Taco Bell is one of the most famous Mexican-style restaurant chains in the whole world. They are known for their delicious menus and fast service. They offer Mexican meals such as Tacos, Burritos, their signature Quesadillas, Nachos, and many other specialty dishes. If you are looking for a good business opportunity, franchising Taco Bell is a good option. However, you will need to know what it takes to franchise one. You will also need to consider the cost that you will have to make when you open this restaurant. So, how much does Taco Bell franchise cost?
Average Taco Bell Franchise Startup Cost
So why franchise Taco Bell? First of all, Taco Bell is the world’s leading quick service Mexican-style restaurant chain, as what we have mentioned above. This restaurant is currently serving 35 million people per week.
As of now, there are more than 5,800 Taco Bell restaurants in the United States alone. And almost 80 percent of it are owned by different independent franchisees.
Currently, The Taco Bell Company have set a goal of opening 2,000 more Mexican restaurant locations by 2023. They are really focusing on recruiting more new franchisees that can develop a lot of units for a period of time.
The estimated total Taco Bell franchise cost runs around $1,177,300 on the lower end and $2,600,000 on the higher end. But before you can franchise one. The company has set a financial requirement. You should have a net worth of at least $1,500,00 and a liquid cash of at least $750,000. The company also prefers franchisees who have a restaurant experience or is a partner with a restaurant operator.
Taco Bell Franchise Startup Cost Breakdown
Whenever you open a business, the total cost you will make will surely be affected by a lot of factors. As for Taco Bell, here is the list of the factors that can and will affect the cost:
- Application and Background Check – Before you are given a chance to franchise Taco Bell, you will be required to have an application and background check which usually cost around $300 on the lower end and $600 on the higher end.
- Startup Fee – If the company approves your application, the next thing you will do is to pay the initial franchising fee of Taco Bell which is $45,000.
- Construction Services – The next factor that you will have to consider is the construction service of your first unit. The usual cost for this factor usually runs around $25,000.
- Licenses, Permits, and Security Deposits – Every business will be required to have all the licenses and permits before you can establish your building. If you are leasing a property, you will also be required to pay the security deposit. The cost for this factor usually runs around $74,000.
- Real Estate – This factor greatly depends on the size of your business. The bigger space you will need, the bigger the cost you will have to make. On the lower end, expect to spend around $175,000 while on the higher end, expect to spend around $1,400,000.
- Site Work and Leasehold Improvements – This is the next big factor that can surely add up to your total Taco Bell franchise cost. The cost also depends on the size of your building and the number of materials and labor needed. Expect to spend around $530,000 on the lower end and $680,000 on the higher end for this factor.
- Equipment – This factor includes operational equipment such as computer hardware and software, POS systems, and much more. Kitchen equipment is also included as well as signage and decorations. Expect to spend around $271,000 on the lower end and $290,000 on the higher end for this factor.
- Startup Inventory and Supplies – This factor includes the inventory you will need which should be purchased in an approved Taco Bell suppliers. This also includes other supplies such as paper items, cleaning supplies, and much more. The cost for this factor would run around $7,000 on the lower end and $10,000 on the higher end.
- Grand Opening Marketing – $5,000
- Operational Fund – Since you will not earn much for the first 3-month operation of your business, you will be the one who will finance the expenses during that period of time. This includes the payroll for your employees, utilities, and much more. This factor can usually cost you around $10,000 on the lower end and $20,000 on the higher end.
After paying the initial Taco Bell franchise startup cost and opening your business, the expense doesn’t really end there. There will be ongoing fees that you will have to consider. This includes the royalty fee which is equivalent to 5.5 percent of your gross sales and Advertising and Marketing fund fee which is equivalent to 4.25 percent of your gross sales. This already includes the national and local advertising fund.
Before you can open your very first Taco Bell restaurant, the company will require you to complete a training course that usually lasts 8 weeks. You and your restaurant managers are required to attend this. You will also be the one to finance the cost you will make for the meals and lodging. The duration of the training will also be extended if you plan to franchise more than 5 restaurants.
Advantages of Franchising Taco Bell
The first advantage that you can have when you franchise taco bell is the absentee ownership. This means that you are allowed to not join any hands-on operation of your business. As long as your restaurant is operating, you can go anywhere in the world anytime.
Another advantage you can get is the ranking. As of now, Taco Bell is ranked #22 in Franchise Directs’ Top 100 Global Franchise Ranking of 2017.
However, there are still disadvantages you can get when you franchise this restaurant. Some of it depends on yourself. But, the major disadvantage you can get is the staffing requirements. The company usually requires you to have at least 25 employees per unit. This means that the overhead cost will be higher than normal.