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Smoothie King Franchises Costs & Profits (2023)

This article was updated with the 2023 Franchise Disclosure Document

With 1,400 restaurants across the globe, Smoothie King is a strong and popular smoothie brand for franchisees that also benefit from a strong market growth and consumer trends. But beyond the hype, should you start a Smoothie King franchise?

With an investment cost of $773,000 on average, and annual sales of $573,000, is Smoothie King a profitable investment?

In this article we’re looking at the financials of Smoothie King franchises: how much it (really) costs, how much profits you can earn and whether this is a good investment. Let’s find out!

Key stats

Franchise fee$30,000
Royalty fee6.00%
Marketing fee7.00%
Investment (mid-point)$773,000
Average sales$561,000
Sales to investment ratio52.0x
Payback period[franchise_value_investment_payback]
Minimum net worth$300,000
Minimum liquid capital$100,000
Source: Franchise Disclosure Document 2023

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About Smoothie King

Smoothie King is a privately held American smoothie company that offers nutritious smoothies made using organic veggies and whole fruits without adding colors, flavors, and artificial preservatives.

The company was founded in 1973 by Steve and Cindy Kuhnau but was later purchased by Wan Kim who was Smoothie King franchisee in South Korea. Today, the company operates in 1,400 locations globally with presence in the US, Grand Cayman, Korea, and Trinidad.

According to the official website of Smoothie King, the company is currently not expanding in international locations.

Smoothie King franchises: pros and cons

Owning a franchise comes with various advantages and disadvantages, and Smoothie King is no different.

The Pros:

  • Extensive training and support: Smoothie King has a detailed program to educate its franchisees about its business concept and systems. Franchisees have access to the franchisor’s comprehensive intranet platform for their operational, ongoing training, and support needs.
  • Third-party financing: The franchisor has established relationships with third-party partners to help franchisees with SBA loan applications and processing to fund their startup and ongoing costs.
  • Simple franchise designs: The franchisor’s restaurant size is 800-1600 square feet, giving franchisees flexibility and the option to choose smaller or larger stores.
  • Exclusive territory protection: The franchisor may designate a protected area for franchisees to operate their restaurants once a lease is secured. Under the agreement, it does not authorize other franchisees to operate competing businesses in the area.
  • Comprehensive marketing services: Smoothies King provides its franchisees with aggressive marketing strategies to help them create awareness about their restaurants and branding. These include email marketing, social media, national media, regional advertising, etc.
  • Recognized smoothie brand: Franchisees can leverage the world’s largest health smoothie brand with a proven business record of more than 50 years to grow and scale their businesses.
  • Site selection: Smoothie King helps franchisees identify a viable business site for their restaurants. In addition, it helps them with lease negotiations and development.
  • Semi-absentee ownership allowed: The franchisor allows franchisees to operate their franchises alongside other business ventures.

The Cons:

  • Not a home-based business: The franchise cannot be operated from a mobile unit. Franchisees must have a fixed office space to operate from.
  • Competition: Smoothie King’s competitors include Juice It Up and Planet Smoothie LLC, just to name a few.
  • Higher royalty fee: Smoothie King has a high royalty fee and marketing fees (12% total) as compared to the competition.

How much does a Smoothie King franchise cost?

A Smoothie King franchise requires a total investment of $773,000 in the beginning, including the initial franchise fee of $30,000.

This number can vary depending on your situation (for example, the type of restaurant you open or its location). For example, you would invest 2x time for a free-standing drive-thru vs. an end-cap or in-line format.

Whilst in-line and end-cap stores are smaller units (often located in shopping malls, airports, etc.), free-standing drive-thru outlets are much bigger units with, logically, a much higher turnover.

Source: Franchise Disclosure Document 2023

The investment amount includes:

  • Formation costs: franchise fee, initial training, technology systems, furniture, equipment, professional fees, signage, leasehold improvements, grand opening, etc.
  • Operating expenses: 3 months’ rent, insurance, start-up supplies & inventory, additional funds fort he first 3 months of operation, etc.

 Here’s a summary of the different costs you should pay for:

End-cap or in-lineFree-standing drive-thru
Initial franchise fee$25,000 – $30,000$25,000 – $30,000
Formation costs$243,601- $511,965$683,400 – $1,247,650
Grand opening$7,500 – $15,000$7,500 – $15,000
Operating expenses$35,500 – $81,500$46,500 – $86,500
Total$311,601 – $638,465$762,400 – $1,379,150
Source: Franchise Disclosure Document 2023

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How much can you make with a Smoothie King franchise?

On average, a Smoothie King franchise makes $561,000 in sales per year.

This number is the median net sales of 924 franchises operated in 2022. The average sales of the Smoothie King franchise have consistently grown over the years:

Source: Franchise Disclosure Document 2023

How profitable is a Smoothie King franchise?

If you want to know how much profits you can earn with a Smoothie King franchise, then you’re in luck! Smoothie King is one of the few franchisor who provides insightful details on the financial performance of its stores. Actually, the FDD 2022 was quite detailed in that regard, but the information was taken out in the latest FDD (2023).

Indeed, as per the 2022 FDD EBITDA margin of franchised restaurants (by quartile) was as follows:

Quartile1234
EBITDA margin20%15%12%5%
Source: Franchise Disclosure Document 2022

This means that the average restaurant earned a 13.5% EBITDA margin in 2021. So with the 2022 AUV of $561,000, the average Smoothie King franchised restaurant makes $75,000 in profits per year on average.

Profit and lossAmount% sales
Sales$561,251100%
COGS$(151,538)27%
Gross Profit$409,71373%
Labor$(162,763)29%
Marketing and royalty costs$(56,125)10%
Occupancy$(50,513)9%
Other OpEx$(67,350)12%
EBITDA$72,96313%
Source: Franchise Disclosure Document 2022, 2023, Estimates

Is a Smoothie King franchise a good investment?

In order to understand whether the profits are worth the costs, we need to look at the payback period: the time it takes for a franchisee to recoup their investment.

We estimate that the payback period for a Smoothie King franchise is about 10 years. This is average, in line with most restaurant franchises.

So we would argue that Smoothie King is a good investment from a financial standpoint: you would be able to repay investors and creditors within 10 years on average.

Of course, keep in mind these numbers are based on the average of all Smoothie King restaurants. So in order to make a decision, make sure to look at all the different factors (your store location, your experience, etc.) and assess your store profitability by creating financial forecasts.

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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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