Are you looking to own a Golden Corral franchise and take a piece from the popular all-you-can-eat buffet restaurant’s big pie? They are a very popular franchise restaurant with an established franchise system and a proven franchise system.
However, their initial investment is quite high compared to similar franchise restaurants.
That’s why you might have doubts about whether it’s worth owning a Golden Corral. We will talk about Golden Corral’s franchise system, associated costs, and what you can expect as an entrepreneur.
About Golden Corral and Golden Corral History
Golden Corral is an American restaurant chain with an all-you-can-eat buffet and a grill in their restaurants. Their aim is to offer something for everyone, with over 150 different dishes in their buffet.
The company was founded in 1973 and quickly started to franchise in 1986, and they’ve been franchising since.
Now, they have over 450 stores across the United States and provide quality meals to hundreds of people every day in their restaurants.
They have a big loyal customer base and different options like curbside pick up in addition to in-house dining. Thanks to these features, Golden Corral is one of the most popular franchises among entrepreneurs.
Franchise Model Table
| Cost Or Fees | Amount |
|---|---|
| Initial Investment | $2.7 million-$9.2 million |
| Franchise | YES |
| Franchising Since | 1986 |
| Franchise-Fee | $50,000 |
| Royalty-Fee | 4% |
| Liquidity | $500,000 |
| Estimated Outlets | 489 |
How Much Does It Cost To Open A Golden Corral Franchise?
The total cost varies between $2.7 million and $9.2 million depending on the type and size of the restaurant and the market. Free-standing, conversion, non-traditional, and retail spaces are four different types of restaurants, and each has varying costs.
The expected total cost includes all of the associated start-up costs like equipment, employees, lease, construction, and many others. It also includes the $50,000 franchise fee.
Franchise Requirements
To become a Golden Coral franchisee, you must have a $2.5 million net worth minimum, $500,000 in liquid assets, and no bankruptcy in the last seven years to prove financial stability. These are the must requirements for each franchisee on the financial side.
Golden Corral also expects a certain business background. The ideal candidate should have restaurant operation management or ownership experience, have a strong understanding of business, and be active in the participation of the operations.
Profit & Revenue Of Golden Corral Franchise
The average company-wide revenue for the year 2022 was $1.7 billion annually.
Based on our profit margin information, which is between 3% and 5%, the estimated net annual profit is between $51 million and $85 million for Golden Corral.
Overall Sales Of Golden Corral Franchise
For 2022, the average unit gross sales for each franchised store were $5.6 million annually. This figure comes from Golden Corral’s franchise disclosure document that every potential franchisee receives. It might vary from store to store depending on different factors.
How Much Does A Golden Corral Franchise Owner Make?
The estimated profit margin of Golden Corral franchised stores is between 3% to 5%. Based on this information, we estimate that the Golden Corral franchise owner’s salary is around $280,000 annually.
| Financial Overview | Percentage of Revenue | Amount ($) |
|---|---|---|
| Individual Franchise Annual Revenue | 100% | 5600000.00 |
| Rent | 11.88% | (665000.00) |
| Insurance | 5.94% | (332500.00) |
| Salaries | 23.75% | (1330000.00) |
| Franchise Royalty Fees | 5.94% | (332500.00) |
| Utilities | 2.38% | (133000.00) |
| Cost of Goods Sold (COGS) | 29.69% | (1662500.00) |
| Labor (Variable) | 15.44% | (864500.00) |
| Total (Expenses) | 95.00% | (5320000.00) |
| Net Profit | 5.00% | 280000.00 |
Note: The displayed expenses are estimates based on industry averages and standard costs. Actual expenses may vary due to factors like location, business size, and market conditions. We recommend conducting detailed research or consulting with a financial advisor for a tailored financial analysis.
Payback Period Of Golden Corral Franchise
With an investment of $9,200,000 and an estimated 5% profit on the average gross sales from 2022, the yearly profit would be $280,000.
Payback Period = Investment / Yearly Profit = $9,200,000/ $280,000= 32.85 years
Based on these figures, it will take approximately 33 years to pay back the initial investment for Golden Corral. This time period could be longer or shorter depending on your sales, revenue, and profit figures.
Failure Rate Of Golden Corral
Franchised Outlets:
| Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|
| 2019 | 451 | 448 | -3 |
| 2020 | 448 | 412 | -36 |
| 2021 | 412 | 355 | -57 |
For the Franchised outlets:
- In 2019, the failure rate was (3)/451×100≈0.67%
- In 2020, the failure rate was (36)/448×100≈8.04%
- In 2021, the failure rate was (57)/412×100≈13.83%
Company-Owned Outlets:
| Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|
| 2019 | 38 | 35 | -3 |
| 2020 | 35 | 8 | -27 |
| 2021 | 8 | 4 | -4 |
For the Company-Owned outlets:
- In 2019, the failure rate was (3)/38×100≈7.89%
- In 2020, the failure rate was (27)/35×100≈77.14%
- In 2021, the failure rate was (4)/8×100≈50.00%
Total Outlets:
| Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|
| 2019 | 489 | 483 | -6 |
| 2020 | 483 | 420 | -63 |
| 2021 | 420 | 359 | -61 |
For Total outlets:
- In 2019, the failure rate was (6)/489×100≈1.23%
- In 2020, the failure rate was (63)/483×100≈13.04%
- In 2021, the failure rate was (61)/420×100≈14.52%
According to the above-mentioned data, we can see that the franchised outlets for Golden Corral declined from 2019 to 2021, showing a failure rate between 0.67% and 13.83%.
On the other hand, for company-owned outlets, the failure rate of Golden Corral was also quite high, lying in the range between 7.89% and 50.00% for the same period of time.
Overall, when we combine the data of franchise and company-owned outlets, we can see that the overall number of outlets of Golden Corral has declined in the years 2019-2021 showing a total failure rate between 1.23% and 14.52%.
Training and Support
There is an initial training program for managers that lasts approximately eight weeks in total. There is a general initial training program with two tiers, each lasting four weeks, and they are held in a Golden Corral training-certified restaurant.
There are also ongoing management training programs after opening that at least one manager must attend.
They also provide extensive support to franchisees from pre-opening to post-opening operations. Their support includes site selection, construction help, pre-opening and marketing support, and recruiting help.
Terms of Agreement and Renewal
The initial agreement will be for 15 years. There is a renewal possibility at the end of the initial term if both parties agree to it.
The franchisor must also be satisfied with the franchisee to approve a renewal. Two five-year renewal terms are available, and each term has its own prerequisites.
Obligations and Restrictions
The franchisee themselves or someone appointed by the franchisee and approved by the franchisor must devote full-time efforts to the operations of the store. The restaurant must always be under direct supervision during working hours by this devoted manager.
Franchisees are obligated to sell any and all products and services that meet the quality standard of the franchisor and are approved by them. The franchisee can’t sell anything that the franchisor didn’t approve beforehand.
Financial Assistance
Golden Corral doesn’t offer direct or indirect financial assistance. The franchisee is completely responsible for finding the necessary funding. There is a veteran discount applicable on the franchise fee, which is 50%.
Golden Corral Comparison
| Name | Franchise Fee | Royalty Fee | Initial Investment |
|---|---|---|---|
| Shoney’s | $35,000 | 4% | $568,000-$2.8 million |
| Souper Salad | $30,000 | 5% | $593,650-$873,200 |
| Golden Corral | $50,000 | 4% | $2.7 million-$9.2 million |
Conclusion
Golden Corral is a quite popular American franchise all-you-can-eat restaurant chain with over 450 stores in the United States. You need between $2.7 million and $9.2 million to open a Golden Corral, which varies based on the size, location, and type of the restaurant.
After you spend this, the average Golden Corral store makes $5.6 million in average unit annual gross sales and about $255,000 in annual net profits.
The profit margin is quite low, but since the potential to earn higher is there, Golden Corral stays as a lucrative opportunity. It could be a great business opportunity for entrepreneurs that has the funding for high costs to open a restaurant, and the finger-licking menu of Golden Corral is worth trying. But first, you must check the facts, as the sayings are the Golden Corral is going out of business in 2023.
FAQs
Is Golden Corral a franchise?
Yes, Goldan Corral is a franchise. They have been actively franchising since 1986.
Do I need to have business experience in the industry to be approved as a Golden Corral franchisee?
Golden Corral requires the potential franchisees to have business acumen and experience as a restaurant manager or owner. It doesn’t need to be in Golden Corral’s industry strictly.
Does Golden Corral offer training to new franchisees?
Yes, they have a very extensive training program. This program is divided into two. There is a general training for everyone, and another training specially designed for managers. Managers have to attend both training programs.
Who Owns Golden Corral?
Golden Corral is a privately held company owned by Investors Management Corp.
Who founded Golden Corral?
James Maynard and William F. Carl came up with the idea and founded Golden Corral in 1971.
How many locations does Golden Corral have?
There are 396 Golden Corral restaurants in the United States. Branson’s Golden Corral Buffet is the largest in the world, with over 650 seating capacity.
Where is Golden Corral headquartered?
Golden Corral is an American restaurant chain which is headquartered in Raleigh, North Carolina, United States.