In 1984, Craig and Lea Culver, along with Craig’s parents George and Ruth, opened the very first Culver’s in the family’s beloved hometown of Sauk City, Wisconsin, and began serving ButterBurgers® and Frozen Custard.
The Culver family cultivated the brand from 1984 to 1990, and then they decided to accelerate growth through franchising. Today, the Culver’s Franchise now has nearly 700 stores across the United States. Known for its “butterburgers” and frozen custard, Culver’s has been serving up its food in the Midwestern US since the early 80’s.
So you are ready to take a look at becoming a Culver’s franchisee, but you want to know how much it will cost you? We reviewed the Culver’s Franchise Disclosure Document and found that the cost to open a new store ranges from $1,970,000 to $4,714,000. This includes the initial franchise fee paid to the franchisor in the range of $30,000 to $55,000. If you sign a multiple unit development, you must pay a development fee of $10,000 for each restaurant that you agree to develop.
The ongoing royalty fee paid to the franchisor is 4% of gross sales. The ongoing advertising fee is 2.5% of Gross sales and the ongoing cooperative advertising fee is up to 4% of gross sales, as approved by a majority vote of the members of the Co-op.
How Much Money Does a Culver’s Franchisee Make?
So you have decided to drop $3,000,000 on a nice, new, shiny Culver’s. What should you expect next and how much money should you expect to make? According to the FDD, the average sales are $3,300,000. At this sales level, you could expect roughly a 13% EBITDA (profit) margin or $429,000 per location.
Is this a good investment? Well, if you invest $3,000,000 to get a $429,000 return, that amounts to a 14.3% return. If that is better than you can receive elsewhere, then maybe you should take a look at Culver’s. It is always good to consult with a financial adviser before making investment decisions.
Culver’s Estimated Initial Investment Cost
The total estimated investment cost of a Culver’s Restaurant is between $1,970,000 – $4,714,000. Like most other restaurants, the bulk of this cost is attributable to land, construction and equipment. Here is how the expected costs break down:
- Initial Franchise Fee: $20,000 – $55,000
- Land: $300,000 – $1,400,000
- Site Work: $161,000 – $593,000
- Building: $822,000 – $1,636,000
- Travel, Living and Expenses during training: $20,000 – $80,000
- Initial Inventory: $35,000 – $45,000
- Furniture, Fixtures, Equipment and Supplies: $395,000 – $495,000
- Sign Package: $106,000 – $220,000
- POS Cash Register: $41,000 – $50,000
- Misc. Expense: $20,000 – $40,000
- Additional Funds: $50,000 – $100,000
- Total Estimated Cost: $1,970,000 – $4,714,000
Culver’s Net Worth Requirement
Maybe you can find the money to build a new Culver’s, but along with that Culver’s is also going to check out your net worth. The current net worth requirement to become a Culver’s franchisee is a liquidity requirement of $350,000.
Culver’s Average Sales
According to the FDD, the average Culver’s sales are $3.3M per year. The median sales for the system $2.M per year. Here is how the sales for franchised stores break down:
Culver’s Number of Locations
The number of Culver’s locations at the end of 2018 was 686. This was up 45 stores over 2017 (up 7%) Of all the locations, the majority of stores are franchised (680) with only 6 stores being company-owned.
Culver’s Royalty, Advertising and Other Ongoing Costs
- The ongoing royalty fee (service fee) paid to the Culver’s franchisor is 4% of gross sales. This amount is paid monthly on or before the 10th day of the month via electronic funds transfer.
- The ongoing advertising fee paid to the Culver’s franchisor is 2.5% of gross sales. This amount is paid monthly on or before the 10th day of the next month via electronic funds transfer.
- The ongoing cooperative advertising paid to a regional co-op can be up to 4% of gross sales. The amount is based on a majority vote of co-op members. The due date on the payment is established by the co-op. If a regional co-op is formed in your region, you must contribute to the co-op.
Culver’s Franchise Term
The initial term of the Culver’s franchise agreement is 15 year, commencing either the date that you initially open you Culver’s restaurant for business or 12 months following the date of the Agreement, whichever occurs first. If you are in good standing, you can renew the franchise agreement for one additional term of 10 years.