Investment in Franchise Costa/Starbucks or Shell

zayf

Hi,

I am interested in investing in a decent franchise, which have a decent return, Are there any kind souls here who already have these franchises and willing to share their experience.

Questions I have is, I am in employment at the moment an would hire someone experience to do managerial jobs. I would be as active as possible but won't be able to let go my full time job.

Also, how much return we can expect from them, Shell only gives cluster of 6 and Costa starts you with 1 store and expects you to own 5 in years.
I know profits are based on Sale, but i am sure if you are part of a big franchise alteast you are on less risk of loss.
P.S. I have got local subway store, which i thought is not that busy as whenever i go, either they dont have a customer or someone comes in when i am about to leave, I was shocked when i asked the guy at the till, how many sandwiches you sell in a week He replied they sell around 5000 sanwiches per week. Which i think is very decent.

Scrooge._2

Subway stores are only decent if they turnover atleast £5k a week. (I know a few owners)

Rosemary_Jane

zayf wrote: »

I have got local subway store, which i thought is not that busy as whenever i go, either they dont have a customer or someone comes in when i am about to leave, I was shocked when i asked the guy at the till, how many sandwiches you sell in a week He replied they sell around 5000 sanwiches per week. Which i think is very decent.

5000 sandwiches a week!! if they are open 12 hours a day, seven days a week - that means they average a sandwich every minute!! More at busy times, because I am sure that they aren't busy round the clock!

When I go to a subway, even with 3 staff there, they take several minutes to serve one, and the toasting thingie only holds 2 sandwiches and takes several minutes; then add the time for cutting the rolls, adding the salads and wrapping the goods, before handing over to the chap at the till.

Buying a franchise is unlikely to be a good idea unless you are working in the business yourself. Staff costs are a huge overhead, and in the early days you'll need to keep costs down.

Why not research by buying the franchise specialist magazines, and going to their expo shows? Then visit franchisees, and ask lots of questions, and observe.

Take good specialist legal advice before you sign for an expensive franchise.

R

zayf

How much these stores make on average, For e.g. if Subway store has a sale of £5000 a week than how much is the average net profit per week.

To open a store in city center, how much are the rents of the property, i am more looking at Manchester side.

What makes money to for shell pumps, I have that franchisee get's commision on fuel sales, How much is that ?

Nicholas-bloody-Parsons

Why a Subway franchise? If you think you can run a successful sandwich store, then why give someone £50k to use the name etc.

I know someone who has his own local sandwich shop and it is alot of hours and hardwork. There is quite a lucrative business in sandwiches for local businesses and conferences, which may count for much of the 5000. But then the profit margin is lower on these orders.

Lokolo

Subway don't have any rules to locations. So you could open one and another could open one 2 doors down. Not very good for you!

Kayalana99

Don't have the experiance myself but a friend's friend of mine(sorry lol) who I work with has a Petrol station and is forever venting how sucessful they are doing ...to put it another way people want petrol all over the country but starbucks and subway are gonna depend on how good location you get!

Lot easier to run id imgaine as well esp if your not thier

zayf

Kayalana99 wrote: »

Don't have the experiance myself but a friend's friend of mine(sorry lol) who I work with has a Petrol station and is forever venting how sucessful they are doing ...to put it another way people want petrol all over the country but starbucks and subway are gonna depend on how good location you get!

Lot easier to run id imgaine as well esp if your not thier

Do you know what pump he runs ?

Does anyone have an idea how much per month you can make with shell on an average cluster of 6 ?

marathonic

I've heard that profit on fuel is minimal. A lot of stations make most of their money from the convenience stores attached.

I also know of stations that were along a major road which is now nothing but a road serving a few houses and a small factory after the original road was bypassed.

Glen_Clark

How many more coffee bars, sandwich shops, and filling stations do you think our economy can support?

marathonic

zayf wrote: »

Costa starts you with 1 store and expects you to own 5 in years.

This is interesting. My first thoughts would be, if I need 5 stores to make a decent living, is it really worth it?

Would I not be better owning one store where I don't have to pay X% of revenue as a franchise fee and Y% of revenue towards advertising.

I believe that the fees sometimes work out in the region of 15% of turnover.

These are purely made up figures but if you look at the cost of a subway sandwich to you as owner:

Ingredients: £1.15
Rent/rates/staff/equipment: £0.80 (£60,000 per year/1400 subs per week - which is one every 5 minutes of a 10 hour day/7 day week)
Interest on business loan: £0.05 (£75,000 at 5% divided as above)
Franchise Fee: £0.45 (15% turnover on a £3 sub)

That gives a cost of £2.45 and a profit of £0.55 before tax (purely made up).

The point of the made up figures is to say: why go the franchise route for a profit of £0.55 when you can go alone for a profit of £1 per sub?