PJ’s Coffee Franchise Cost Is High For Owner Operators (2022)



PJ’s Coffee Franchise is a retail coffeehouse chain in the south. It was founded by Phyllis Jordan (and, thus, PJ) in 1978. Since 2004, they have been competing with Starbucks in the local areas and aim to go countrywide. They had 121 franchised and 11 affiliate-owned locations as of 2021. Want to find out the PJ’s Coffee franchise cost, owner salary, and profit? Keep watching this video!

This video was based on an exclusive Vetted Biz analysis, click here for the full report:

PJ’s Coffee Franchise Cost High For Payback Period (2022)

Others Coffee videos
Tim Hortons: https://youtu.be/UbUOFZ6eQeQ
Starbucks: https://www.youtube.com/watch?v=EerUIDRE-Lw

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00:00 Introduction
00:23 About PJ’s Coffee
00:49 Initial Investment Cost
01:21 Royalty and Marketing Fee
01:32 PJ’s Coffee Franchise Owner Salary
01:44 Time to Recoup the Investment
02:21 Selling a PJ’s Coffee Franchise
03:25 Conclusion

#PJsCoffeeFranchise #VettedBiz

The Food and Beverage industry in the USA accounts for 13% of all manufacturing employment in the country. Around 1.46 million people are employed in this industry. Food franchises make up to 36% of the total franchise establishments in the USA and it is expected to create 1.6million more jobs by 2027.

The annual growth rate in the industry is around 2% and the EBITDA multiplier is around 3X for single-unit coffee shops.

PJ’s competes in the Food and Beverage industry with brands like Aroma Espresso Bar, Illy, Starbucks, etc.

The initial PJ’s Coffee Franchise Fee is $10,000 – $35,000 depending on the type of location. You have to pay this upfront fee when opening a PJ’s Coffee franchise.

The estimated total investment necessary to begin the operation of a PJ’s Coffee Franchise ranges from $406,000 to $1,024,000. The following costs are part of the upfront costs included in the initial investment for a PJ’s Coffee. Many of these are one-time fees that are needed to launch the franchise.

PJ’s requires a minimum of $150K in liquid capital and a net worth minimum of $500K for a single unit. Creditworthiness, favorable debt to income ratio, and secondary sources of income are also considered when determining eligibility.

Owning a PJ’s Coffee Franchise Requires Ongoing Fees

Royalty: 5% of net sales

Marketing Fee: 2% of net sales

Initial Marketing Fee: $10,000

These fees are about 1% less than the industry standard.

Based on the median sales provided by PJ’s Coffee franchise locations, at an average of a 15% profit margin it will take around 8.5 years to recoup your investment. This is longer than other franchise opportunities. You may not get a 15% profit margin which would elongate getting a return on your investment.

MANY FACTORS AFFECT THE SALES, COSTS, AND EXPENSES OF YOUR FRANCHISED STORE SUCH AS THE FRANCHISED STORE’S SIZE, GEOGRAPHIC LOCATION, MENU MIX, AND COMPETITION IN THE MARKETPLACE. THE PRESENCE OF OTHER COFFEE SHOPS; THE EXTENT OF MARKET PENETRATION AND BRAND AWARENESS THAT PJ’S STORES HAVE ATTAINED IN YOUR MARKET. ALSO, THE QUALITY OF MANAGEMENT AND SERVICE AT YOUR FRANCHISED STORE ARE FACTORS.

To assign a valuation multiple for PJ’s Coffee franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems where more transaction data is available.

Under $1 Million Net Sales. Estimated Selling Price = Net Sales * 0.44

When you go to sell a PJ’s Coffee franchise based on the median multiple of .44 and net sales in 2021 of $808,284, it will sell for $355,629. This is significantly lower than the midpoint investment of $715,000.

The more franchises you own, the more earning potential you will have as private equity firms become interested in your business instead of individual owner-operators.

PJ’s Coffee is a very profitable business for the franchisor with retained earnings of $476,253 in 2021. Compared to $392,937 million in 2020, they saw an increase of 21%. This is a good indication of growth as a company overall.

Over the last three years, the company has been expanding. Over the three-year period between 2019 and 2021, they opened 39 new locations, resulting in an average of 13 locations per year. This is generally a good sign as the company is expanding.

PJ’s Coffee presents itself as an up-and-coming player in the industry, planning to take on Starbucks.

This video was based on an exclusive Vetted Biz analysis, click here for the full report:

PJ’s Coffee Franchise Cost High For Payback Period (2022)

Want to have a franchise specialist support you day-to-day in your franchise search/ analysis? Click here for more information:

How We Help Franchise Buyers Find The Right Franchise



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