This article is based on a video originally recorded on Vetted Biz Youtube Channel.
Have you considered owning your own Trader Joe’s franchise? Trader Joe’s is a grocery store chain that serves mostly their brand food products and beverages such as unique snacks, produce frozen foods, and more. Trader Joe’s offers vegan, gourmet, and organic foods that cater to a wide variety of customers. It also is known for being affordable, widely popular among young adults who are living on their own.
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Trader Joe’s is a smaller grocery store where it stores around 4,000 items while a typical grocery store has around 50,000 items stocked. Trader Joe’s has 530 stores in the United States and it is continuously growing. Although the grocery store industry overall is predicted to only grow .6% from 2021 to 2026.
The grocery store is a 12.9 billion industry and from this, you can make a decent amount of profit owning a grocery store. Also, there is low risk when owning a grocery store where it ranks a 2.1 out of 4, 4 being the riskiest. If this is of interest to you, keep reading.
Trader Joe’s Franchise
Unfortunately, Trader Joe’s is not a franchise. This grocery store is privately owned and this is most likely due to maintaining close control of the stores.
Trader Joe’s was founded in 1958 in California near the Los Angeles area. The store was first a convenience store named Pronto Market which was owned by the founder named Joe Coulombe. There was too much competition with Pronto Market so Joe decided to develop a new concept. Joe Coulombe visited the Caribbean and got inspired when the tiki trend was at its height at the time. Joe Coulombe named it Trader Joe’s which was to make fun of a tiki-themed restaurant called Joe Vic’s located in Beverly Hills which was an expensive restaurant. The first store opened in Pasadena, California in 1967 and this led to the famous Trader Joe’s.
The CFO of Trader Joe’s has been Mitch Nadler since October 2013. The CEO of Trader Joe’s has been Dan Bane since 2001.
Trader Joe’s owner
Aldi Nord, which is owned by two brothers in Germany, owns Trader Joe’s. The brothers own a discount chain in Germany and wanted to expand in the United States. They did this by acquiring Trader Joe’s which Joe Coulombe sold to Theo Albrecht, CEO of Aldi Nord.
Estimated Trader Joe's franchise cost (If it were a franchise)
Trader Joe's Franchise Fee
The estimated cost of a franchise fee of Trader Joe’s would cost around $55,00 to $65,000.Nikko franchise is a supermarket and their franchise fee costs $35,000 to $50,000. Nikko franchise is a much smaller grocery store and has less inventory which would make Trader Joe’s more expensive. This is a bit more expensive than the average franchise fee which is around $25,000 but grocery store franchises are more expensive due to them being bigger than restaurants.
Estimated Initial Franchise Fee
The estimated investment of Trader Joe’s ranges from $40,000 to $60,000. This is due to training expenses, inventory and additional funds for three months. Nikko franchise estimated initial investment ranges from $35,00 to $50,000. These costs are from training which can cost between $1,500 to $2,000. Training fees can vary depending on how many employees you have and how many you continue to hire when the store is open. The equipment can cost a few thousand dollars such in Trader Joe’s there is always a station for customers to try the food.
Also, this includes cash registers and packaging equipment which are necessities for a grocery store. Also, inventory is a significant portion of the cost which can cost between $20,000 to $25,000. This includes all of the food needed to supply the grocery store and supplies to be sustainable for a few weeks. Going along with this is the additional food for three months which can range from $15,00 to $20,000 to cover initial operating expenses to be able to survive for three months.
Additional Costs
There are also additional costs such as leasehold improvements and additional work capital. The leasehold improvements can cost the majority of the cost of franchise which is between $2,000,000 to $3,000,000. The additional work capital is estimated to cost $1,000,000 to $1,500,000. These costs will vary depending on the location and how large your Trader Joe’s will be but keep the cost in mind if Trader Joe’s ever becomes a franchise.
Trader Joe's stores
They have open 15 stores in 2021. Trader Joe’s new stores are in Florida, New York, Oregon, California, Alabama, Colorado, North Carolina, Tennessee, Indiana, Kentucky, and Delaware. In some of these states, there were multiple Trader Joe’s that opened there. This is a good sign to see where Trader Joe’s is making strides to expand throughout the United States. It also shows they are doing well enough to expand rapidly and there is still a need for more Trader Joe’s. So far for 2022 Trader Joe’s is opening a grocery store inLower Allen Township, Pennsylvania.
Conclusion
Trader Joe’s is not yet a franchise but that doesn’t mean it will never become one. Based on the financials, Trader Joe’s would be quite an expensive franchise. This is due to the amount of stock it takes to supply a grocery store and other fees such as royalty, training, etc. But based on the rate of pace Trader Joe’s is growing. There is potential to become very profitable from this business venture. Trader Joe’s is a nationwide chain that is well-known among most Americans. Many people want to take part in the company for these reasons and if you are one of them keep an eye out for a Trader Joe’s franchise.
Are you thinking about investing in a grocery store franchise, or interested in exploring more options? Make sure to check out Vetted Biz’s websitefor listings of other similar franchises in the Food and Beverage industry.
