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The Melting Pot Franchises: $2.2M AUV and $1.7M Costs

One of the very few fondue franchises, opening a new The Melting Pot location can be a great idea if there are no competitor in the area due to its unique menu. But is this a profitable business?

We think so: it would cost you on average $1,717,000 to open a new location (in line with most restaurant franchises) yet your restaurant could make $2,202,000 in Average Unit Volume (the average AUV for The Melting Pot franchised restaurants).

Are you convinced? In this article we will look at this fondue franchise from the perspective of its Financial Disclosure Document. We will see how much it really costs and how much profits you can realistically make with this business. Let’s find out!

Key stats

Franchise fee$45,000
Royalty fee5.00%
Marketing fee4.50%
Investment (mid-point)$1,717,000
Average sales$2,203,000
Sales to investment ratio3.0x
Minimum net worth$1,500,000
Minimum liquid capital$450,000
Source: Franchise Disclosure Document 2023

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The Melting Pot

What is The Melting Pot?

The Melting Pot is an American chain of franchised casual dining restaurants based in Tampa, Florida.

The Melting Pot was founded in 1975 in Maitland, Florida, and served only three menu items: Swiss cheese fondue, beef fondue, and a chocolate fondue dessert. Today it also offers salads, meat entrees, chicken, pasta, and seafood.

Mark, Mike, and Bob Johnston opened The Melting Pot of Tallahassee in 1979 with permission from the owners. In 1985, they purchased all the rights to The Melting Pot brand and established The Melting Pot Restaurants, Inc.

The Melting Pot started franchising in 1985 and now has over 95 restaurants in the US and Canada.

The Melting Pot franchises pros and cons

Pros

  • Initial franchise training: The franchisor provides a comprehensive training program to its franchisees. It trains them about its concept and procedures, customer service, hiring and training skilled staff, and operations. It also prepares them for a successful grand opening and ongoing local store marketing.
  • Real estate: The franchisor offers its franchisees real estate support to identify a convenient restaurant location. Also, it helps them with the design, construction, and lease negotiations to reduce the cost of establishing and building their restaurants.
  • Exclusive territory protection. The franchisor provides its franchisees with an exclusive territory to operate in. It does not grant any other franchises or operate competing restaurants in the agreed-upon area.
  • National and local marketing: The brand offers its franchisees a dedicated marketing and advertising strategy. Franchisees can utilize national media, regional advertising, social media, email marketing, loyalty programs, and targeted local store promotional tools to build their public relations.
  • Simple concept: The brand utilizes a simple and easy-to-execute concept. It has a unique dining experience that does not require chefs or highly trained staff, uses a simple kitchen set-up with few equipment and requirements, and operates on a one-day part or shift basis. Franchisees can get started fast and with lower labor costs.

Cons

  • No direct financing: The brand does not offer direct or indirect financing to new franchisees. It also does not guarantee any lease, note, or grant on behalf of its franchisees.
  • Not a passive business: The franchisor does not allow absentee business ownership. The franchisees are required to be fully involved in the daily operations of the restaurants.
  • Not a mobile business: The business cannot be run from home or a vehicle. Franchisees need to have a retail facility, office space, or a warehouse.

How much does a The Melting Pot franchise cost?

On average, you may need to invest around $1,717,000 to open a The Melting Pot restaurant.

The investment amount is an average. Indeed, it will change depending on factors like restaurant size, location, etc. Generally, you would need to invest between $1,364,389 and $2,069,638 (Franchise Disclosure Document 2023).

Startup costs

So why you would need to invest this amount? This initial investment covers all the startup costs you may need to pay to start a restaurant business. In addition to the initial franchise fee of $45,000, the investment amount covers:

  • Formation Costs: real estate services fee, security deposit, leasehold improvements, computer and point of sales, gift card processing, website development, customer survey services, restaurant equipment, furniture, fixtures, signage, training expenses, licenses (alcoholic beverages, business, and health), etc.
  • Initial Marketing: grand opening advertising fee 
  • Operating Costs: opening inventory and supplies, insurance, rent, utility deposits, accounting firm fee for 3 months, reservation system, working capital for first 3 months, etc.
Type of costLowHigh
Initial Franchise Fee$45,000$45,000
Formation Costs$1,122,889$1,697,388
Initial Marketing$15,000$20,000
Operating Costs$181,500$307,250
Total$1,364,389$2,069,638
Source: Franchise Disclosure Document 2023

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The Melting Pot

What’s the AUV of a The Melting Pot franchise?

A The Melting Pot franchise makes $2,202,000 in sales per year on average.

The sales number is the annual median sales of 89 franchised restaurants operating in the 2023 fiscal year (ended on March 31, 2023). The AUV of a restaurant varies widely depending on several factors. For example, in 2022 two third (60 out of 89) restaurants made $2.2M or more in revenue on average:

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The Melting Pot

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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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