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Perkins Franchise Costs $1.2M – $3.3M (+ 2024 Profits)

The Perkins Restaurant & Bakery franchise, with its roots stretching back to 1958, stands as a testament to an enduring American culinary tradition. Initially founded as a pancake house, Perkins has expanded its menu over the decades to include a wide array of breakfast, lunch, and dinner options, catering to a broad customer base with its classic comfort foods and contemporary culinary specialties.

Headquartered in Atlanta, GA, the chain began franchising, marking the start of its expansion and evolution into the Perkins Restaurant & Bakery known today.

The franchise is renowned not just for its all-day breakfast offerings but also for its in-house bakery, which contributes significantly to its appeal by providing a variety of pies, muffins, and other baked goods, made fresh daily.

a financial plan for a franchise
a financial plan for a franchise

Initial investment

Type of ExpenditureAmount (Traditional Franchise)
Initial Franchise Fee$40,000
Training Fee and Travel and Living Expenses While Training$97,000 – $119,000
Real Estate – Rent for First 3 months$20,000 – $60,000
Improvements$575,000 – $1,967,000
Interest during construction$25,000 – $30,000
Equipment and Seating$490,000 – $650,000
Signs and Décor$53,000 – $82,000
Site Plan/Engineering Drawings$12,500 – $18,500
Travel Expenses for Opening Guide Meeting$0 – $750
Smallwares, Small equipment, Opening Inventory and Uniforms$53,000 – $82,000
POS System$15,000 – $20,000
Help Desk (total for first 3 months)$215 – $215
Hardware and Software Components – Computer Security$2,500 – $3,000
Other Computer and Technology Expenses (first 3 months)$2,500 – $3,000
Grand Opening Promotion$4,000 – $10,000
Miscellaneous Opening Costs$45,000 – $55,000
Additional Funds-3 Months$100,000 – $150,000
Total$1,534,000 – $3,290,000

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 initial franchise fee for a twenty-year Standard Unit Franchise is $40,000 for new franchisees. For Non-Traditional Units with a ten-year term, the fee is $15,000.

Royalty Fee

Franchisees must pay a weekly royalty fee equal to 4.0% of Net Sales.

Transfer Fees

A transfer fee of 25% of the then-current Initial Franchise Fee applies if a franchise is sold or there’s a transfer involving more than 51% ownership, with specific exceptions for approved transfers within the first year of the Franchise Agreement.

Renewal Fees

For franchise renewal, a fee equal to twenty-five percent (25%) of the then-current initial franchise fee is required.

Computer and Technology Fees

The fees related to computer system, software, and technology services currently stand at $850 per year for helpdesk services, billed monthly. For any additional services provided by Perkins, reasonable fees may be charged.

Advertising Requirement

Franchisees must spend a minimum of 1.0% of Net Sales on qualified local advertising and marketing activities, which may increase to not more than 1.5%.

revenue

Revenue & Profits

a financial plan for a franchise
a financial plan for a franchise

Franchise 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 to open a Perkins Franchise

1. Initial Research and Inquiry

  • Begin by gathering detailed information about the Perkins Restaurant & Bakery franchise opportunity to understand the brand, market position, and investment requirements.
  • Visit the Perkins franchising website to find preliminary information and express your interest by filling out an inquiry form or contacting their franchise development team directly.

2. Initial Discussions

  • After submitting your inquiry, expect an initial discussion or call with a Perkins Franchise Development Representative to briefly go over your interest, qualifications, and answer any basic questions you might have about the franchise.

3. Detailed Exploration

  • Engage in more detailed discussions to deeply understand the franchise model, support structure, financial requirements, and the potential return on investment. This step may involve multiple calls or meetings and the sharing of more detailed documentation about the franchise.

4. Franchise Application

  • Complete a formal franchise application where you’ll provide detailed information about your financial status, business experience, and your vision for owning a Perkins franchise. This application will be reviewed thoroughly by the franchisor.

5. Franchise Disclosure Document (FDD) Review

  • Once your application is approved, you will receive the Franchise Disclosure Document (FDD), which contains important information about the franchise opportunity. You’ll have the chance to review this document, ask questions, and possibly consult with legal or financial advisors.

6. Discovery Day and Final Interview

  • Attend a Discovery Day at Perkins’ corporate office or a designated location to meet with the executive team, understand the brand culture, and get a firsthand look at the operation. This may also include a final interview to ensure mutual fit and alignment of goals.

7. Franchise Agreement and Approval

  • Upon successful completion of all previous steps and mutual agreement to move forward, you will be presented with a Franchise Agreement to sign. This formal agreement outlines all terms and conditions of your franchise ownership.

8. Site Selection and Development

  • Work with Perkins’ real estate and development team to identify and secure an ideal location for your restaurant. This process includes site selection, lease negotiation, and planning the build-out of your restaurant to meet Perkins’ brand standards.

9. Training and Preparation

  • Undergo comprehensive training covering all aspects of running a Perkins franchise, including operations, management, customer service, and local marketing strategies. This training is crucial for ensuring you are fully prepared to operate your restaurant.

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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