Slim Chickens Franchises: $2.4M Turnover at a 30% Profit Margin

Another strong contender among the various chicken restaurant franchises in the US, Slim Chickens indeed has a very attractive profile with an annual turnover of $2.4 million on average.

Yet, Slim Chickens is also one of the most expensive chicken restaurant franchises: it costs on average $2.7 million in startup costs which you would have to fund as the franchisee (either from investors, yourself or a bank loan e.g. SBA loan).

So naturally you may be wondering whether opening a Slim Chickens restaurant is a profitable venture. That’s what we’re investigating in this article.

We’ll see how much it really costs to open a Slim Chickens franchised restaurant, how much profits you can really make, and whether you should invest in this business. Let’s dive in!

Slim Chickens franchises: key figures

Franchise fee	$22,500
Royalty fee	5.0%
Marketing fee	3.0%
Investment (mid-point)	$2,680,000
Average sales	$2,366,000
Sales to investment ratio	0.9x
Payback period*	8 years
Minimum net worth	$3,000,000
Minimum liquid capital	$1,500,000

What is Slim Chickens?

Slim Chickens is an American fast-casual restaurant chain based in Fayetteville, Arkansas. The chain was founded by Greg Smart and Tom Gordon in 2003.

It serves fresh chicken tenders, wings, salads, sandwiches, wraps, chicken & waffles, and southern-fried sides like pickles, okra, and fried mushrooms.

Slim Chicken’s franchising journey started in 2013, and today the chain has more than 200 stores in the US and globally.

Slim Chickens franchises: pros and cons

Pros

• Exclusive territory protection: The franchisor grants its franchisees the right to operate in a protected development market. It does not authorize any other franchises or operate a competing channel in the agreed-upon area.
• Development and construction: The brand has an experienced real estate and restaurant development team. It helps franchisees with trade area analysis, site selection, site approval, designs, lease negotiations, and the building of their restaurants.
• Training: The brand offers a comprehensive franchise and management training program to its franchisees. It trains its franchisees on its business concept, customer hospitality, managing its staff, how to carry out a successful grand opening, and restaurant growth strategies.
• Financial support: The franchisor provides financial support to its franchisees such as accounting systems integration, P&L reviews, back office support and strong vendor partners. Also, the brand helps franchisees get accurate reports and performance analyses for easy budgeting, planning, and monitoring of their expenses.
• Flexible franchise formats: Slim Chickens has different franchise formats that can fit into the real estate opportunities available to its franchisees. It gives franchisees flexibility with formats such as master franchise opportunities, area development franchise opportunities, and multi-unit franchise opportunities.

Cons

• No financing: The franchisor does not offer direct or indirect financing to its franchisees for startup costs, equipment, inventory, payroll, and trade fixtures.
• Not a passive investment: A slim Chickens franchise does not allow for absentee ownership. Franchisees need to actively participate in the day-to-day operations of their restaurants.
• Not a part-time business: The franchise does not present a part-time business opportunity. It requires its franchisees to operate according to the parent company’s working hours.

How much does a Slim Chickens franchise cost?

You have to invest around $2,679,500 to open a Sim Chicken franchise restaurant.

This is an average; indeed, it varies based on many factors, such as the location of your restaurant, its size, and future policy changes.

In addition to the initial franchise fee that you must pay to the franchisor, you would also pay for the furniture and fixtures, signage, equipment, training costs, etc. Here’s the full breakdown of costs:

Expense	Amount
Initial franchise fees	$15,000- $30,000
Furniture, fixtures and equipment	$275,000-$325,000
Signage and interior graphics	$45,000-$75,000
Training costs	$23,000-$39,000
Other	$949,000-$3,583,000
Total	$1,307,000-$4,052,000

What’s the turnover of a Slim Chickens restaurant?

On average, a Sim Chicken franchise has a $2,366,491 turnover per year.

This is the average turnover per restaurant for the 66 of the 107 franchised restaurants that were open in all of 2021. The most successful restaurant had a turnover of $5,764,715 and the less performing $1,145,623 instead.

How profitable is a Slim Chickens franchise?

Sim Chicken is a very profitable franchise. Indeed, a Sim Chicken franchise makes $707,267 profits per year on average. This corresponds to a 30% profit margin (adjusted EBITDA).

We found that the 30% profit margin is higher than the average profit margin for similar restaurant franchises (25-27%).

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

Unfortunately, Sim Chicken has not provided detailed information on all costs for its franchised-owned restaurants in its FDD. Therefore, we used benchmarks for both Cost of Goods Sold and labor costs (25% and 29% respectively, as per our industry benchmark).

Profit and loss	Amount	% of sales
Sales	$2,366,491	100%
COGS	($591,623)	25.0%*
Labor	($686282)	29.0%*
Rent	($192,000)	8.1%
Royalty + marketing fees	($189,319)	8.0%
Adjusted EBITDA	$707,267	~30.0%

Is a Slim Chickens a good investment?

With a required investment of $2,679,500 on average, no wonder franchisees may be reluctant to go ahead and open a new Slim Chickens restaurant. Indeed, the investment is much higher than the average for restaurant franchises ($1.6 million as per our benchmark).

In order for you to assess whether a Slim Chickens franchise is a good investment, you must look at the payback period: the time it takes for an investment (like opening a franchised restaurant) to generate enough profits to recoup the initial investment.

We found the average payback period for a Slim Chickens is 7.5 years, which is slightly more than what we consider good for a restaurant franchise (anywhere between 5-6 years is good, and anything below 4 years is excellent).

That being said, this shouldn’t put you off to go ahead. Even though Slim Chickens isn’t the most profitable chicken restaurant franchise, there are other factors at play when choosing a franchise (like the pros and cons discussed earlier, the competition, etc.).

How does it compare vs. other franchises?