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McAlister’s Deli Franchise Costs $1.1M – $2.5M (+ 2024 Profits)

McAlister’s Deli, established in 1989 in Oxford, Mississippi, by retired dentist Dr. Don Newcomb, is a fast-casual restaurant chain that has grown significantly since its inception. Originally envisioned as a neighborhood restaurant and gathering place, McAlister’s Deli first opened its doors with a menu that included their now-famous sandwiches, giant baked potatoes, salads, and sweet tea.

The brand started franchising in 1994, indicating a strong growth trajectory that continues to this day​. Headquartered in Atlanta, Georgia, McAlister’s Deli is part of the Focus Brands portfolio, a testament to its sustained expansion and popularity.

McAlister’s is distinguished by its genuine hospitality and a broad menu that includes deli sandwiches, spuds, soups, salads, desserts, and their signature McAlister’s Famous Sweet Tea. The franchise has also incorporated modern dining conveniences such as mobile app ordering and a loyalty program, enhancing the guest experience and fostering customer loyalty​.

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Initial investment

Type of ExpenditureAmount
Initial Franchise Fee$35,500
Construction and Build Out Costs$753,200 – $1,373,000
Permitting$6,000 – $15,000
Equipment Package$257,400 – $294,000
Millwork$38,000 – $60,000
Furniture$29,000 – $55,000
Menu Board, Graphics and Interior Signage$25,000 – $28,000
Exterior Signage$92,200 – $135,000
Computer System$22,000 – $58,000
Smallwares$20,000 – $30,200
TV/Music$1,200 – $6,000
Architect/Engineer$20,000 – $55,000
Rent$7,200 – $18,600
Grand Opening Marketing$25,000 – $27,000
Legal and Accounting Fees$3,000 – $10,000
Insurance$1,925 – $9,500
Misc. Opening Costs/ Security Deposits$5,000 – $33,000
Management Training Program Fee$0 – $25,000
Travel and Living Expenses during Training$26,200 – $33,700
On-Site Training Fee$0 – $34,000
Opening Inventory$25,000 – $100,000
Additional Funds – 3 Months$25,000 – $53,000
Total Initial Investment*$1,417,825 – $2,488,500
* for a Newly-Constructed Freestanding Location

Note: The table above provides a snapshot of the main costs associated with starting the most common franchise format (as disclosed in the Item 7 of the Franchise Disclosure Document). For a complete overview of all the expenses involved with the various formats offered by the franchisor, please consult the Franchise Disclosure Document.

Franchise fees & Royalties

Initial Franchise Fee

The standard initial franchise fee is $35,500, which is non-refundable once paid under the Franchise Agreement. The franchise may offer reductions under certain circumstances, such as economic incentives or inducements for existing operators to open additional locations or for multi-unit operators

Royalty Fee

The Royalty Fee is 5% of Net Sales, payable weekly.

Marketing/Advertising Fee

The Advertising Contribution is currently 2% of Net Sales, also payable weekly.

Lease or Rent Fee

A Late Fee of $500 per month is incurred for late delivery of lease documentation.

Transfer Fees

For a control transfer, the fee is 50% of the then-current Initial Franchise Fee; for a non-control transfer, it is 10%.

Renewal Fees

The Renewal Fee is 20% of the then-current Initial Franchise Fee, payable before signing a renewal Franchise Agreement.

Management Fees

Management Training Fees are currently $250 per trainee per day, payable before attending training.

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Franchise pros and cons

The Pros:

  • Comprehensive training: The brand has a comprehensive training program to equip franchisees with hands-on experience on its menu, operation standards, and customer hospitality. Its current training program is about 5 to 6 weeks of classroom training, the opening of the restaurant, and ongoing sessions of conferences, convention programs, webinars, teleconferences, or training sessions on any matters related to the system.
  • Exclusive territory: The franchisor provides franchisees with a protected, exclusive territory in which to operate their restaurant. Under the franchise agreement, the brand does not grant any other franchises or operate competitive restaurants in the protected area except in “captive audience” locations.
  • Solid franchise support: The brand offers franchisees dedicated business support and consultations to help them run their restaurants smoothly and improve their bottom line. This is through online support, proprietary software, security and safety procedures, and field operations.
  • Real estate and construction assistance: To assist franchisees in building their restaurants, the brand offers expert advice on real estate and lease negotiations. It also helps them with convenient business location assessment, site selection, restaurant design, and construction.
  • Marketing support: The brand has aggressive marketing planning and execution strategies. Franchisees can achieve national and local store growth by utilizing the brand’s national media, regional advertising, social media, loyalty program app, and localized marketing plans and campaigns.
  • Multiple income streams: McAlister’s Deli employs flexible ways for customers to enjoy their meals. Franchisees use dine-in, take-out, catering, online ordering, and a pick-up window to add to their income streams.

The Cons:

  • No financing: McAlister’s Deli does not provide franchisees financing for the franchise fee, trade fixtures, or other costs, directly or indirectly. It also does not guarantee any lease, obligation, or note on behalf of franchisees.
  • Competition: With changing healthy eating options, the brand faces competition from established brands like Panera Bread, Quiznos or even Jimmy John’s to name a few
  • Not a passive investment: The franchise does not offer a passive investment opportunity. The franchisees are required to fully participate in the operations of their restaurants and keep them open full-time.

How to open a McAlister’s Deli franchise

1. Meet Financial Requirements

  • Initial Capital: You will need a minimum liquid capital of $425,000.
  • Net Worth: Your net worth should be at least $1,000,000.
  • Total Investment: The total investment to open a McAlister’s Deli franchise ranges from approximately $921,450 to $1,565,900, depending on various factors such as location and restaurant size​.

2. Submit an Application

  • Franchise Application: Submit your application and show that you meet the financial prerequisites and have a strong interest in running a fast-casual restaurant.

3. Training and Support

  • Pre-Opening Training: Before opening, a minimum of four managers must attend and successfully complete a comprehensive management training program, which lasts about 7.5 weeks and may occur online or in-person at the corporate headquarters or designated locations​ ​.
  • Ongoing Support: McAlister’s provides continuous support through marketing campaigns, operational guidance, and a dedicated franchise business consultant to ensure smooth operations​ .

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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