What Are My Start-up Costs?
A breakdown of the costs and fees associated with investing in a Pancheros franchise
Pancheros is poised to become a dominant brand in the Mexican restaurant industry. Founded in 1992 by President Rodney Anderson, whose first location in Iowa City, Iowa is still thriving today, Pancheros has won an enormous following by serving the perfect burrito and homemade Mexican food. Over 30 years and 71 locations later, Pancheros has launched dozens of entrepreneurs into successful business ownership. With the demand for fresh, fast and delicious Mexican food skyrocketing, Pancheros is rapidly expanding across the United States and is actively seeking passionate entrepreneurs to capitalize on the growing demand for Pancheros in their communities.
“Now is a great time to invest in Pancheros because we’ve developed a brand that is vibrant and energetic, and we have food that really resonates with our customers,” says Joe Gale, Director of Franchise Development with Pancheros. “We’ve worked really hard to make Pancheros an affordable investment, and more than anything we have a strong team of people who work collaboratively with our franchisees to help them thrive in their businesses. As the demand for Mexican food continues to increase, the fact that we offer a simple business model, that leverages a lean labor model and state-of-the-art technology really positions us as a brand with strong growth-potential going forward.”
As detailed in Item 7 of our Franchise Disclosure Document, the total investment to open a new Pancheros is $460,825 – $1,027,000. Our low costs of entry are the result of a business model that is designed to help entrepreneurs thrive in business. Pancheros has a real-estate team dedicated to helping entrepreneurs secure prime locations, offers industry-leading support, and invests significantly in new technology to help franchisees keep ongoing costs low.
What do I get for my franchise fee?
As a Pancheros franchisee, you will have the support of an established, rapidly growing brand behind you. We focus on helping entrepreneurs thrive in business, and our franchise owners have access to an immersive initial training platform, ongoing personalized training, extensive marketing support and more to help their businesses grow and prosper.
What markets are available?
Pancheros has prime territory available in markets across the United States, with a strong focus on the Midwest and Northeast.
What is our business model?
Pancheros excels in serving exceptional, homemade Mexican food. Everything from our famous tortillas, to our queso, guacamole and beyond, is prepared fresh, in-house every single day. Pancheros food is so fresh that we do not even have a freezer or microwave in our restaurants, and this level of quality is something that our customers can taste. While the level of preparation is higher in Pancheros than in other Mexican concepts who bring a lot of their food in pre-cooked and bagged, our menu is simple and our recipes are easy to master. Our restaurants are placed in corner locations in highly visible retail shopping centers and require between 2,200 and 2,500 sq. ft. Pancheros has a real-estate team to help new franchise secure properties, negotiate fair leases and oversee build-out and construction. Our team will help you run a thriving business that becomes a part of the dynamic fabric of your community.
For a more in-depth look at costs and fees associated with opening a new Pancheros franchise, please review Item 7 from our most recent FDD:
|Type of Expenditure||Amount|
|Initial Franchise Fee1||$30,000|
|Real Estate / Rent and Security Deposit2||$0 - $20,000|
|Utility Security Deposits3||$0 - $5,000|
|Leasehold Improvements4||$220,000 - $550,000|
|Furniture, Fixtures & Equipment5||$110,000 - $175,000|
|Initial Merchandise Purchases||$1,800 - $2,500|
|Initial Inventory6||$7,500 - $15,000|
|Insurance7||$2,500 - $15,000|
|Training8||$5,000 - $12,500|
|Initial Marketing Campaign9||$30,000 - $50,000|
|Signage10||$7,500 - $32,500|
|Point-of-Sale System (POS System) and Back Office Software||$13,500 - $18,000|
|Office Equipment / Supplies12||$2,100 - $6,500|
|Licenses and Permits13||$425 - $5,000|
|Professional Fees14||$5,500 - $40,000|
|Additional Funds (3 months)11||$25,000 - $50,000|
|TOTAL||$460,825 - $1,027,000|
The investment and expenditures required of actual franchisees may vary considerably from the projections included above. Depending on many factors, including geographical area, the amount of space leased, and the business capabilities of any particular management and service team.
Unless specified otherwise, you will incur the expenses described in the chart above in establishing the franchised restaurant, except for the real estate lease and utility deposits, which are imposed and collected by third parties. These may be refundable if permitted by the third party. No expenditure in the table above is refundable. The figures shown above are for existing buildings only, whereas the costs may vary substantially if you choose to construct a building for your franchised restaurant. However, you are not required to construct a building.
- See Item 5 for more information about the initial franchise fee and available discounts.
- Franchised Restaurants typically occupy 2,000 to 2,500 square feet in an end-cap strip center location. You are responsible for renting or acquiring premises suitable for the Franchised Restaurant. The figures in the chart assume that you will occupy the premises according to a commercial lease and that the rent commences on the date the Franchised Restaurant opens for business. The low figure assumes no security deposit, and the high figure assumes a security deposit equal to two months’ rent, however, you may incur higher security deposit expenses depending on your financial circumstances. Rent, taxes, and insurance vary greatly by market and other circumstances.
- You may be required to pay deposits before the installation or start of service of telephone, gas, electric and other utilities, as required by any utility company.
- Your build-out costs will depend upon the size and condition of the premises, the nature and extent of leasehold improvements required, the local cost of contract work, and the location of the Franchised Restaurant. The estimates assume a standard build-out of the premises performed by the lessor, including landlord-provided HVAC, supplemented by any amounts provided by you for additional leasehold improvements made to the premises according to System specifications. Leasehold improvements include plumbing, electrical wiring, carpentry and installation of furniture, fixtures, flooring and equipment, but do not include building shell costs, exterior work to the building that may be required, or any costs associated with exterior grease-trap, impact or hook-up fees. The figures in the chart represent your estimated costs, net of tenant improvement allowance, which typically ranges from $0 to $30 per square foot.
- You must purchase various equipment and fixtures to operate the Franchised Restaurant, as specified in the Confidential Operations Manual. You may purchase or lease approved brands and models of fixtures from approved suppliers. The cost of furniture, fixtures and equipment will depend on financing terms available, the size of the facility, brands purchased and other factors. If you are purchasing an operating restaurant from our affiliate, you may not incur any extra expense for these items. This estimate does not include vehicles for catering services because a new franchisee typically does not offer catering services. If you elect to offer catering services, you must purchase or lease a vehicle.
- Your requirements for initial inventory are designated in the Confidential Operations Manual. You must maintain an inventory of ingredients, food and beverage products and other products, materials, and supplies that will permit you to operate the Franchised Restaurant at maximum capacity.
- You will obtain insurance coverage with the limits we require. The lower figure assumes 25% down on a yearly premium amount.
- You are responsible for transportation and expenses of any persons attending the training program. This amount depends on the distance you must travel and the type of accommodations you choose. The estimate contemplates attendance by one person traveling to our headquarters or other location for approximately three days for an initial orientation session and two persons traveling to a location that we designate for approximately three weeks for on-the-job training.
- You must spend at least $30,000 to $50,000 for an initial marketing campaign, which will be paid to our designated advertising agency. You must obtain a white pages listing for the Franchised Restaurant, and register the business with online directories, such as Google, at our direction. (See Item 11.)
- Signage includes exterior signs that bear the Marks. Signage costs may vary depending on the type, size and location of the signs and local restrictions.
- This estimates the funds needed to cover your initial expenses for the first three months of operation (other than the items identified separately in the table). It includes payroll costs for a manager but not any draw or salary for you. However, this is only an estimate, and it is possible that you will need additional working capital during your first three months of operation, and there is no guarantee that your Restaurant will break even during this period or at any time. Your working capital needs will depend on various factors, including your management skill, experience, and business acumen; local economic conditions; the prevailing wage rate; competition; and your Restaurant’s sales during the initial period. In compiling these estimates, we relied on our franchisees’ experience and our affiliate’s experience in operating PANCHERO’S restaurants.
- You must lease or purchase various office equipment and supplies.
- This estimate includes liquor and food licenses but excludes any building permits you need to obtain. If you request and we approve the sale of beer at the Franchised Restaurant, this is the fee you may be required to pay the local, county or state authorities in order to obtain a license. The high figure is the maximum suggested expenditure for the license.
- This estimate includes architect and attorneys’ fees. Your fees will vary by market and your decisions regarding the advisory services you obtain.