How Much Applebee's Franchise Owners Really Make Per Year
Applebee's is a confident brand. The casual restaurant chain is booming with success and poised to grow when more pandemic restrictions lift, CNN Business reports, and the company believes that its franchisees will directly benefit. In addition, restaurant sales in 2020 — during the height of the pandemic — were higher than in most of the previous 20 years, according to Statista. So, perhaps taking on an Applebee's franchise could become a wealthy investment.
Not that running a franchise is easy, of course. Although franchisees have many benefits of an established brand — including its reputation, sophisticated advertising, and access to its financial strength — they also have drawbacks such as less freedom to deviate from the brand's direction and frequent royalty payments (via Forbes).
After considering both sides, taking a slice of Applebee's $4.7 billion yearly sales (via Applebee's) could seem like an opportunity that's too good to miss. But factoring in monetary expenditures such as the significant initial investment requirements, what are the financial rewards of operating an Applebee's franchise?
Income can be high — after a massive cost
According to The Grubwire, the average Applebee's restaurant achieves an astonishing annual sales of over $2.4 million. However, out of all of that cash the average franchisee gets only about $310,000 profit. And that's before tax and other expenses are taken into account — such as a 4% royalty fee to Applebee's. So, the yearly income that Applebee's franchisees ultimately earn is likely to be noticeably less.
Franchise Business Review notes that Applebee's franchise operators of United States restaurants that are at least two years old take home $120,000. Applebee's allows investors to set up numerous franchises though (according to Applebee's website), meaning that operators have the chance to multiply their earnings by operating more than one restaurant.
Franchise owners also need to ensure they make back the money on their initial setup costs, which Franchise Direct estimates to be between $2,009,201 and $8,266,730. Thus, the company requires prospective franchisees to have a net worth of at least $3 million for a single store, with $1 million in easily accessible cash, according to the Applebee's website.
However, franchise earnings clearly can't be too bad, as The Grubwire reports that "franchising is a big part of the Applebee's story" — the story of a company that has nearly 2,000 restaurants worldwide (via Applebee's).