Smash Burger Franchise Owner’s Salary & Failure Rate 2024

Are you thinking about owning a fast-food franchise that specializes in burgers? If so, you might have heard about Smash Burger and that they might be a good option. That’s why owning a Smash Burger franchise might be in your mind.

Smash Burger Franchise

Is it really a good idea to own a Smash Burger, or should you go for other options on the market? Would it be worth to own one? In this article, we show you Smash Burger’s franchise system, tell you what you can expect, the costs, training, and everything else on their franchise system.


About Smash Burger And Smash Burger History

Smash Burger is an American fast-food restaurant chain specializing in burgers. The company was founded in 2007 by two investors experienced in the industry, hoping to bring burgers to the market that they cook on a flattop grill at a high heat.

Their burgers are made to order and made with a hand-smashing fresh technique. They started to franchise in 2008, hoping to grow the brand quickly. Now, the company has over 245 franchised outlets, and most of them are franchise-owned.

They are still actively franchising under the Jollibee Foods Corporation’s ownership, with stable long-term growth for both the company and the franchises. They have an extensive franchise program to establish newcomers to their system.


Franchise Model Table

Cost Or FeesAmount
Initial Investment      $941,860-$2 million
FranchiseYES
Franchising Since2008
Franchise-Fee$40,000
Royalty-Fee5.5%
Liquidity$250,000
Estimated Outlets245

How Much Does It Cost To Open A Smash Burger Franchise?

You can expect to invest somewhere between $941,860 and $2 million for one Smash Burger franchise store. This expected investment includes the $40,000 franchise fee, real estate, construction, payroll, equipment, and all other necessary startup costs.

The franchisor comes up with this estimate on their franchise disclosure document, which they came up with from past information. The real numbers might be different depending on certain factors such as the number of stores, location, and size.


Franchise Requirements Of Smash Burger

Smash Burger is looking for people who have a successful track record in the restaurant industry. You need to have worked in the industry before, preferably in a managerial role. You also need to have at least $250,000 in liquid cash and a net worth of at least $1.5 million.

Additionally, the optimal size of a franchised store for traditional restaurants is between 2100 and 2600 sq feet. The non-traditional restaurants can be as small as 500 sq ft.


Smash Burger Profit & Revenue

Smash Burger’s revenue for the entire year in 2022 was $6.9 million. This is the gross revenue that the company earned in this year. The net income for the same year was $143,000. This is the net income when taxes and all other costs are removed.


Overall Sales

The average Smash Burger location made $1 million in overall sales, including both company and franchise-owned. Franchise-owned stores’ average overall annual sales was $990,442. 40% of franchise-owned stores hit or exceeded this average. The highest-earning store made $2.5 million, and the lowest made $386,694.


How Much Is The Smash Burger Franchise Owner Salary?

Smash Burger doesn’t disclose the net profit per store on its franchise disclosure document. However, they state that a franchised location had a 36.8% average gross profit margin. Based on this info, we can calculate that the average franchise owner’s salary is $364,482 annually.

Financial OverviewPercentage of RevenueAmount ($)
Individual Franchise Annual Revenue100%364482.00
Rent7.90%(28794.08)
Insurance3.95%(14397.04)
Salaries15.80%(57588.16)
Franchise Royalty Fees3.95%(14397.04)
Utilities1.58%(5758.82)
Cost of Goods Sold (COGS)19.75%(71985.20)
Labor (Variable)10.27%(37432.30)
Total (Expenses)63.20%(230352.62)
Net Profit36.80%134129.38

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

With an investment of $2,000,000 and a yearly profit of $134129.38, we can calculate the payback period Of Smash Burger.

So, to find out how long it will take to earn back the initial investment:

Payback Period = Investment / Yearly Profit = $2,000,000 / $134129.38= 14.9 years

Based on these figures, it will take approximately 15 years to pay back the initial investment for Smash Burger. This time period could be longer or shorter depending on your sales, revenue, and profit figures.


Failure Rate Of Smash Burger

Franchised Outlets:

YearOutlets at the Start of the YearOutlets at the End of the YearNet Change
202011698-18
20219891-7
20229182-9

For the Franchised outlets:

  • In 2020, the failure rate was (18)/116×100≈15.5%
  • In 2021, the failure rate was (7)/98×100≈7.14%
  • In 2022, the failure rate was (9)/91×100≈9.89%

Company-Owned Outlets:

YearOutlets at the Start of the YearOutlets at the End of the YearNet Change
2020161115-46
2021115128+13
2022128135+7

For the Company-Owned outlets:

  • In 2020, the failure rate was (46)/161×100≈28.5%
  • In 2021, the growth rate was (13)/115×100≈11.3%
  • In 2022, the growth rate was (7)/128×100≈5.4%

Total Outlets:

YearOutlets at the Start of the YearOutlets at the End of the YearNet Change
2020277213-64
2021213219+6
2022219217-2

For Total outlets:

  • In 2020, the failure rate was (64)/277×100≈23.1%
  • In 2021, the growth rate was (6)/213×100≈2.8%
  • In 2022, the failure rate was (2)/219×100≈0.91%

According to the above-mentioned data, we can see that the franchised outlets for Smash Burger declined from 2020 to 2022, showing a failure rate between 15.5% and 9.89%.

On the other hand, for company-owned outlets, the growth rate of Smash Burger was lying in the range between 11.3% and 5.4% from 2021-2022. Initially the compny experienced decline, showing a failure rate of 28.5%.

Overall, when we combine the data of franchise and company-owned outlets, we can see that the Smash Burger franchise has declined in the years 2020 and 2022 showing a total failure rate between 23.1% and 0.91%. It only grew in 2021, showing a growth rate of $2.8%.


Training and Support Of Smash Burger

Training and Support Of Smash Burger

There is an initial training program that aims to teach the franchisee and the managing owner or the designated manager the operation of the franchised store.

This initial training is for around six weeks, and it happens at Smash Burger’s headquarters in Colorado or at another designated location. There might be additional training after the store’s opening upon request.

The franchisee also gets continuous support both before and after the opening of the franchised store. This support includes helping with the site selection process, creating an optimal business and traffic count based on the store’s location, competition analysis, local marketing preparation, and many more.


Terms of Agreement and Renewal

The length of the first franchise agreement with Smash Burger is 15 years. After the initial 15 years are over, there is a renewal possibility for another 15 years. Both sides must agree to this renewal, and the franchisor must approve this renewal request.


Obligations and Restrictions Of Smash Burger

Either the franchisee or an appointment managing owner must control the restaurant and oversee the operations on a full-time basis. They are responsible for everything related to the franchised store.

The franchisees are obligated to sell all the products and services that the franchisor specifies from time to time and can’t sell any product or service that the franchisor didn’t authorize. Some items approved by the franchisor might be discontinued from time to time, and the franchisee is obligated to remove those from the store. There might also be minimum or maximum prices set by the franchisor on certain products.


Financial Assistance Of Smash Burger

Smash Burger does not offer direct or indirect financial assistance to potential franchisees. They do not guarantee any kind of financial obligation. It is up to the franchisee to come up with the necessary funding.


Smash Burger Comparison

NameFranchise FeeRoyalty FeeInitial Investment
Wayback Burgers$35,0005%$209,000-$698,000
Five Guys$25,0006%$256,200-$591,250
Smash Burger$40,0005.5%$941,860-$2 million

Conclusion

Smash Burger is a popular hamburger American fast-food franchise chain that is steadily growing. They have over 240 outlets, and they aim to grow even more through franchising, which signals a great opportunity for entrepreneurs.

You can also expect to have a profit margin of over 35% in your store, leaving you with a good salary every year. Considering all this, Smash Burger can definitely be a great choice.


FAQs

Is Smash Burger profitable?

According to the financial documents, yes. The company’s net profit in 2022 was $143,00. The franchised stores had an average of 36.8% annual gross profit margin.

When did Smash Burger start franchising?

Smash Burger started to franchise in 2008, one year after opening.

Who owns Smash Burger?

Smash Burger is owned by Jollibee, Jollibee Food Corporation.

Who founded Smash Burger?

Smash Burger was founded by Rich Schaden and Tom Ryan. They founded Smash Burger in 2007.

Where is the headquarters of Smash Burger?

Smash Burger has its headquarters in Denver, United States. It has 45 office locations.

How many locations does Smash Burger has?

There are a total of 277 locations of Smash Burger. It has 220 outlets in the United States and 7 in Canada.

Sources

https://www.franchisedirect.com/foodfranchises/five-guys-burgers-and-fries-franchise-08788/ufoc/

https://www.franchisedirect.com/foodfranchises/Smash Burger-franchise-13304/ufoc/

https://www.Smash Burgerfranchising.com/Smash Burger-the-opportunity

https://en.wikipedia.org/wiki/Smash Burger

Leave a Comment