- How to Open this Business: Guide
- TOP-7 KPI Metrics
- Startup Costs List
- How To Increase Business Profitability?
- How to Sale More?
- How to Value this Business?
Introduction
The Del Taco franchise has continued to grow over the years and is now one of the leading Mexican-style fast food outlets around the world. According to a study by Statista, the overall fast food industry has grown steadily over the past decade and in 2018 had a market value of over 3 billion!
Despite the growth in the industry, running a franchise can be a difficult process and often comes with various operating expenses. Costs associated with owning and operating a Del Taco franchise include franchise and management fees, food costs, staff labor costs, leases and building utilities , furniture and equipment rental, marketing and advertising, insurance, accounting services and legal services.
When taking on a Del Taco franchise, understanding these costs is key to making informed decisions that are best for the business. To help with that, we’ve compiled a list on the various operating expenses associated with a Del Taco franchise.
Operating Expenses
When considering investing in a franchise opportunity, potential franchisees need to know what their operating costs will be. Operating costs for a Del Taco franchise may include:
- Franchise and management fees
- Food costs
- Staff labor costs
- Construction lease and utilities
- Rental of furniture and equipment
- Marketing and Advertising
- Assurance
- Accounting services
- Legal services
The amount of each of these expenses will depend on the location of the franchise, the size of the franchise and the other local business environment.
Franchise and management fees
Opening a Del Taco restaurant requires a large financial commitment. The total initial investment cost varies and depends on a number of factors. To open a new Del Taco restaurant, initial investment fees ranging from ,279,650 to ,690,000 are required (none of which are subject to ongoing percentage fees). This varies depending on factors such as location, size and type of store, as well as real estate costs. These fees are broken down into categories such as initial franchise fees, real estate and leasehold improvements, equipment, grand opening signage and advertising, and more.
Franchise fees
The starting franchise fee for a Del Taco restaurant is ,000 for a stand-alone restaurant and ,000 for a restaurant located in another business. These fees are one-time fees that are due upon signing the franchise agreement.
Royalty fee
Royalty fees represent a percentage of the total gross sales made by the franchisor, which is currently 5%. These fees are collected on a monthly basis.
Management service fees
Management services management fees are also based on a percentage of gross sales, currently set at 3.2% for a stand-alone restaurant and 2.4% for a restaurant located in another business. These fees are collected on a monthly basis.
Advertising costs
Under the franchise agreement, Del Taco requires all franchisees to contribute at least 5% of their gross sales to pay for advertising and promotional activities. These fees are collected on a monthly basis.
Total franchise and management fees for a Del Taco restaurant can be 5,445 or more in the first year and annual fees between 0,000 and 8,000 in subsequent years.
Food costs
Every successful business requires careful budgeting and planning, and a Del Taco franchise is no different. Operating costs are a major component of a successful business, especially in the foodservice industry, and total operating costs for a Del Taco franchise can range from million to as much as million. $.7 million. A major component of these costs is food costs .
In a Del Taco franchise, food costs will include the cost of all fresh ingredients used to prepare the items, as well as the cost of packaging, delivery, and waste. The latest research indicates that food costs for a Del Taco franchise can range from 28-35% of total sales . This means that if a franchise forecasts a certain number of sales each year, it should plan to spend 28-35% of those sales on food in order to maintain profitability and success.
Fortunately, these food costs can be managed and kept to a minimum. This can be done by taking many steps such as keeping a keen eye on storage and inventory, properly tracking expiration date, knowing wholesalers, taking advantage of bulk buy offers, and discounting costs by making as much food in-house as home as possible. By implementing these techniques, a Del Taco franchise can minimize their food costs and remain profitable.
Staff labor costs
Staff labor costs are an important consideration for those wishing to start a Del Taco franchise. This can be one of the largest operating expenses depending on the size of the franchise location. According to the US Bureau of Labor Statistics, as of May 2020, the average hourly wage for fast food workers in the United States was .84. This figure is 8 cents higher than in May 2019, when the average hourly wage was .76. In addition to paying their employees the average hourly wage, Del Taco franchise owners must also provide payroll taxes, benefits, worker’s compensation, and other associated fees.
In addition to compensating their employees, Del Taco franchise owners should also be aware of labor compliance regulations. The Wage and Hour Division of the Department of Labor is responsible for enforcing labor laws, such as the Fair Labor Standards Act. This law establishes minimum wage, overtime pay, record keeping, and other labor regulations that must be followed. Violations of these laws can result in significant financial penalties, so it is important for Del Taco franchise owners to familiarize themselves with these laws and ensure that the rights of their employees are respected.
When calculating the labor costs of a Del Taco franchise, it is important to consider all of the above factors. Salaries, payroll taxes, benefits, and other employee-related expenses can add up quickly. Franchisees must also factor in the cost of complying with labor regulations or risk hefty fines. Considering all of the above expenses, labor costs for a Del Taco franchise can be up to 20% of operating costs.
Building lease and utilities
When considering total franchise operating costs for a Del Taco restaurant, building lease and utility costs are among the most important. This would include the costs of renting and/or buying the building, as well as electricity, water and other utilities.
The construction lease and utilities aspect of opening and operating a Del Taco restaurant can be one of the most expensive parts, with costs ranging from around one thousand dollars to three thousand dollars in monthly expenses. According to Del Taco’s website, these costs can take up to ten percent (10%) of the company’s total budget.
In terms of actual costs, these figures can vary considerably. However, according to recent statistics, the average monthly cost for rental construction and utilities for a single Del Taco restaurant is around ,462.
The lease and building utilities part of the budget should not be forgotten, as these costs can quickly add up. When calculating total operating costs for a Del Taco franchise, it is important to consider the following:
- Rental or purchase price of the building
- Property taxes for the building
- Electricity cost
- Water cost
- Cost of natural gas
- Telecommunications costs
- Insurance costs
It is also important to consider additional costs that may be associated with lease and building utilities, such as maintenance costs and repairs.
As with any new business, it is important to think about the total costs of running the business. The building lease and utilities will take up a large portion of the budget, and it is important to be aware of the actual costs of renting or buying the building and associated utilities.
Rental of furniture and equipment
When considering the costs of operating a Del Taco franchise, furniture and equipment rentals are an important part of any prospective franchisee’s budget. The amount required can vary greatly depending on the type of business established and the number of employees planned. With Del Taco’s line of fresh Mexican-inspired meals, items like a grill, ovens and steamers, ice machine and refrigeration units are essential amenities.
Furniture and equipment rental can be available in different formats, with outright purchases as well. For example, briefcase rentals are a cost-effective and convenient way to provide short-term furniture and equipment.
According to statistics from the United States Small Business Administration (SBA), the average cost of obtaining and equipping a restaurant franchise is ,800 in the United States for the year 2019. However, depending on the configuration specific to the restaurant, this figure can vary considerably. Upgrade units like the kitchen range and oven, for example, can increase overall rental costs. The SBA also notes that most equipment found in larger restaurants should also be considered for midsize establishments, provided the cash flow exists to cover the costs.
Ultimately, when it comes to furniture and equipment rentals, potential Del Taco franchisees should take their time shopping around. There are a number of different vendors who specialize in providing custom furniture and equipment hire, including online platforms such as Equipment . Furniture and equipment rentals can be rented on flexible terms that meet the exact needs of the franchise. Depending on the vendor, franchises can also access a wide range of equipment rentals at unbeatable prices.
Marketing and Advertising
When it comes to running a successful Del Taco franchise, marketing and advertising costs can have a major impact on the budget. According to Statista.com, US advertising spending in 2020 was expected to reach an estimated total of 0 billion. It’s a huge market to compete in and advertising needs to be taken into consideration when looking at the budget for a new business.
When investigating the advertising costs of a Del Taco franchise, several factors should be considered. These include the restaurant’s total advertising budget, all local marketing campaigns, online marketing costs, and overall promotional efforts. The advertising cost for a single franchise could range from ,000 to ,000 depending on the size and scope of the campaign.
It is also very important to consider the number of outlets you have in a particular area and the competition nearby in order to set an appropriate budget. Advertising budgets should also be adjusted based on the target audience and the impact the campaign will have on future sales. Additionally, the development of digital marketing strategies should also be included in the marketing and advertising budget, as many customers are becoming more tech-savvy and prefer to shop online.
When setting up a marketing and advertising budget for a Del Taco franchise, it is important to be aware of the amount of competition and industry trends that play a major role in the market. Considering current trends, the franchise has the budget allocated to return an excellent return on investment on advertising efforts.
Assurance
When evaluating the costs of operating a Del Taco franchise, insurance is an important line item that must be factored into the equation. While there is no set amount franchisees must pay for insurance, the average cost of insurance for a del taco franchise in 2020 is estimated to be between ,000 and ,000 per year. This can vary greatly depending on the type and coverage of insurance required.
The 2020 Franchise Disclosure Document issued by Del Taco outlines the types of insurance required for franchisees, including workers’ compensation insurance, commercial liability insurance, and property insurance, to name a few. name a few. This insurance helps protect the business against potential losses ranging from legal liabilities to property damage or loss. Depending on the type of insurance, the coverage and deductibles that the insurer offers can be negotiated in advance.
Additional types of insurance that Del Taco encourages their franchisees to consider include:
- Equipment / contents insurance
- Business Interruption Insurance
- Life insurance for key employees and disability insurance
- Umbrella insurance
Insurance against such eventualities will help protect the business against liability, loss and damage due to external factors. When shopping for insurance, be sure to compare at least three separate insurers to get the best price and coverage.
Accounting services
When it comes to running a successful Del Taco franchise, it is important to consider the costs associated with accounting services. Accounting services, such as bookkeeping and tax preparation, can quickly add up and stack up in business profits. In 2017, according to Statista, the cost of accounting services for a small business in the United States was ,700 per year.
To ensure that your Del Taco franchise is in full compliance with all applicable accounting laws and regulations, it is important to hire a qualified accounting firm that can provide a full suite of services. Professional accounting firms generally offer the following services:
- Preparation and analysis of financial statements
- Bank reconciliation
- Audit
- Tax planning and preparation
- ACCOUNTANTS ACCOUNTING AND ACCOUNTING SERVICES AND
- Financial and estate planning
- business consultancy
Additionally, there may be additional services offered by the accounting firm, such as legal advice or investment advice. Although these additional services come with an additional cost, they can be worth their weight in gold if the right advice is given. It is important to discuss the range of services provided by the accounting firm so that you can determine if they are suitable for your Del Taco franchise.
It’s important to compare the prices of a range of accounting firms to ensure you get the best price for the accounting services you need. Professional accounting firms charge for their services based on the type and complexity of the task. While a basic book service might cost just a few hundred dollars a month, more complex tasks, such as preparing for an audit or setting up a business plan, can cost significantly more. .
If you are a new Del Taco franchise owner, it is worth investing in professional accounting services. An experienced accounting firm or individual can provide invaluable advice and guidance on financial matters and help you maximize the profitability of your business. Additionally, it is important to ensure that your records and documents are maintained in accordance with all applicable laws and regulations. The cost of accounting services is therefore well worth the investment.
Legal services
When it comes to running a Del Taco franchise, it’s important that potential franchisees understand the costs associated with legal services. This can include things like getting documents created and filed, getting legal document advice and assistance, and various other administrative tasks. The exact fees associated with legal services vary, but they generally average around ,000 to ,000 per year based on recent statistics. For example, current legal fees and fees for new franchise owners in the United States range from ,175 to ,000.
In addition, the costs associated with operating costs are estimated to be around 5 to 10% of the total cost. For example, current estimates suggest that expenses such as costs for rental, employee training, and marketing materials could range from ,500 to ,000.
It is important to consider these legal fees when starting and running a Del Taco franchise. Location, competition and other market factors can influence the amount and type of legal services required for your franchise. This may include researching and obtaining licenses, copyrights and patents for products and services, preparing contracts and other required documents. For these reasons, it is important to consult a professional attorney or a team of legal advisors who are experienced with this type of franchise.
Conclusion
Starting a Del Taco franchise can be a great business opportunity with even greater potential rewards. Despite the higher profitability compared to other franchises, it is crucial to understand the various operating expenses involved. From franchise and management fees to furniture rentals and legal services, all costs should be considered. A thorough understanding of all operating costs associated with a Del Taco franchise can help business owners make informed decisions that are best for their business.
Looking at the approximate total cost of owning and operating a Del Taco franchise, we found that start-up and operating costs can add up to .21 million . This amount includes franchise fees, staff labor costs, insurance, building leases and utilities, food costs, marketing and advertising, furniture and equipment rental. equipment, accounting services and legal services.
Overall, the Del Taco franchise can be a rewarding business with multiple benefits for investors and business owners. With the right strategies and techniques, owners can overcome the costs associated with franchising and take their business to the next level.