Red Robin Franchise: Startup Cost, Profit & Opportunities

Red Robin Franchise Fee, Revenue, And Profit Margin

Red Robin International Inc. is a casual dining, full-service restaurant business that began operations in 1969.

Exactly 10 years later, it opened its doors to investors by offering franchising opportunities. Since then, the company has witnessed tremendous growth with over 575 units and counting.

This restaurant franchise offers a rich menu that includes customer favorites like burgers, family burger bundles, entrees, sandwiches, and appetizers.

Others include beverages, adult beverages, salads & soups, desserts, shakes, and more.

The brand has steadily grown over the years and has become one of the valuable brands for investments. This article is written for persons who are convinced about this franchise opportunity and want to give it a try.

The information here will be of significant benefit to your quest for ownership.

What you need to know about Red Robin Franchise

As a prospective franchisor, there are certain things you need to know about this franchise opportunity. Such information includes the franchise term and possible renewal, financial assistance, and obligations.

What more? Details on training need to be fully understood in addition to investment or financial requirements.

You’ll find all of these key points extensively covered as you read on. Let’s start right away.

i. Franchise Term and Possible Renewal

Like most franchise opportunities, the Red Robin franchise has a fixed term. This is known as the term of the agreement. Red Robin’s initial franchise term from the date of signing the agreement is 20 years.

However, it has no renewal provisions.

In other words, your ownership rights come to an end at the expiration of the franchise term. However, the franchisee may make adjustments to this provision.

You’ll have to discuss with the management or receive its franchise disclosure document (FDD) for fuller and more comprehensive knowledge about term limits.

ii. Financial Assistance

While it’s common to see some franchise opportunities offering financial assistance to qualified candidates, Red Robin does none of that.

At Red Robin, there are no direct or indirect financing provisions for would-be franchisees.

According to its FDD, the franchisor gives no guarantee whatsoever for franchisee mortgages, promissory notes, leases as well as other related obligations. The franchisee is solely responsible for all such provisions.

You’ll need to be fully prepared financially to stand a chance of ownership.

iii. Franchisee Obligations and Restrictions

As a Red Robin franchisee, there are certain obligations as well as restrictions guarding your day-to-day operations. First off, the franchisor allows or allows entities to own its franchise offerings.

However, such ownership requires that at least one owner be identified.

Such an owner (part owner) will need to be approved by Red Robin and must have at least a 10% stake or interest and voting power in the franchise. Such an individual is bestowed with the position of “managing principal.”

Part of the obligations requires the managing principal and the operating partner to adopt full-time management supervision of the day-to-day operations of their Red Robin outlet.

There are times when the managing principal may also double as the operating partner. This depends on the approval of the franchisor.

Franchisees are required to have two managers; one serving as the kitchen manager and the other acting as the general manager. Such managers will need to undergo training.

As a Red Robin franchisee, you’re required to offer all menu items for sale. Such offerings should fit the franchisor’s every requirement.

iv. Training

Having qualified for this franchise opportunity, what follows next is training.

Training is offered in two schools owned by the franchisor. These are the School of Team Member Excellence and the School of Management.

Restaurant staff like bartenders, servers, line cook, hosts, and bussers are required to attend the School of Team Member Excellence.

On the other hand, management staffs consisting of operating partners, general managers, kitchen managers, and assistant managers are required to attend the School of Management.

A program known as Management Foundations Training is offered in the School of Management.

While these are currently the training requirements of the franchisor, it’s important to note that these are likely to change without notice.

Before you open your first outlet, an onsite training lasting about 7 days is provided. This helps with the successful launch of your operations as a Red Robin franchisee.

v. Financial Requirements

Financial requirements are crucial determinants of whether a candidate qualifies for this franchise opportunity or not. First, there’s an estimated initial investment with a high and low of $1,865,000 to $4,115,000.

This is an estimated total that excludes the real estate and liquor license.

There are also other ongoing fees such as the royalty which is about 5% of gross sales and local advertising fees among a long list of others. First, let’s consider the finer details of the estimated initial investment.

In other words, let’s look at what constitutes such an investment sum.

vi. The Estimated Initial Investment

This includes a franchise fee starting from $35,000 and small wares & supplies ranging from $40,000 to $50,000. Initial inventory falls within the $25,000 to $35,000 range.

For pre-opening expenses, it includes legal, accounting, personnel & training-related expenses.

The pre-opening expenses attract a fee of $150,000 to $250,000. An annual insurance premium of around $50,000 to $75,000 will need to be paid.

This covers building, contents, liability, workers’ compensation insurance, and umbrella.

For site work, Red Robin requires a fee of $75 to $500,000, while its pre-construction, due diligence, costs, designs, and permit fees range from $0 to $400,000.

Building construction costs around $800,000 to $1,500,000.

For furniture, fixtures, décor items, and equipment, you’ll incur a fee ranging from $550,000 to $950,000.

Exterior signage translates to around $40,000 to $120,000. Red Robin franchisees are required to have additional funds covering a 3-month period in the sum of $100,000 to $200,000.

vii. Other Fees

For other fees, they include the “approval of alternative supplier” fee, late opening fee, regional or local advertising cooperative fee, and refurbishment of restaurant premises. These and several other fees apply.

A full breakdown of all such fees is communicated by the franchisor in the FDD.

These are key information you’ll need to know about when applying for a Red Robin franchise opportunity. As stated, you’ll need to be financially prepared as there are no financing arrangements or provisions.

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