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FDD Talk 2019: Bombshells Restaurant & Bar Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

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

  • Section I – Background information on the Bombshells Restaurant & Bar franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Bombshells Restaurant & Bar franchise, based on Item 7 of the company’s 2019 FDD
  • Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Bombshells Restaurant & Bar franchise, based on Items 5 and 6 of the company’s 2019 FDD
  • Section IV – Number of franchised and company-owned Bombshells Restaurant & Bar outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD
  • Section V – Presentation and analysis of Bombshells Restaurant & Bar’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:
  • 2018 average, median, highest, and lowest gross sales for the 5 affiliate-owned Bombshells Entities restaurants (“Sample Restaurants”) that operated from October 1, 2017 through September 30, 2018 (“Reporting Period”)
  • 2018 average food cost, alcohol beverage cost, non-alcohol beverage cost, cost of goods sold, labor, and rent percentages for the 5 affiliate-owned Bombshells Entities restaurants that operated from October 1, 2017 through September 30, 2018
  • 2018 royalties, advertising assessment, POS software program fee, and mystery shopper costs for the 5 affiliate-owned Bombshells Entities restaurants that operated from October 1, 2017 through September 30, 2018

Section I – Background Information

11 Things You Need to Know About the Bombshells Restaurant & Bar Franchise

Opens Largest Location and Continues Houston Expansion

1.  In early April 2018, Bombshells Restaurant & Bar announced the opening of its largest location – in the fast-growing Houston suburb of Pearland – as part of plans to more than double the size of the chain in the Houston area. The Pearland location will be the chain’s largest Bombshells, boasting 10,900 square feet inside, 2,800 square feet on the patio outside, and seating for more than 400.

2.  In the same press release, Bombshells said that it had plans to open four more restaurants in the Houston area by early 2019. This will expand the brand’s presence to seven from three units in the Houston area, for a total of nine in Texas. The other two are in Dallas and Austin. Bombshells also has plans to expand in San Antonio and South Florida.

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3.  David Simmons, director of restaurant operations for Bombshells Restaurant & Bar, said, “With our build out, we’ll be able to surround Houston with a total of seven locations to leverage advertising, marketing and awareness.”

4.  The upcoming Bombshells locations will be roughly 8,000 square feet inside and feature 2,800 square feet patios. The four additional Houston locations are:

  • near Interstate 10 in east Houston that was slated to open in September 2018;
  • at 6888 Southwest Freeway in southwest Houston that was projected to open in December 2018. At the time of the announcement, a $1.5 million building permit for this location had been filed by Friendswood-based Tannos Construction & Development;
  • near U.S. 249 in Tomball that was scheduled to open in March 2019; and
  • in Katy. It’s projected to open in June 2019 as the company is still finalizing a site.

Named to Restaurant Business Magazine’s The Future 50 List

5.  At the end of July 2018, Bombshells Restaurant & Bar was named to Restaurant Business magazine’s yearly “The Future 50” list. “The Future 50” features the fastest-growing concepts in the country with annualized sales between $25 million and $50 million. Restaurant Business ranked Bombshells No. 21 for its combination of sales and unit growth, average unit volume, military theme, Bombshells Girls, live music, and large menu.

6.  At the time of the announcement, Bombshells mentioned that there were six restaurants in Texas with four more in development in the Houston area. This will bring the chain up to 10 units by the end of the 2019 fiscal year.

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7.  Eric Langan, president and CEO of RCI Hospitality Holdings, Inc., the parent company of Bombshells Restaurant & Bar, said, “We greatly appreciate the third party recognition this brings Bombshells. This is especially rewarding since we opened the first location only five years ago.”

Company History

8.  Bombshells Restaurant & Bar was founded in 2013 by Rick’s Cabaret International, Inc. (now called RCI Hospitality Holdings, Inc.) in Dallas, Texas. The idea for Bombshells Restaurant & Bar was conceived by Travis Reese, EVP of RCI.

9.  Reese’s grandfather piloted more than 100 missions in the Berlin Airlift following World War II. A pilot himself, Reese envisioned a place reflecting a respect for military and veterans, past and present. The brand’s servers are called “Bombshells Girls” and bring to life the timeless WW II era pin-up girls from calendars, posters, and paintings on military aircraft.

10.  A few months after opening the first Bombshells Restaurant & Bar, a second location opened in Webster, Texas. RCI Hospitality Holdings began franchising the Bombshells concept in 2015 and the brand has been growing in Texas.

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Entrepreneur’s Franchise 500

11.  Bombshells Restaurant & Bar did not rank on Entrepreneur’s 2019 Franchise 500 list.

Section II – Estimated Costs

  • Please click here for detailed estimates of Bombshells Restaurant & Bar franchise costs, based on Item 7 of the company’s 2019 FDD.

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

  • Please click here for detailed information on Bombshells Restaurant & Bar’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2016

  • Outlets at the Start of the Year:  0
  • Outlets at the End of the Year:  0
  • Net Change:  0

2017

  • Outlets at the Start of the Year:  0
  • Outlets at the End of the Year:  0
  • Net Change:  0

2018

  • Outlets at the Start of the Year:  0
  • Outlets at the End of the Year:  0
  • Net Change:  0

Company-Owned

2016

  • Outlets at the Start of the Year:  5
  • Outlets at the End of the Year:  4
  • Net Change:  -1

2017

  • Outlets at the Start of the Year:  4
  • Outlets at the End of the Year:  5
  • Net Change:  +1

2018

  • Outlets at the Start of the Year:  5
  • Outlets at the End of the Year:  6
  • Net Change:  +1

Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis

  • The average sales and certain cost information for the five affiliate-owned Bombshells Entities restaurants (“Sample Restaurants”) that operated from October 1, 2017 through September 30, 2018 (“Reporting Period”) is provided below.
  • Bombshells excluded information for the one Bombshells Entity restaurant (Pearland) that did not operate during all of the Reporting Period.

Part 1 – Sales Information for Sample Restaurants During Reporting Period

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