Consumers can’t say no to juicy, smokey, and flavorful burgers. The reason why burger joints are sprouting like mushrooms left and right. For restaurateurs, running a casual burger joint promises a lucrative return. If you’ve been looking to have a massive slice of the pie from this industry, franchising is your best bet. While many up-and-coming restaurateurs eye on burger chains, there is one that stands out as a gourmet burger chain in America. And that is Red Robin.
In this article, we’ll give you the lowdown on the Red Robin franchise cost. Read on to learn about Red Robin’s history, training procedures, franchisee obligations. Not to mention, some interesting facts that make Red Robin special.
Franchise Description
Red Robin is one of the most popular American chains of restaurants that offer mouthwatering gourmet burgers. But it hadn’t always started as a full-service restaurant. Red Robin was once a bar named “Sam’s Tavern,” opened in the 1940s.
Its location was on a campus in Seattle, Washington. Then, in 1969, Gerry Kingen took over the business and slowly added food items on the menu. It is under the trade name Red Robin Gourmet Burgers, Inc.
Since the takeover, Red Robin has become famous for its delectable gourmet burgers that consumers crave. They offer the most quality burgers in a casual and fun dining atmosphere that caters to both kids and adults. On top of gourmet burgers, Red Robin also has various food options such as:
- soups
- salads
- appetizers
- desserts
- entrees
- signature beverages
Moreover, Red Robin is still brewing up thirst-quenching beers and co*cktails. Their beers include a selection of both local and regional beers in America. In fact, Red Robin earned the Best Beer Program in a Multi-Unit Chain Restaurant VIBE Vista Award.
Red Robin’s success as a gourmet burger chain is the reason why there are over 570 restaurants all over America. It wasn’t until in 1979 that the first Red Robin franchise was launched in Yakima, Washington. Out of the 570 restaurant chains, there are over 90 franchised Red Robin chains.
The franchisor, Red Robin International, Inc., grants franchisees the right to open more than one Red Robin restaurant. The initial Red Robin franchise cost is around $1,865,000 to $4,115,000. This includes the initial franchise fee of $35,000. Plus there’s also a working capital of up to $200,000, and a 5 percent royal fee. Read until the end to know the detailed Red Robin franchise cost.
Training Overview
The franchisee will have to undergo two types of training programs when franchising a Red Robin restaurant. The first one is the School of Management training program. This will involve training for the higher-ups such as the Operating Partner, general manager, assistant manager, and kitchen manager. The first training program also includes the Managing Principal, wherein he/she has to undergo the Managing Principal Training Program.
The second type of training that franchisees have to undertake is the School of Team Member Excellence. This is the training program for rank-and-file employees such as bartenders, servers, hosts, bussers, and cooks.
Finally, the franchisor will then hold a final training program before opening with a week-long duration. This is called the New Restaurant Opening Training program. However, all higher-ups must get approval from the franchisor that they have satisfactorily aced the School of Management training program.
Obligations and Restrictions
According to the Red Robin Franchise Agreement (FA), all franchisees must select the location, considered the “Protected Area.” This is then approved by the franchisor overseeing to factors such as commercial progress, population, and demographics.
Under the FA, the Operating Partner and Managing Principal must ensure that they supervise the Red Robin restaurant daily. Furthermore, if the franchise is an entity, the franchisee must identify at least one of their owners. This person should have the decision-making influence to act as the Managing Principal. Moreover, he must also have a 10 percent ownership interest. Not to mention, the franchisor calls the shots on what menu items and other products the franchisee must offer.
The initial franchise term is 20 years, starting from the contract signing date. Last but not least, the franchisor doesn’t offer options for financing, nor mortgages, promissory notes, or leases.
Red Robin Franchise Cost
Your Investment
| Name of Fee | Low | High |
|---|---|---|
| Initial Franchise Fee | $35,000 | $35,000 |
| Real Estate | Variable | |
| Small wares & Supplies | $40,000 | $50,000 |
| Initial Inventory | $25,000 | $35,000 |
| Pre-Opening Expenses | $150,000 | $250,000 |
| Annual Insurance Premium for first year’s coverage | $50,000 | $75,000 |
| Liquor License | Variable | |
| Site Work | $75,000 | $500,000 |
| Pre-construction, Due Diligence, Design Costs, Permits | $0 | $400,000 |
| Building Construction Costs | $800,000 | $1,500,000 |
| Furniture, Fixtures, Décor Items and Equipment | $550,000 | $950,000 |
| Exterior Signage | $40,000 | $120,000 |
| Additional Funds – 3 months | $100,000 | $200,000 |
| ESTIMATED TOTAL | $1,865,000 | $4,115,000 |
Other Costs
| Type of Fee | Amount |
|---|---|
| Royalty | 5% of Gross Sales. |
| Cooperative Advertising and Promotion Fund (CAP Fund) Account | 0.5%. Franchisees must contribute a percentage of the Gross Sales that the franchisor designates to the CAP Fund each Accounting Period. |
| National Advertising and Promotional Fund | 2%. Franchisees must contribute a percentage of the Gross Sales that the franchisor designates to the NAF each Accounting Period. |
| Local Advertising | 1.5%. Franchisees must spend a percentage of Gross Sales in each calendar quarter on approved local advertising activities. |
| Regional or Local Advertising Cooperative | Maximum of 1.5% of Gross Sales, credited against local advertising requirement. |
| Late Opening Fee | $35,000 |
| Insufficient Funds | $100 |
| Additional On-Site Evaluations | Variable |
| Refurbishment of Restaurant Premises | Variable |
| Approval of Alternative Supplier | Varies. It should not exceed the reasonable cost of the research and inspection and the actual cost of the test. |
| Audit | Amount of any delinquency in royalty and service fees and advertising contributions plus interest from the date due. Unless there’s an understatement of Gross Sales exceeds 2% in which case franchisees must also pay for the cost of the audit. |
| Information Security Audit | The actual cost of the audit. |
| Transfer | $5,000 multiplied by number of Restaurants remaining to be developed to transfer interest in Area Development Agreement. $10,000 to transfer interest in FA. |
| Relocation | $5,000 |
| Cost and Attorneys’ Fees | Varies |
| Indemnification | Varies |
| Interest | Lesser of 1.5% per month or the maximum rate allowed by applicable law. |
| Non-Solicitation Fee | 200% of the annual salary of the person recruited |
| Insurance | Cost of insurance. |
| Management Fee | 10% of Gross Sales plus costs and expenses. |
| Additional and On-Site Training | The current training fee. Plus, any travel and living expenses for the trainers the franchisor sends to the restaurant. |
| New Restaurant Opening Training | $45,000-$80,000 |
| Mystery Shopper/Customer Survey Fee | Varies. But the franchisor estimates the cost of each inspection will range from $100 to $500. |
| Damages | An amount equal to the value of the Royalty, CAP Fund contributions, NAF contributions, and Cooperative contributions. Those would have become due following termination of the FA for the period beginning on the date of termination and ending 3 years from the termination date. Unless, the scheduled expiration of the term of the FA expires earlier, in which case the period for calculating the damages will end on the date of expiration. |
Did You Know?
Red Robin is one of the best options for a franchise opportunity due to the company’s fascinating culture. Here are some fun facts about Red Robin:
- Mike and Steve Snyder, two regular Red Robin consumers, opened the first Red Robin franchise.
- Red Robin is one of the few casual dining restaurants that offer bottomless steak fries for over 20 years!
- In 2014, Red Robin smashed the record for offering the unhealthiest meal combo amounting to 3,540 calories! This included the “Monster” double burger, bottomless fries, and a milkshake.
- One of the commercials backfired, and Red Robin received a public backlash from vegetarians. The line in the commercial said, “We even have a garden burger just in case your teenage daughter is going through a phase.”
For more details on the Red Robin franchise information, visit their website here.
If you want more information about other franchises, you can find other resources here at Franchise How!
