Perkins Franchise: Sales, Costs & Profits (2023)

Famous for its breakfast-style menu and its waffles and pancakes, Perkins has today more than 300 restaurants scattered across 32 states in the US. It’s a very popular brand for any franchisee who wants to capitalise on a solid all-day breakfast style franchise.

But is it a profitable business? To open a new Perkins restaurant you would need to invest $1,922,728 (from equity or a loan). Then, you could expect your restaurant to gross on average an annual turnover of $1,729,246.

So is this a good investment? In this article we’re looking at the financial stats of Perkins franchises.

We will answer questions like: how much profits can you make? How much does it really cost? More importantly, we’ll see whether you should invest in this franchise today, or not. Let’s find out!

Key stats

Franchise fee	$40,000
Royalty fee	4.8%
Marketing fee	4.0%
Investment (mid-point)	$1,923,000
Average sales	$1,729,000
Sales to investment ratio	0.9x
Payback period	7 years
Minimum net worth	$1,500,000
Minimum liquid capital	$500,000

What is Perkins?

Perkins is an American casual dining restaurant chain founded in 1958 by Matt and Ivan Perkins in Cincinnati, Ohio, and is now headquartered in Sandy Springs, Georgia.

The chain serves pancake and waffle options, American staples like breakfast all day, hearty steak plates, juicy burgers, and a wide selection of handcrafted handhelds, soups, salads, pies, and muffins.

Its franchising journey began in 1965, and now it has more than 300 company-owned and franchised stores in 32 US states and two provinces in Canada.

Perkins franchises: pros and cons

Pros

• Site development assistance: The brand helps its franchisees identify a convenient business location, considering traffic and growth potential for expansion into multi-unit locations. It also assists with restaurant designs and construction, whether building new or converting an existing location, lease negotiation, and grand opening.
• Comprehensive franchise training: Perkins has an extensive management and staff training program. Its initial training consists of approximately 350 on-the-job hours and 105 classroom hours. This provides franchisees with the business concept, staff management, and operational procedures required to reduce inventory waste and conduct a successful grand opening.
• Vendor and supply chain support: Franchisees get access to approved vendors and a central supply chain. They can leverage the brand’s purchasing power to establish strong vendor relationships and enjoy a consistent supply of high-quality foods, trade fixtures, and supplies at low costs.
• Experienced management support: The brand offers franchisees a professional and dedicated management team with experience in the successful establishment of numerous franchises. Franchisees get a proven business model, franchise infrastructure, and ideas to smoothly run their business.
• Exclusive territory protection: Perkins grants its franchisees the right to operate their businesses in an approved protected territory. It does not license any other franchises or operate a competing brand or channel in that agreed-upon area.
• Multiple income streams: Perkins is well known for its popular full menu all day long. Franchisees can provide a menu that caters to all tastes and dayparts, including breakfast, lunch, dinner, and late night. In addition, dine-in, take-out, and delivery options offer franchisees multiple income streams to boost their profitability.

Cons

• No financing. The franchisor does not directly or indirectly finance its franchisees for franchise fees, ongoing operations, or development costs. Also, the franchisor does not guarantee any grant, note, or lease on behalf of its franchisees.
• Not a passive investment: Perkins does not allow for absentee ownership. It requires franchisees to be actively involved in their restaurants’ day-to-day operations.
• Competition: The brand faces tough competition from chains offering full-day menu times such as breakfast, lunch, and dinner, such as Denny’s, Waffle House, and IHOP.

How much does a Perkins franchise cost?

You would have to invest on average $2,014,728 to open a new Perkins restaurant franchise.

Note that this is the investment for a traditional unit. Indeed, there are two kinds of restaurant formats you can choose from:

• Traditional unit: $2,014,728
• Non-Traditional unit: $1,830,728

Also note that the investment presented here is an average; indeed, it varies based on many factors, such as the location of your restaurant, its size, etc. For example, here are the low and high estimates provided in the latest Franchise Disclosure Document:

Here’s the full breakdown of costs per restaurant format:

	Traditional	Non traditional
Initial franchise fees	$40,000	$15,000
Improvements	$575,000 – $1,250,000	$400,000 – $1,250,000
Equipment and seating	$490,000 – $590,000	$400,000 – $590,000
Signs and decor	$53,000 – $82,000	$40,000 – $82,000
Additional funds -3 months	$100,000 – $150,000	$100,000 – $150,000
Other	$272,065 – $387,390	$232,065 – $387,390
Total	$1,530,065 – $2,499,390	$1,187,065 – $2,474,390

What’s the average turnover of a Perkins restaurant?

On average, a Perkins Restaurant franchise makes $1,729,246 in sales per year.

This is the average sales per restaurant for the 195 of the 205 franchised restaurants operating in all of 2021. This is a significant increase of 129% year-on-year vs. 2020 ($752,477, 63 units) as the chain recovered from the COVID-19 pandemic.

Note that this excludes 10 franchised restaurants operating less than 50% of 2021. These units had an average net sale of $885,775.

How profitable is a Perkins franchise?

On average, a Perkins Restaurant franchise makes $484,144 profits per year. This corresponds to a 28% adjusted EBITDA margin, higher than the industry average (25-27% as per our restaurant franchise benchmark).

We calculated this number using the information available in the Franchise Disclosure Document 2022.

Unfortunately, Perkins Restaurant has not provided detailed information on the cost of goods sold (COGS), and labor costs. Therefore, we used 25% and 29% of sales, respectively, as per industry benchmarks.

Profit and loss	Amount ($)	% sales
Sales	$1,729,246	100%
COGS	($432,312)	25.0%*
Labor	($501,481)	29.0%*
Rent	($160,000)	9.2%
Royalty + marketing fees	($151,309)	8.8%
Adjusted EBITDA	$484,144	~28.0%

Is a Perkins franchise a good investment?

At first, you could think $484,144 profits per year is an incredible franchise business. The reality is a bit different. Indeed, the profits you will earn as the franchisee (or any investor) should be calculated from net profits instead of EBITDA.

Whilst EBITDA gives a clear picture of the ‘true’ profitability of a business (like a franchise) as it excludes non-operating expenses like corporate taxes, debt interest and so forth, you would need to pay for those anyway. That’s why we look at net profits for judging whether a franchise is a good investment.

Assuming a 15% net profit margin, we found that it takes on average 7 years for a franchisee to recoup her / his initial investment upfront (the $1,922,728 we discussed earlier).

Whilst not exceptional (the best franchises have payback period of 3 years or even less), it’s an average payback period. As such, we see Perkins as a good investment if you were to buy the franchise.

How does it compare vs. other franchises?

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