How much does it cost to open a Pincho franchise?
A detailed look at Pincho startup costs to see what you get for your initial investment
Pincho is seeking only experienced restaurant operators, preferably in the franchise segment, and we are selling a minimum of three units under each Area Development agreement at this time. Here’s a detailed look at the per-restaurant costs from Item 7 of our latest Franchise Disclosure Document
|Type of Expenditure||Amount||Method of Payment||When Due||To Whom Payment is to be Made|
|Initial Franchise Fee||$30,000||Lump sum||Upon execution of the Franchise Agreement.||Us|
|Real Property||$26,000 – $50,000||Lump sum or financed||Prior to opening; upon execution of lease||Your Landlord|
|Tenant Improvements||$167,000 – $250,000||Lump sum or financed||Per your agreement with General Contractor and Architect||Approved Contractors|
|Furniture, Fixtures, Equipment, Decor, Uniforms and Signs||$159,000 – $189,000||Lump sum or financed||As incurred prior to opening||Approved Suppliers|
|Opening Inventory, Supplies||$15,000 – $20,000||Vendor terms||Vendor terms||Approved Suppliers|
|Licenses and Permits||$6,055 – $12,000||Lump sum||As incurred prior to opening||Licensed Professionals, Governmental Organizations|
|Utility Deposits||$5,000 – $8,000||Lump sum||As incurred prior to opening||Utility Companies|
|Insurance||$4,000 – $8,000||Insurance company terms||Per insurance carrier||Insurance company|
|Grand Opening Advertising||$10,000||Lump sum||As incurred prior to opening||Third Parties and Approved Suppliers|
|Initial Training||$10,000 – $25,000||As incurred||As incurred||Suppliers of transportation, food and lodging|
|Legal and Accounting||$1,000 – $3,500||As incurred||As incurred||Licensed Professionals|
|Additional Funds for First 3 Months of Operations||$30,000 – $50,000||As incurred||As incurred||Us, Third Parties and Employees|
|TOTAL ESTIMATED INITIAL INVESTMENT||$463,055 – $655,500|
Amounts paid to suppliers or third parties (other than us) may or may not be refundable, depending on the arrangement you make with the supplier.
Your initial investment for a new Restaurant depends upon (1) its size; (2) its configuration; (3) its location; (4) who pays the cost of developing the real estate and/or construction of the Restaurant; and (5) the amount and terms of any financing. The initial funds required must be estimated since most costs are not within our control and may change at frequent intervals. These figures are estimates only. The costs are constantly changing due to reasons beyond our control and you should obtain current cost information as part of your due diligence prior to the time you execute your Franchise Agreement.
The Initial Franchise Fee is non-refundable. We do not currently, nor do we have any future plans to, finance any part of the Initial Franchise Fee.
Real Estate costs vary considerably according to the type of Restaurant, fair market values in your area, your real estate interest (leasehold or ownership), location, and whether you or your landlord develops the location. Your costs can vary depending on the size of the site and municipal requirements. The Restaurant will usually occupy leased space, and will typically contain 1,800 to 3,000 square feet. Although we do not recommend it, some leases may obligate the tenant to pay the landlord an additional “percentage rent” amount, equal to the amount by which the rent per square foot is exceeded by a percentage of gross sales. Leases are usually “triple net,” requiring the tenant to reimburse the landlord for all of the landlord’s costs of operation. These triple net costs and Common Area Maintenance (CAM) charges are determined by negotiation between you and the landlord and will vary from location to location. This estimated range for Real Estate considers the costs of the first month’s rent, a security deposit and advance rent (or, three (3) months of rental costs) that most landlords require their tenants to provide upon execution of the lease. We strongly suggest that you seek the advice of a real estate professional familiar with the market in which you will be located and the relevant laws.
This estimate assumes you pay the entire cost of construction with no tenant improvement allowance or contribution by the landlord for construction. It also assumes the premises are delivered with four bare walls and a ceiling, electric in place, gas in place, an HVAC system in place, and that non-union labor will be employed. If the premises are not so delivered, these costs may substantially increase, and if union labor is used, these costs may additionally increase. This estimate also includes architect fees.
This estimate includes estimated costs associated with furniture, furnishings, installations, equipment, trade fixtures, point-of-sale register system, hardware for required music service, office equipment, uniforms, computers, and certain items on the Restaurant premises, including but not limited to televisions, ice machines, security and entertainment, ovens, refrigerators, and a water filtration system. The amount of specific items will vary depending upon the location, size and condition of a particular Restaurant. You will be required to use a designated point-of-sale electronic cash register system and software, and install a designated telephone line and/or cable/DSL Modem, as well as any other necessary items for downloading information and credit card confirmation. See Item 11 in our FDD.
This estimate includes the estimated costs of uniforms, opening inventory of food products, paper products and other supplies. Depending on your Restaurant’s location, this estimate may be higher due to shipping costs. Any costs for products paid to us or our affiliates are not refundable and are payable in lump sum before your Restaurant opens for business.
Incorporation and related fees include complying with fictitious, assumed, or trade name statutes of the state in which the Restaurant is located. Costs such as additional licenses and permits to sell alcoholic beverages are also included in this estimate.
The telephone, gas, water and electric companies, and/or others supplying services to your Restaurant may require deposits. The deposits may be refunded to you at a later date. In most cases, your lease will require you to pay electric, gas, water and other utilities directly; however, some landlords cover some utility charges through common area maintenance (CAM) fees or operating fees. See Note 4 above.
You are obligated under the Franchise Agreement to obtain and maintain, in such minimum amounts as set forth in the Franchise Agreement, commercial general liability insurance, business interruption insurance, fire and extended coverage insurance, windstorm insurance (depending on the location of your Restaurant), automobile liability coverage (if you use a vehicle in connection with your Restaurant), workers’ compensation, and any other insurance required under the terms of the lease or in accordance with your state’s laws for the Restaurant or business.
Beginning one month before the opening of your Restaurant and continuing for two months after, you must expend at least $10,000 for the grand opening advertising and promotion of your Restaurant using only materials, media, special events and public relations activities required or approved in advance by us.
You will incur all costs and expenses associated with our mandatory initial training program. These costs include meals, travel, lodging, transportation, etc., but does not include compensation of your employees, which we cannot estimate. Generally, these costs will vary as a function of the distance traveled, the lodging selected, the distance between the lodging and the location we designate for training, and the type of transportation selected. This estimate contemplates attendance of three persons (the Franchisee or Operating Partner, your designated General Manager and either your Assistant Manager or Shift Manager) traveling to our Company-Owned Pincho Factory (or PINCHO) Restaurant in Hialeah, Florida, or other designated located in South Florida, and attending training as required by the Franchise Agreement. You must also maintain worker’s compensation insurance coverage for trainees in your employment.
You may need to employ an attorney, an accountant and other consultants to assist you in establishing your Restaurant. These fees may vary from location to location depending upon the prevailing rate of attorneys’, accountants’ and consultants’ fees and the scope of services requested.
This is an estimate of the minimum funds needed only for opening expenses and working capital to operate the Restaurant for a period of three (3) months after opening. In formulating the estimated amount of additional funds for the first 3 months of operation, we relied on our affiliates’ experience in operating Pincho Factory Restaurants in South Florida since November 2010. The estimate of additional funds also includes salaries and benefits for employees, but does not include any allowance for an owner’s draw. The amount will vary substantially depending on your situation and must be determined by you. The actual amount of additional funds you will need depends on a variety of factors, including: how closely you follow methods and procedures; your management skill, experience and business acumen; local economic conditions; the local market for restaurant services; prevailing wage rate; and the sales levels achieved during the initial period. Additional working capital may be needed beyond the initial 3-month period. You may have to put additional cash into the business, but we cannot and will not estimate how much or promise when, or whether, the Restaurant will ever achieve positive cash flow or profits. In addition, we recommend that you have sufficient additional funds available to cover your personal living expenses for a period of no less than six (6) months. These figures should be reviewed with an accountant and a business advisor before making a decision to purchase a franchise.