Red Robin Franchise Costs $1.9M – $4.1M (2024 Fees & Profits)
Red Robin Gourmet Burgers, Inc. is a well-known casual dining restaurant chain that was founded in 1969 in Seattle, Washington. Initially, it was a local favorite, but it quickly gained popularity due to its unique approach to gourmet burgers. The company began franchising in 1979, and since then, it has grown significantly.
Today, Red Robin’s headquarters are located in Greenwood Village, Colorado, and the franchise has expanded to include over 500 locations across the United States and Canada.
Red Robin is particularly famous for its extensive menu of high-quality, customizable burgers, which are served alongside their signature Bottomless Steak Fries®. The restaurant offers a lively and family-friendly atmosphere, making it a popular destination for a wide range of customers, from families to teens.
In addition to its gourmet burgers, Red Robin also serves a variety of other dishes, including salads, soups, appetizers, and desserts, as well as an array of beverages that include innovative cocktails and local beers.
What sets Red Robin apart from its competitors is its commitment to providing a fun and memorable dining experience. The chain emphasizes “Bottomless Fun,” offering unlimited fries with burgers and promoting a playful, inviting environment that appeals to guests of all ages.
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Initial investment
Here’s what you can expect to spend to start a Red Robin franchise.
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
Here are the main ongoing fees the franchisor will ask you to pay going forward to run the franchise.
Initial Franchise Fee
The initial franchise fee for a Red Robin franchise is $50,000.
Royalty Fee
Red Robin franchisees are required to pay a royalty fee of 4% of gross sales.
Marketing/Advertising Fee
The marketing/advertising fee is 2% of gross sales.
Brand Fund Fee
Franchisees must contribute 1% of gross sales to the brand fund.
Transfer Fees
The transfer fee for a Red Robin franchise is $10,000.
Renewal Fees
The renewal fee for a Red Robin franchise is 50% of the then-current initial franchise fee.
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Franchise pros and cons
Pros
- Exclusive territory protection: The franchisor grants its franchisees the right to establish their restaurants in an exclusive market area approved by the parent company. It does not authorize any other franchise or operate a competing channel in the protected area as long as the franchisees are compliant with its franchise agreement.
- Investment buyout opportunity: The franchisor offers its franchisees the option for a buyback. In the unlikely event that a franchisee buys the Red Robin franchise and it fails to pick, the franchisor refunds them their development and franchise fees.
- Marketing support: The brand utilizes a superb marketing strategy to enhance improved public relations. It utilizes brand popularity, go-to search terms to improve SEO, social media, email reach, and engagement, and targeted promotional campaigns to publicize the brand’s products and local stores.
- Management training: The brand offers its franchisees extensive management and staff training on how to establish and operate a successful restaurant. It trains them about the products in line with its concept, handling customers, hiring and training staff, and product packaging. In addition, it provides them with new restaurant opening training.
- Franchise support: The brand has experienced top leadership and a professional franchise consultant to provide its franchisees with helpful growth strategies. Franchisees get guidance and expert advice on establishing and running their restaurants successfully.
Cons
- No financing: The brand does not directly or indirectly finance its franchisees for startup costs, equipment, inventory, or trade fixtures. Also, the franchisor does not guarantee its franchisees’ notes, grants, or leases.
- No absentee ownership: The franchise does not present a passive investment opportunity. The franchise owners or their appointed managing directors must be fully active in the decision-making and running of their restaurants.
- Competition: The brand faces a lot of competition from well-known brands in the fast food industry, especially from the giants Burger King, Five Guys, Steak n Shake, and others like Texas Roadhouse, Famous Dave’s or Sonic Drive In to name a few.
How to open
Opening a Red Robin franchise involves several steps, designed to ensure you are a good fit for the franchise. Here are the main steps to follow to open a Red Robin franchise.
1. Initial Franchise Inquiry
- Contact the Franchise Department: Reach out to Red Robin’s franchise development team to express your interest in opening a franchise.
- Submit an Application: Complete the franchise application form provided by Red Robin to assess your eligibility.
2. Financial Requirements
- Initial Investment: Ensure you have access to the required capital. The total investment to open a Red Robin franchise typically ranges from $1.8 million to $3.9 million.
- Franchise Fee: Be prepared to pay an initial franchise fee, which is around $35,000.
- Net Worth & Liquidity: You should have a minimum net worth of $1 million and liquid assets of at least $500,000.
3. Training and Support
- Attend Training Programs: Red Robin offers extensive training programs, including the School of Management and the School of Team Member Excellence, to prepare you and your team for running the franchise.
- Ongoing Support: The franchisor provides continuous support, including marketing assistance, operational guidance, and periodic training updates.
4. Site Selection and Approval
- Select a Location: Work with Red Robin’s real estate team to find a suitable location for your restaurant.
- Approval Process: The chosen site must be approved by Red Robin based on demographic studies and market potential.
5. Opening Your Franchise
- Construction and Setup: Follow Red Robin’s guidelines for restaurant construction, interior design, and equipment setup.
- Grand Opening: Plan and execute a grand opening event with the support of Red Robin’s marketing team to attract customers and build awareness in the community.
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.
