Have juicy entrepreneurial dreams and a love of Tex-Mex served in a flash? Opening a Taco Bell franchise might be the perfect way to put your business ambitions into action without having to start from scratch. In 2020, each restaurant made an average of $1.6 million.
But buying a ready-made money maker comes at a significant cost, including not only franchise fees but real estate, inventory, equipment and more. While specifics can vary widely based on your location, the type of facility you’re hoping to open and other factors, a Taco Bell franchise costs about $575,600 to $3,370,100 upfront.
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Taco Bell franchise overview: what to know
Originally opened in 1962 by World War II veteran Glen Bell — yes, that’s how it got its name — Taco Bell is owned today by Yum! Brands, the corporate group that also owns KFC and Pizza Hut. According to the company’s website, there are more than 7,000 Taco Bells in the United States serving over 40 million customers weekly, as well as a growing number of international properties.
Taco Bell units come in several different types, and which you’re interested in opening will have a large impact on the total upfront cost. You can choose from the following:
- Traditional locations, which are stand-alone restaurants with their own fully equipped kitchen, an indoor dining area, and often a drive-thru.
- In-Line locations, which are similar to traditional units but more streamlined, often appearing in urban locales. (The Taco Bell Cantina locations, which serve alcohol, are In-Line units.) In-Lines that feature a drive-thru are known as End-Caps.
- Power Pumpers, which are Taco Bell locations attached to a gas station or travel store.
- Taco Bell Express locations, which are more sparsely equipped units that may serve only a limited selection of the full Taco Bell menu. These may be stand-alone locations or kiosks constructed in larger buildings.
Taco Bell franchise costs
If you’re hungry to open your own Taco Bell restaurant, you should know the overall costs to buying a franchise are far greater than the initial franchise fee.
Again, specifics can vary considerably; cities with a lower cost of living will generally cost less to build and operate a restaurant in, and scaled-down Express locations cost far less to outfit than Traditional units do. You might also be able to save upfront costs by purchasing an existing Taco Bell location rather than building a brand new one — costs for doing so range between $152,250 and $1,800,000.
Here’s a rough idea of how much it costs to franchise a Taco Bell.
- Background check: $350 to $600 per person
- Initial franchise fee: $25,000 to $45,000
- First Unit construction fee: $27,250
- Real Estate Services fee (optional): $0 to $37,250
- Marketing fee: 4.25% to 4.5% of store sales
- Training fee: $350 per person on staff
There may also be additional fees, like royalty fees. And that’s all before including the actual costs of building and outfitting the location.
These costs can include:
- Real estate or rent: Up to $1,400,000
- Permits and licensing: $74,000 to $125,000
- Actual site construction: $550,000 to $1,200,000
- Equipment, signage and decor: $375,000 to $460,000
- Initial inventory: $7,000 to $10,000
- Grand opening: $5,000
- Operational funding for the first three months: $40,000 to $60,000
That adds up to a total investment of:
- $1,298,600 to $3,370,100 for Traditional units and Power Pumpers
- $575,600 to $1,415,100 for In-Line and End-Cap units, and
- $227,000 to $590,100 for Taco Bell Express locations
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Your costs could possibly be even higher, depending on what your commercial real estate or equipment needs are.
Taco Bell franchise funding and eligibility
Who should consider themselves ready to become a Taco Bell baron? Eligible franchisees will need to have accrued some wealth ahead of time. In fact, like many other franchise organizations, Taco Bell has specific wealth requirements of franchise applicants:
- Net worth: $1.5 million
- Liquid assets: $750,000
Taco Bell doesn’t offer its franchisees direct financial assistance, though it may refer lenders willing to offer financing to you. You may want to consider franchise loan options to help cover the upfront costs. Depending on your specific needs, commercial real estate loans could help you purchase property, or equipment loans could allow you to obtain the necessary kitchen equipment you’ll need for your taco empire. And the U.S. Small Business Administration (SBA) also offers funding for buying a franchise.
Taco Bell franchise pros and cons
Are those high Taco Bell franchise costs worth it? Like any investment, opening a Taco Bell (or buying an existing one) has both drawbacks and benefits.
ProsCons
Taco Bell is a beloved, long-standing brand that’s easy to sell — it’s typically an even stronger earner than other major Yum! Brands restaurants like KFC and Pizza Hut.
The different styles of Taco Bell units available offer flexibility.
Your Taco Bell restaurant should be relatively easy to hire for — since few specialized skills are necessary.
Taco Bell offers training materials; workers can be young and new to work.
Taco Bell is a relatively expensive franchise to start up compared to other brands.
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A Taco Bell restaurant requires quite a few employees to keep each shift running smoothly.
Absentee or passive ownership is frowned upon. Franchise owners are expected to be actively involved in day-to-day operations.
No direct funding options available.
Franchise alternatives to Taco Bell
Still curious about becoming a franchisee — but rethinking your devotion to Taco Tuesday?
There are plenty of other options out there, many of which you can buy into at lower costs (or which may offer the promise of larger earnings). Consider:
Chick-fil-A
Willing to trade your Crunchwrap Supreme for a fried chicken sandwich with a side of lemonade? Chick-fil-A has one of the lowest franchise fees in the business — though it does require active involvement in the business’s daily operations.
- Initial fee: $10,000
- Total investment: $582,360 to $2,025,400
- Liquid assets: No requirement aside from $10,000 initial franchise fee
Baskin-Robbins
Looking for a sweet franchise option that costs significantly less overall than Taco Bell? Here’s the scoop on franchising a Baskin-Robbins location.
- Initial fee: $25,000
- Total investment: $293,840 to $626,360
- Liquid assets: $100,000 and a net worth of $200,000
McDonald’s
McDonald’s isn’t necessarily any cheaper to franchise than Taco Bell, but the iconic golden arches is also the fast food chain that dominates the industry’s market share.
- Initial fee: $45,000
- Total investment: $1,314,500 to $2,306,500
- Liquid assets: $500,000
As you can see, there are plenty of ways to buy into a ready-made business without paying Taco Bell franchise costs. Whether you’re looking to fill a taco shell, scoop ice cream cones or flip burgers, there might be a franchise option for you.
Source: https://tholansonnha.com
Category: Finance
