Cousins Subs Franchise Review – Average Sales, Cost of Goods Sold, Wages, Rent, Other Expenses, Operating Profits (2020 FDD) | Franchise Chatter

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In this FDD Talk post, you’ll learn the following:

  • Section I – Background information on the Cousins Subs franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Cousins Subs franchise, based on Item 7 of the company’s 2020 FDD
  • Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Cousins Subs franchise, based on Items 5 and 6 of the company’s 2020 FDD
  • Section IV – Number of franchised and company-owned Cousins Subs outlets at the start of the year and the end of the year for 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD
  • Section V – Presentation and analysis of Cousins Subs’ financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:
  • 2019 average gross receipts for the 21 affiliate-owned Cousins Subs Shops that were open the entire 2019 fiscal year
  • 2019 average gross receipts for the 62 franchised traditional Cousins Subs Shops that were open the entire 2019 fiscal year
  • 2019 average gross receipts for the 7 franchised non-traditional Cousins Subs Shops that were open the entire 2019 fiscal year
  • 2019 average total revenue, cost of goods sold, wages, occupancy costs, telephone and utilities, advertising, employee benefits, other operating expenses, franchise fees, and shop EBITDA for the 20 affiliate-owned traditional Cousins Subs Shops that were open the entire 2019 fiscal year
  • growth in average unit volume for all Cousins Subs Shops between fiscal year 2011 and fiscal year 2019
  • system-wide annual net sales in fiscal years 2011 and 2019 for the 61 traditional franchised Cousins Subs Shops, 7 non-traditional franchised Cousins Subs Shops, 19 traditional affiliate-owned Cousins Subs Shops, and 2 non-traditional affiliate-owned Cousins Subs Shops that were open during both the entire 2011 fiscal year and the entire 2019 fiscal year
  • percentage growth in net sales in the 1st, 2nd, 3rd, and 4th quarters of 2019 as compared to the previous year for all Cousins Subs Shops that were open for both of the full comparison periods

Section I – Background Information

18 Things You Need to Know About the Cousins Subs Franchise

Launches Loyalty Program

1.  In early January 2020, Cousins Subs announced that its loyalty program – Cousins Club – was now available to guests at nearly all of its locations across the Midwest. The loyalty program rewards members with one point for every $1 spent in stores and online for dine in, carry out, or delivery. When guests enroll in Cousins Club, they will receive a free bag of chips, one free order of regular fries, or a free regular drink redeemable up to 14 days after registration.

2.  Justin McCoy, vice president of marketing for Cousins Subs, said, “At Cousins Subs, we believe in better. We’re excited to introduce Cousins Club to better reward guests for their loyalty and make ordering our delicious cuisine easier than ever before. Cousins Club is a personalized, user-friendly loyalty program that offers suggestive selling based on each guest’s order history and makes it quick and simple to order a meal by requiring six clicks or less.”

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3.  Cousins Club members accrue points on an ongoing basis to redeem the following rewards:

  • 25 points: One cookie
  • 50 points: One bag of chips, one order of regular fries, or one regular drink
  • 75 points: One regular Wisconsin Cheese Curds, one regular Wisconsin Mac and Cheese, one chocolate or vanilla shake, or one root beer float
  • 100 points: One 7.5” sub or Sub in a Bowl
  • 250 points: One portable speaker, cooler, or inflatable hammock
  • 500 points: One 20-piece Party Box
  • 1,000 points: One set of Bean Bag Toss or KanJam
  • 2,500 points: One visit from Cousins Subs’ Traveling Sub Truck for up to 20 people

4.  Guests can sign up for Cousins Club via the Cousins Subs app, which is available for download through the Apple App store and Google Play, and the Cousins Subs website. When members refer a friend, they’ll receive 10 bonus points. Through Cousins Club, members can receive push notifications about new products and promotions, save and favorite up to three of their orders, and send a message to a Cousins Subs guest experience professional to receive a response to the user’s email.

5.  Cousins Club is fully integrated into the Cousins Subs app and cousinssubs.com, which enables members to easily track the number of points they accrue. When guests earn rewards, they’ll receive a notification via the Cousins Subs app and the email they used to register for Cousins Club. All rewards expire after one year.

Introduces Cousins Cares

6.  In mid-April 2020, Cousins Subs announced the launch of Cousins Cares – a campaign through which guests can pay it forward and order free meals to be delivered to hardworking, essential employees in Wisconsin.

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7.  “Every day, especially during these unprecedented times, we strive to make it better for our communities,” said Justin McCoy, vice president of marketing for Cousins Subs. “We’re looking forward to partnering with guests in our home state of Wisconsin to show appreciation for essential employees who are working diligently to improve the lives of our neighbors in need.”

8.  As part of Cousins Cares, guests could place an order for a 20-Piece Party Box for delivery to an essential business in their community. Through April 30th, participants received $15 off their order of a 20-Piece Party Box and were not charged a delivery fee. To place an order, the public was asked to call or visit a participating Cousins Subs location and provide the name, address, and phone number of the essential business the 20-Piece Party Box would be delivered to. Online and mobile ordering were not permitted.

9.  Each 20-Piece Party Box contained Ham & Provolone and Turkey subs. Benefiting essential businesses were encouraged to post a photo of their Cousins Cares delivery order on social media using #CousinsCares and #LocalAtHeart.

Three Corporate Employees Transition into New Roles

10.  In early July 2020, Cousins Subs announced the transition of three members of its corporate support team into new roles to build on the company’s legacy of better. J.J. Grube stepped into the position of vice president of operations and finance; Alan Lundeen assumed the title of senior director of talent management; and Hilary Krekling was promoted to director of operations.

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11.  Christine Specht, CEO of Cousins Subs, said, “As we prepare for broader Midwest expansion and continue to increase our corporate store count, it’s critical to our company’s success to ensure we have the right employees in the right seats to propel our brand forward. We truly believe each of our three employee transitions will make it better for our restaurant teams, corporate staff, franchise partners and community and position the brand for even more opportunities for growth.”

12.  J.J. Grube assumed the role of vice president of operations and finance after serving as vice president of finance and director of finance for nearly 3.5 years. While he has spent his nearly 16-year professional career in finance, Grube is a true operations leader at heart. In his new role, he is responsible for driving efficiencies and standardization to help corporate restaurant general managers and franchise partners run their stores more efficiently. In addition, he holds the lead operations position on the company’s menu development team.

13.  Alan Lundeen stepped into the brand’s first people-dedicated leadership role. As senior director of talent management, he oversees the company’s training, human resources, and recruitment functions, while being responsible for staffing, bench planning, training, and attending to all personnel related matters at every step of the corporate employee lifecycle. He is also responsible for introducing company-wide initiatives to further enhance company diversity and inclusion efforts, culture, and staffing. Lundeen is an accredited professional with more than 12 years of HR experience.

14.  Hilary Krekling was promoted to the role of director of operations after serving as a corporate area director for more than five years. Her leadership and development skills blossomed while serving in her prior role as she managed stores with the highest sales volumes, most employees, and best profit margins in the company. As director of operations, she leads the team of four corporate area directors and continues to guide two corporate restaurants in their pursuit of operational excellence. Hilary has more than 12 years of experience leading Cousins Subs’ restaurant teams to success.

Company History

15.  Cousins Subs was founded in 1972 by cousins Bill Specht and James Sheppard in Milwaukee, Wisconsin. The cousins decided to open their own sandwich shop because they couldn’t find a local shop that lived up to the high standards of the ones they were used to in New Jersey. Not long after opening the first Cousins Subs, Specht and Sheppard partnered with a local bakery to make fresh bread for the shop.

16.  Following the success of the first Cousins Subs location, Specht and Sheppard opened a second shop in the Milwaukee area. This was followed by a few more locations before Specht and Sheppard started franchising the Cousins Subs concept in the mid-1980s. Cousins Subs’ growth has always been slow and steady and for the most part, the brand has remained in a Midwestern regional chain.

17.  Cousins Subs has remained a family business, as Christine Specht-Palmert, daughter of co-founder Bill Specht, took over as CEO in 2015 when her father retired. In addition to the shops in Wisconsin, Illinois, and Indiana, Cousins Subs has a small presence in New York.

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18.  Cousins Subs did not rank on Entrepreneur’s 2020 Franchise 500 list.

Section II – Estimated Costs

  • Please click here for detailed estimates of Cousins Subs franchise costs, based on Item 7 of the company’s 2020 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

  • Please click here for detailed information on Cousins Subs’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2020 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2017

  • Outlets at the Start of the Year:  79
  • Outlets at the End of the Year:  78
  • Net Change:  -1

2018

  • Outlets at the Start of the Year:  78
  • Outlets at the End of the Year:  72
  • Net Change:  -6

2019

  • Outlets at the Start of the Year:  72
  • Outlets at the End of the Year:  71
  • Net Change:  -1

Company-Owned

2017

  • Outlets at the Start of the Year:  22
  • Outlets at the End of the Year:  18
  • Net Change:  -4

2018

  • Outlets at the Start of the Year:  18
  • Outlets at the End of the Year:  20
  • Net Change:  +2

2019

  • Outlets at the Start of the Year:  20
  • Outlets at the End of the Year:  27
  • Net Change:  +7

Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis

  • “Traditional Shops” mean all Cousins Subs other than those “Non-Traditional Shops.” “Non-Traditional Shops” mean those Cousins Subs which are (a) co-branded with a pizza establishment, (b) located within a convenience store, or (c) attached to a convenience store.
  • There were two affiliate-owned Non-Traditional Shops operated in 2019, which are included in the total affiliated-owned Cousins Subs Shops.
  • Each chart below includes all the affiliate-owned and franchised Shops that were open the entire 2019 fiscal year. These charts do not include Shops that were opened during the 2019 fiscal year or closed for an extended period during a remodel.
  • The affiliate-owned chart includes Shops that were reacquired from a franchisee, or sold to a franchisee, during the fiscal year if the Shop was affiliate-owned for 6 months or longer during the fiscal year; if the Shop was not affiliate-owned for at least 6 months, it was included in the applicable Franchised Shops chart.
  • The affiliate-owned Shops and the franchised Traditional Shops were ranked according to the annual amount of gross receipts and divided into 3 equal categories. The “High” category contains the top third, the “Middle” category contains the middle third, and the “Low” category contains the bottom third.
  • “Gross receipts” means the aggregate amount of all sales of food products, beverages, and other merchandise and products of every kind or nature sold from, at, or in connection with your Shop or arising out of the operation or conduct of business by your Shop, including any revenues from all vending machine, video game machine, and jukebox sales, less any customer refunds up to the amount of the sales price and excluding all sales, use, or service taxes collected and paid to the appropriate taxing authority.
  • “Gross receipts” shall include: (a) all amounts redeemed from gift certificates, gift cards, or similar mediums, (b) all insurance proceeds received by you for loss of business due to a casualty or similar event at your Shop, and (c) the fair market value of any services or products received by you in barter or exchange for your services or products.

Part 1 – 2019 Average Gross Receipts of Affiliate-Owned Shops

All Shops

High

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