job training, and proven food operating systems for the streamlined operations of their restaurants.
• Management support: The brand offers its franchisees extensive management support to establish their restaurants and grow smoothly. Franchisees get expert advice from top and field managers on operations, progress reviews, ongoing consultations, P&L management, meetings and conventions, and mentorship from successful brand partners.
• Operational excellence: The brand provides its franchisees with a successful and established network of Asian American restaurants with a global presence. Franchisees can easily establish their restaurants and expand into a multi-unit business that is simple and fun to operate.
• Real estate and construction: The brand gives franchisees guidance and suggestions for locating an approved viable business location in terms of geographic area and traffic. It helps them establish their restaurants from scratch or remodel existing ones. It also facilitates them with recommended specifications, standards, procedures, standard décor, and layout plans for the restaurants.

Cons

• No exclusive territory: The L&L franchise does not offer its franchisees an exclusive territory. Franchisees may face competition from franchises granted by the franchisor or other competitive channels and brands it owns or controls.
• No Financing: The brand does not provide franchise financing for start-up costs, inventory, and equipment. Also, it does not guarantee any lease, grant, or note on behalf of its franchisees.
• No absentee ownership: The franchise is not a passive investment. Franchisees must be fully involved in the daily operations of their businesses.

How much should you invest to own a L&L Hawaiian Barbecue franchise?

On average, you would need to invest around $334,350 to open an L&L Hawaiian Barbecue restaurant.

The investment is an average that depends on various factors. For example location, restaurant size, the current market price of required equipments and other factors change the total investment required to open a new L&L Hawaiian Barbecue restaurant. Generally, the investment amount ranges between $133,700 and $535,000 (Franchise Disclosure Document 2020).

What are you paying for?

The investment you would pay covers all the startup costs needed for starting a restaurant. In addition to the initial franchise fee of $30,000, you would also pay for:

• Formation costs: construction cost, equipment, furniture, exterior, security deposit, professional fees, etc.
• Initial training: travel and living expenses during training
• Operating costs: inventory, rent, uniforms, insurance, utility deposits, first 3 month’s working capital, etc.

Type of cost	Low	High
Initial Franchise Fee	$30,000	$30,000
Formation Costs	$71,000	$415,200
Initial Training	$3,700	$7,500
Operating Costs	$29,000	$82,300
Total	$133,700	$535,000

What’s the average turnover of a L&L Hawaiian Barbecue restaurant?

On average, an L&L Hawaiian Barbecue franchise makes $612,921 in sales per year.

The sales number is the annual median sales of the franchised restaurants operating in the 2019 fiscal year. Most of the restaurants (55%) generate over the average revenue (43% over $750,000). 

How profitable is a L&L Hawaiian Barbecue franchise?

We estimate that an average L&L Hawaiian Barbecue franchise makes $119,427 in profits per year. This represents a 19% profit margin. (adjusted EBITDA margin)

The 19% adjusted EBITDA margin is on the very lower end compared to similar franchises as per our intelligence (~25-27% industry average). The main reason for this low margin is a significantly higher rent cost vs. similar restaurant franchises (22.5% sales vs 8% industry average). This is partly due to the fact that L&L Hawaiian Barbecue restaurants are large (a store can go up to 2,500 sq. ft.).

Note that L&L Hawaiian Barbecue does not disclose their franchises’ cost data. Indeed, we couldn’t use the exact numbers for some costs. We had to use the industry average for COGS (25% sales) and labor costs (29%) to calculate this number. 

Profit-and-loss	Amount	% of sales
Sales	$612,921	100%
COGS	$(153,230)	25.0%*
Labor	$(177,747)	29.0%*
Rent	$(138,000)	22.5%
Royalty + marketing fees	$(24,517)	4.0%
Adjusted EBITDA	$119,427	~19%

Is a L&L Hawaiian Barbecue a good investment?

By comparing the initial required investment of $334,350 to the future profits (assuming 10% net profit margin), we found that the payback period is 5.5 years on average.

This means it would take you 5.5 years to reimburse loans, investors or even your own funds with the profits generated by a L&L Hawaiian franchised restaurant.

As such, we can conclude that L&L Hawaiian Barbecue is a good investment from a financial standpoint. Now, your decision shouldn’t be based only on financials: also take into considerations factors like franchisor’s training and support, level of competition where you intend to open your restaurant, etc.

How does it compare vs. other franchises?