Slim Chickens Franchise Cost, Fee & Income Deep Dive

Written by: Patrick Findaro
Last Updated: December 22, 2021
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SLIM CHICKEN

Are you interested in the food franchise industry and want to run your own business? Slim Chickens, offers franchises that sell chicken tenders, wings, chicken & waffles, sandwiches, and more. Slim Chickens franchise is a fast-casual restaurant located across the United States. The franchise food industry is high in competition being rated a 3/4, 4 being very competitive but there isn’t a high amount of risk being rated a 2/4, 4 being high risk. If this interests you, keep reading about what Slim Chickens has to offer.

 

History of Slim Chickens Franchise

 

Slim Chickens was founded by Greg Smart and Tom Gordon who started the restaurant in a garage test kitchen in 2002. The founders thought there was a need for great quality chicken in northwest Arkansas. They opened the first location in 2003 in Fayetteville, Arkansas and it grew from there.

The CEO of Slim Chickens is Thomas D. Gordon who also was the founder of this franchise. He has served as CEO since December 2002. The CFO of the company is Seth A. Jensen who has served in this role since June 2011.

slim-chickens-food

 

Slim Chickens Litigation

 

Slim Chickens has dealt with two litigations that are both closed. One of the litigation was recently on September 29, 2020, called the “In the Matter of Slim Chickens’ Development Company”. This was with the Securities Division of the Department of Financial Institutions where it was alleged Slim Chickens sold two franchises without it being registered in the state of Washington. By terms of the Consent Order, Slim Chickens agreed to stop selling and offering franchises in the state of Washington and they paid the State of Washington an investigative cost of $1,000.

The second litigation was called “Hodson vs. Slim Chickens‘ Development Company” which happened in 2012. The plaintiff Hodson was an owner of Slim Chickens‘ prior affiliate which operated the franchise. Hodson sued them for breach of contract, fraud, misrepresentation, and more. They ended up settling where Slim Chickens agreed to purchase Hodson’s minority ownership which cost $420,000.

Buy FDD Slim Chickens

 

Slim Chickens Franchise Cost

 

The initial Slim Chickens franchise fee is $20,000 and is due once you sign the Franchise Agreement.

Estimated Initial Investment for a Single Slim Chickens Restaurant

Type of ExpeditureAmountMethod of PaymentWhen DueTo Whom Payment is to be Made
Initial Franchise Fee$20,000As arrangedOn Signing of The Franchise AgreementUs
Real Property / Site Lease / Site Review Fees$0 to $15,000 See Notes 2 and 3As arrangedAs agreedThird Parties
Construction / Site Work / Building Conversion$350,000 to $1,200,000As arrangedAs agreedThird Parties
Furniture, Fixtures, and Equipment$275,000 to $315,000As arrangedAs agreedVendors
Smallwares$12,000 to $14,000As arrangedAs agreedVendors
Building Signage and Interior Graphics$40,000 to $65,000As arrangedAs agreedVendors
Soft Costs$137,000 to $278,000As arrangedAs agreedVendors
Insurance$9,000 to $15,000As arrangedAs agreedInsurance Company
Opening Inventory$6,000 to $10,000As arrangedAs agreedVendors
Training Costs / Opening Assistance Reimbursement$23,000 to $39,000As arrangedBefore trainingVendors
POS System / Drive-Thru Components / Menu Boards$64,000 to $84,000As arrangedAs agreedVendors
Low voltage / Security / Network Installation$32,000 to $38,000As arrangedAs agreedVendors
Security and Utility Deposits$2,500 to $12,000As arrangedAs agreedVendors and Utility Companies
Business Licenses (excluding beer and wine license)$400 to $2,000As arrangedAs agreedLicensing Authority
Grand Opening Ad Expenditure$10,000As arrangedAs agreedService Providers
Additional Funds — 3 months$40,000 to $65,000   
TOTAL FOR a Single Franchise$1,065,900 to $3,367,000   

 

The Slim Chickens’ initial investment costs between $1.07 million to $3.37 million. This is quite expensive to open up a franchise but many costs take a large chunk out of the investment. The most expensive cost is construction/building the restaurant. This can cost between $350,000 to $1.2 million. Slim Chickens expects most franchisee owners to lease the restaurant because purchasing one is much more expensive.

 


Purchasing a restaurant is what represents the higher cost although it is a one-time purchase that could save you money in the long run.


 

Also, there is another option of building your restaurant. This can be costly depending on building it from scratch but in an already existing restaurant, it’s much more affordable.

slim chickens

Another high cost which you may not know about is soft costs. Soft costs between $137,00 to $278,000 which includes mandatory site work. This involves permits, occupancy certificates, architect fees, reports, legal services, tap fee which is the amount paid for the public sewer treatment, etc. There are some flexible costs such as deciding whether to build, buy or lease your restaurant but there are other costs that cannot budge such as the soft costs. This is something to consider when deciding to purchase a franchise on how much power you have in deciding on what to buy.

 

Slim Chickens’ ongoing costs and fees

Other Fees

Name of FeeAmountDue DateRemarks
Royalty Fee5% of Gross SalesPayable weeklySee Explanatory Notes for definition of Gross Sales
Advertising Fund Contribution2% of Gross SalesPayable weeklyYou Pay the Advertising Fund Contribution directly to us

 

The chart above shows the advertising fees such as the advertising fund contribution which is 2% of gross sales. Also, there is the local advertising cooperative contribution which is 1% of gross sales. Something to pay attention to is that these fees are paid every week so paying attention to how much you are making each week is crucial to determine the revenue you make at the end.

There are also transfer fees which means if you decide to sell the franchise you will be charged $10,000 plus the reimbursement of the actual costs in the development agreement. Also in the franchise agreement, the transfer fee is $5,000 plus the reimbursement of the actual cost. From this make sure you are 100% willing to follow through with this franchise because it is extremely costly to get out of it.

 

Franchise Royalty Fee

The Royalty Fee is 5% of gross sales which is paid weekly.

 

How much do Slim Chickens franchise owners make?

Slim Chickens Franchise Owners’ Earnings

Group #Average Gross Sales per RestaurantMedian Gross Sales per RestaurantTotal Number of Restaurants in AnalysisNumber of Restaurant in Category Meeting or Exceeding the Average Amount Number of Restaurants in Category Meeting or Exceeding the Median Amount
1 (Gross Sales > $3,000,000)$3,408,756$3,262,952523
2 (Gross Sales $2,000,000 to $3,000,000)$2,440,547$2,439,0491055
3 (Gross Sales $1,500,000 to $2,000,000)$1,800,809$1,823,66818109
4 (Gross Sales < $1,500,000)$1,255,142$1,267,326231413

 

The chart above it splits up the restaurants based on how much they make the highest being 1 and the lowest being 4. The average gross sales of all Slim Chickens restaurants is $1.8 million. The lowest gross sales are $901,510 and the highest is $4 million.

 Many of the restaurants are in the lowest category which is meeting or making less than $1.5 million. This doesn’t look promising for future franchise owners especially if you are just getting started. It may take you a few years to earn back your investment and it might be quite difficult to earn a spot in the top tier.

 Slim Chickens Units Opened and Closed

Systemwide Outlet Summary

Outlet typeYearOutlets at the Start of the YearOutlets at the End of the YearNet Change
Franchised20185056+6
20195659+3
20205978+19
Company-Owned20181620+4
20192023+3
20202311-12
Total Outlets20186676+10
20197682+6
20208289+7

 

The net change is positive for the franchised units and the company-owned net change is positive except for the year 2020. Also, there are many more franchised outlets than company-owned outlets. This is a good sign because Slim Chickens focuses more on the franchised outlets and growing them rather than the company-owned outlets.

slim-chickens-person

 

 

How much do the owners of Slim Chickens make?

 

Slim Chickens LLC’s Income statement

Slim Chickens Development Company, LCC — Statement of Operation — For the Years Ended January 3, 2021, December 29, 2019 and December 30, 2018

 202020192018
Revenues   
Franchise development fees$765,045$697,822$1,380,000
Royalty fees$5,594,368$3,7,95,159$3,206,642
Advertising fund contributions$2,331,290$1,720,991
Other revenue$274,184$354,194$395,383
Total revenues$8,964,887$6,568,169$4,982,025
    
Operating expenses   
Payroll and related expenses$3,502,723$2,628,189$2,400,423
Management fees$1,513,357$1,196,080$999,891
Professional fees$343,864$186,447$247,312
Travel$432,076$722,196$526,835
Marketing services and other fees$567,462$580,883$562,632
Office expenses$179,356$178,845$155,338
Advertising$1,691,657$1,639,799$2,487
Depreciation$70,869$75,880$76,705
Other$263,462$221,926$249,970
Total operation expenses $8,564,826 $7,430,245 $5,221,593
    
Income (loss) from operations$400,061$(862,076)$(239,568)
    
Other income (expense)   
Interest income$36,288$33,254
(Interest) expense$(63,091)$(470,630)$(699,012)
Total other expense$(26,803)$(437,376)$(699,012)
    
Net Income (loss)$373,258$(1,299,452)$(938,580)

The income statement above it shows they have a loss of net income until 2020. Their revenue costs are the same as their operating expenses as of 2020 and before their revenue was less. This is a red flag where they are barely making anything that could lead to closure. Their operating expenses are very expensive and it’s increasing as time goes on.

 

Slim Chickens Cash flow

Slim Chickens’ Development Company, LLC — Statement of Cash Flows — For the Years Ended January 3, 2021, December 29, 2019 and December 30, 2018

 202020192018
Cash flows from operating activities   
Net income (loss)$ 373,258$ (1,299,452)$ (938,580)
Adjustments to reconcile net income (loss) to net cash provided (used) by
operating activities
   
Depreciation$ 70,869$ 75,880$ 76,705
Amortization of deferred financing costs$ 10,100$ 2,525
(Gain) loss on disposal of property, plant and equipment$ (1,012)$ 3,110
Changes in operating assets and liabilities   
Receivables$ (564,265)$ (135,603)$ (52,429)
Receivables- related parties (including advertising fund)$ (720,372)$ (2,681,379)$ 178,987
Prepaid expenses$ (3,186)$ (5,323)$ 4,805
Accounts payable$ (13,609)$ 116,134$ 40,351
Accounts payable- related parties$ 322,689$ 51,005$ (47,434)
Accrued expenses$ 507,730$ 270,874$ (193,471)
Accrued interest payable$ 738$ (14,469)
Deferred franchise development fees$ 1,442,589$ 790,478$ {525,000)
Net cash provided (used) by operating activities $ 1,415,429 $ (2,821,755) $ (1,450,431)

 

   
Cash flows from investing activities   
Net change in restricted receivables$ (21,941)$ (7,417)$ 30,248
Net change in due to affiliates$ 50,000$ 733,874$ (733,874)
Net change in advertising fund payable$ (206,300)$ 168,294
Purchase of property, plant and equipment$ (3,459)
Purchase of certificate of deposit$ (3,000,000)
Redemption of certificate of deposit$ 3,000,000
Proceeds from sale of property, plant and equipment$ 8,000$ 18,868
Net cash provided (used) by investing activities$ 3,032,600$ (2,479,843) $ (516,464)

 

   
Cash flows from financing activities   
Contribution from parent$ 12,880,198
Decrease in bank overdraft$ (133,653)$ (9,147)
Net proceeds from (payments on) line of credit$(5,677,475)$ 2,252,420
Proceeds from issuance oflong-terrn debt$1,500,000
Payments on notes payable$ (48,733)$ (1,582,529)$ (120,607)
Payments on other debt$(750,000)
Net cash provided (used) by financing activities $ (48,733) $ 6,236,541 $ 2,122,666

 

   
Net increase in cash and cash equivalents and restricted cash$ 4,399,296$ 934,943$ 155,771
    
Beginning of year – Cash and cash equivalents and restricted cash$ 1,090,714$ 155,771
    
End of year – Cash and cash equivalents and restricted cash$ 5,490,010$ 1,090,714$ 155,771

 

   
Supplementary disclosure of cash flow information   
Cash paid during the year for interest$ 62,353$ 485,099$ 155,771

 

   
Supplementary disclosure of noncash transaction   
Conversion of promissory notes$ 3,975,000

The chart above shows the net income of Slims Chickens which was negative in 2018 and 2019 and then became positive in 2020. Since 2020 Slim Chickens has had $5.49 million in cash. The majority of the cash they have is from investing which increased significantly in 2020 which before was negative. In 2019 they were able to have cash at the end because of a parent contribution in which the parent donated $12.88 million. This is not a great indicator to buy a franchise from Slim Chickens since they just recently started making money and although they do have a lot of cash most of it comes from investments, not themselves.

Are you thinking about investing in Slim Chickens, or interested in exploring more options? Make sure to check out Vetted Biz’s website for listings of other similar franchises in the restaurant industry.

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