Who would have thought that a hot dog cart established in the streets of Manhattan, New York, in 1990 would turn into a globally recognized franchise empire serving Halal-certified Mediterranean flavors?
In a span of only three decades, Halal Guys have grown to be the leader of the American Halal Segment after they opened to franchising in 2014. Currently, they have 100 stores and over 400 restaurants across the globe, but their success doesn’t stop there. They’re still looking to expand with potential franchisees committed to upholding the brand of the company.
To open a Halal Guys franchise, one must have restaurant industry experience and a working capital worth $1,000,000 and a net worth of $1,550,000. The total investment ranges from $370,150 – $1,317,550 depending on the location and other factors.
If you think you’re ready for a contract, then prepare to pay $60,000 for the initial franchise fee, which is much higher than other food franchise opportunities. Halal Guys has been recognized as a profitable opportunity but don’t get too excited yet because there’s more you’ll need to know about the total costs. In this article, I will do the math and help you make an informed decision. Take our franchise quiz to find out if this is the right opportunity for you.
- Who is the owner of Halal Guys?
- How many employees does Halal Guys have?
- What’s the Business Plan for Halal Guys?
- How Much Does the Halal Franchise Cost in the UK?
- Financial Requirements and Fees
- Average Sales/Revenue per Year
- Halal Guys Franchise Facts
- How Much Profit Does a Halal Guys Franchisee Make Per Year?
- Advantages of Franchising Halal Guys
- Challenges of Franchising Halal Guys
- Is the Halal Guys Franchise right for you?
Who is the owner of Halal Guys?
Halal Guys is the brainchild of three Egyptian founders who saw the gap in the market in the boroughs of Manhattan, New York. Abdelbaset Elsayed, Mohammed Abouelenein, and Ahmed Elsaka started selling authentic halal food to Muslim taxi drivers. Eventually, they caught the attention of non-muslim customers who craved “new and exotic tastes, textures, and flavors”.
How many employees does Halal Guys have?
A lot! Halal Guys is a brick-and-mortar restaurant that employs 51 to 200 people per location. Employees consist of restaurant staff, cook, restaurant manager, shift manager, assistant manager, cashier, retail assistant manager, and customer service associate helping hand in hand to offer famous platters of chicken and gyro over rice, falafel sandwiches, crave-able sauces, and more. Depending on the position, a halal guy employee may earn $15 to $17 per hour. Halal Guys require above average staff levels to keep output fast.
What’s the Business Plan for Halal Guys?
Halal Guys appeals to the market with its halal-certified Mediterranean food as they thrive on the tagline, “We are different.” At the time Halal Guys was established, it was hard to find halal food in Manhattan, New York City. As a result, the co-founders decided to stop selling hot dogs and to switch to halal rice platters and gyro sandwiches.
Halal Guys gained phenomenal success as patrons spread the word of their brand, promoting them to a cult favorite. In 2014, they signed a deal with a franchise development group called Fransmart, paving their way to becoming one of the fastest-growing food chains in America.
The street food concept is the unique point of the business. From a single food cart, it grew into a food empire that has a remarkable presence in the domestic and global market. To preserve the authenticity of a fast lane atmosphere where it began, they introduced a restaurant design concept that mimicked an urban environment.
The ordering system at this restaurant is similar to Chipotle: step up to the counter, choose a dish, and let the staffer assemble it. The establishment itself has an open design so the customers can see how their orders are prepared and be assured that they are consuming food that is fulfilling, tasty, and, most importantly, safe.
Halal Guys has not strayed from its original purpose. They did not give up the halal feature of their products despite capturing the attention of non-muslim customers. Notably, their addictive white sauce had people keep coming back for more.
The franchise model is crucial to the goal of the company to remain as America’s leader of the Halal Food segment and grow further. One of the qualities they’re looking for in an investor is the ambition to develop multiple stores.
They have set the required net worth to almost $2,000,000 to ensure they are financially capable of contributing to their vision and brining in franchisees with the financial means to open more than one unit. Though franchisees will have the right to operate the branch and use everything that comes with it, they will not have the creative freedom to introduce a novel concept.
How Much Does the Halal Franchise Cost in the UK?
Below is an overview of the fees that you will have to pay to gain the right to operate a Halal Guys franchise in the United Kingdom. But first, let me clarify some of the financial terms you’ll come across in this part.
- Liquid capital – (also known as cash required) refers to the entire amount of cash you have available and could access without a traditional loan.
- Net worth – refers to the value of all your non-financial and financial assets minus the value of all your outstanding liabilities.
- Total investment – is the total capital or the total money you will need to put into the franchise over time to get it up and running.
- Franchise fee – refers to the amount you must pay to the franchisor to use its brand and resources.
|Initial Franchise Fee||$65,000|
|Total Investment||$315,000 to $926,000|
|Multi-Unit Development Fee||$650,000 international fee paid upfront (10 unit minimum required)|
|Royalties||6% of Gross Sales|
The initial franchise fee of Halal Guys in the UK is $5,000 more than the general initial franchise fee, but the total investment is cheaper here. Investing in the UK will save you $55,000 to $391,550. Here’s the catch though: if you are going to sign the Multi-Unit Development Agreement, you must develop at least 10 units. That’s $65,000 dollars each!
All in all, you will have to pay $650,000 for the Multi-unit development fee. On top of that, you have to secure 6% of your gross sales for the Royalties, 1% of gross sales for the local store marketing, and 2% of gross sales for the Worldwide Creative Fund.
Financial Requirements and Fees
Moving on to the domestic setting, here is an overview of the financial requirements that you need to have and the fees that you need to pay when you decide to operate this franchise.
|Total Investment||$370,150 to $1,317,550|
The Initial franchise fee within the country is only $60,000 but compared to the investment done in the international setting, it is more expensive here. Nonetheless, the minimum requirement of locations to develop in the U.S area is fewer.
You are only expected to develop at least 5 units and the good news is that you only need to deposit 50% of the initial franchise fee for each additional unit. The Multi-unit development fee, then, is at least $180,000. You will still pay other miscellaneous fees: 6% of gross sales for royalties, 2% of gross sales for the Worldwide Creative Fund, and 1% for the local store marketing.
Average Sales/Revenue per Year
|System-wide Annual Sales||not disclosed|
|Average Annual Sales Per Unit||$8,000,000 (as of 2019)|
|Average Franchise Profit||$1,898,117|
Halal Guys is the world’s leading and best American Halal Food Restaurant and America’s one of the fastest-growing restaurant chains. The performance of the franchises was not disclosed in the Franchise Disclosure Document but based on the financial statements from the 2019 FDD, a Halal Guys franchise can make as much as $8,000,000 a year and earn $1,898,117 profit from it.
That’s about 23.72% of the total earnings. If we’re going to consider the fact that the average profit margin of restaurants is 3% – 6%, then the franchise profit would be around $240,000 to $480,000 only. As you can see, the profit margin reported in the FDD is much higher than a typical franchise.
Halal Guys Franchise Facts
Despite the economic crisis brought by the COVID-19 pandemic, the demand of halal food remained strong in the mainstream market. In fact, the Compound Annual Growth Rate (CAGR) of the Halal food Market size is 4.3% and by 2026 is expected to reach $1,679,900,000.
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Halal Guys has won over customers in the domestic and global setting with its unique street food concept. The mouth-watering Mediterranean-inspired halal menu, and of course, its phenomenal and addictive white sauce deserve a lot of credit. Halal Guys didn’t have to try so hard to market its products because their patrons themselves have been doing it for them through word of mouth.
Here are some of the achievements and awards of Halal Guys:
- Hottest News Franchises by Entrepreneur Magazine in 2017
- The Future 50 Fastest-Growing Companies by Restaurant Business in 2017
- The Halal Guys’ chicken and gyro platter is NYC’s most legendary street food
- Rank #7 on Fast Casual’s 2020 Top Movers and Shakers Award
Halal Guys started as a single food cart, a hotdog food cart, in the streets of Manhattan, New York, in 1990. After the co-founders signed a franchise development agreement with Fransmart, they rapidly grew into the world’s largest American halal food chain with over 400 locations across the globe.
How Much Profit Does a Halal Guys Franchisee Make Per Year?
According to a financial statement from the 2019 FDD, a halal guy franchisee can earn a profit of $1,898,117 from $8,000,000 worth of total revenue. That is 23.72% of the total earnings of the restaurant. The average profit margin for a restaurant is actually 3-6%.
Keep in mind that the numbers presented in this paragraph do not necessarily represent the overall performance of Halal Guys. The profitability of Halal Guys depends on several factors. It could be the expenses of the restaurant, the effectiveness of the marketing strategy, the location, the demand for the products themselves, and more.
Advantages of Franchising Halal Guys
One of the apparent advantages of becoming a Halal Guy franchisee is the multiple possibilities of success. As a franchisee, you are expected to develop at least 5 units of this established brand. This opportunity entails exciting benefits, and their details are as follows:
Secure patrons for your restaurants.
Halal Guys has already built a loyal customer base because of its reputable dishes that they have come to love. It was able to rise to fame and achieve phenomenal success as one of the fastest-growing franchises because of the recommendations of the people who have tasted their legendary products. The brand name is already enough to draw customers depending on where you plan to open.
Play-safe marketing blueprints.
Doing trial-and-error methods can be risky especially when you’re just about to launch your business. Halal Guys saves you from this hassle by providing you with proven branding, trusted suppliers, a successful menu, and many more.
Access to Entrepreneurial Support from the Franchisor.
Halal Guys is committed not only to the development of the company but also to the success of every member of its franchising community. As a franchise owner, you may achieve operational efficiency and increased business value by participating in the comprehensive training and support system designs that the company designed for you.
The support includes but is not limited to: (1) marketing and brand building, (2) training for franchisees, managers, and employees, (3) operational, project management support, (4) business consulting, and many more.
Challenges of Franchising Halal Guys
Although Halal Guys has been known for its halal-certified Mediterranean cuisine is not exempted from the challenges that any restaurant would face. Poor management and incompetent customer service are a possibility, and so is seeing negative reviews posted about the food on the internet. Below are some of the challenges you may encounter as a franchisee.
Commitment to the Projects.
Halal Guys seeks to partner with visionary entrepreneurs who are willing to develop multiple territories once they sign the franchise agreement. Though raising at least five units is a part of your journey as a franchisee, it may be difficult to stay committed. Success doesn’t happen overnight, so you will need a lot of patience, dedication, and determination to achieve your goals. Don’t join this or any franchise unless you’re ready to go all in.
Aside from the $1+ investment you’ll likely need to make to start operating a franchise, you have to secure certain percentages of your gross sales to pay the ongoing fees. You can calculate the expenses of your business as accurately as you want but you can never precisely predict how much you would need to allocate to keep it running without compromising of profit too much.
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Profit Margin Challenges.
As mentioned above, the average profit margin of owning a restaurant is only 3% to 6%. One way that Halal Guys became more profitable than other Halal carts in the area is that they buy supplies directly from the supplier and cut out middle-man expenses whenever possible. Although the Halal Guys has strong margins, you will need to make sure to cut down on food and labor waste as much as possible.
Is the Halal Guys Franchise right for you?
Halal Guys Franchise is definitely not a budget-friendly investment, but it can be worth the risk if you’re prepared to take it. If you have a working capital of $1,000,000 and a net worth of $1,550,000 then you’re ready for a contract.
Running a restaurant is a high-risk investment, and operating multiple branches of it can be a real challenge, but if that has always been your ambition and you are up for it, then there’s no reason for you to doubt yourself anymore.With their humble beginnings in selling halal food to Muslim taxi drivers in 1990, it has thrived in recent years.