Welcome to Franchise Breakdowns, a weekly email covering up & coming franchises to help you find the next big brand. If you’re reading this but haven’t subscribed, you can do so here:

To franchise owners,

Today’s edition highlights Angry Crab Shack and Hounds Town.

Angry Crab Shack is an asian cajun sit-down seafood restaurant founded by former NFL player Ron Lou. Lou played for the Houston Oiler’s (yup, they were a team once) in the 70’s before retiring and spending the next 35+ years in the restaurant industry. He’s created concepts ranging from breakfast restaurants to sports bars, before arriving on Angry Crab Shack in the mid 2000’s. The restaurant provides “unique seafood boil combined with bold Asian-Cajun flavors that are unique to the brand”, and some eye-opening economics despite their early stage.

Hounds Town is a fully interactive dog daycare, grooming, and boarding facility, and was founded in 2001 by Mike Gould, a founding member of the NYPD K-9 unit and commanding officer of the Nassau County Police Department. Mike’s experience with dogs is unique as he pioneered the use of canines in the police force in the early 80’s. His leadership, combined with an exploding pet industry and a concept with some promising data thus far makes it worth diving into.

On to the breakdowns👇

DISCLAIMER: DO NOT CONSIDER ANYTHING WRITTEN BELOW AS INVESTMENT ADVICE. IF YOU DECIDE TO PURCHASE A FRANCHISE, YOU MUST DO YOUR OWN RESEARCH, AND REALIZE ANY INVESTMENT MAY GO TO $0.00.

Angry Crab Shack

Background

• Franchising since 2017

• Founded in 2013 in Mesa, Arizona

• Offers dine-in, curbside pickup, delivery and catering services

Number of Units

• 15 locations open nationwide

• 13 locations in Arizona, 1 in Alabama, 1 in Nevada

• Locations coming soon in Atlanta, Fort Worth, Oak Lawn, Tucson, and West Palm Beach

Fees, Expenses (2020 FDD)

• Initial franchise fee: $50,000

• Royalty Fee: 5% of gross sales

• Brand Development Fund: currently 1% of gross sales, can be increased to 2%

Initial Investment (2020 FDD)

• $391,440 - $670,700

• The franchise website quotes a median initial investment of $497k, by using second-gen locations to reduce buildout costs

Financial Performance (2020 FDD)

• Below is the unaudited net sales, total COGS, gross profit, operating expenses, and net income for 5 affiliate owned and 1 franchised Angry Crab Shack in the Phoenix metro area that reported sales + expenses for the calendar year 2019:

The Wolf’s Take 🍟 

As you can tell, this concept has yet to be proven in areas outside of the southwest, but there’s no denying that it is thriving in the Phoenix market.

A median initial investment of $497k, combined with locations producing anywhere from $300k - $600k in net income is pretty astounding. While a sit-down restaurant definitely requires more operating expertise than your average QSR, the numbers here are downright impressive.

I for one will be watching the growth of this concept closely!

Recent Press

• 5 Best Seafood Restaurants in Mesa, Arizona

• How the Pandemic Changed Angry Crab’s Shack Design

• Angry Crab Shack Announces Agreement to Bring First Franchise to Seattle

Twitter Watch 👀

Come join the conversation on Twitter, where I’m actively talking SMB & franchising!

The Wolf of Franchises 🍟 @franchisewolf

Ask me about your favorite franchise and I'll give you my thoughts 👇

Todd Duncan @constantnewness

@franchisewolf @SeanODowd15 Any thoughts on Firehouse Subs? I almost bought in multiple times.

7:38 PM ∙ Aug 13, 2021

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Hounds Town

Background

• Started franchising in 2008

• Founded in 2001 in Port Jefferson, New York

• Offers dog daycare, grooming, boarding, and pet taxi services

Number of Units

• 18 units as of 2021

Source: Entrpreneur.com

Fees, Expenses (2020 FDD)

• Initial franchise fee: $45,000

• Royalty Fee: 6% of gross sales

• Brand Development Fund: 2% of gross sales

Initial Investment (2020 FDD)

• $265,800 - $492,500

• Leasehold improvements are $90k - $240k of the above range

Financial Performance (2020 FDD)

The below tables contain information and financial representation for 5 franchise locations and two affiliate locations that have been open for at least 12 months as of December 31st, 2019:

The Wolf’s Take 🍟 

There’s quite a variance in the P&L’s of the franchise locations, as we have a few standouts, a few mediocre performers, and 1 loser.

Location 3 and location 5 are the standouts: considering the high end of the investment range is $492k, to be earning 38% - 65% ($189k - $324k) of your investment back each year, after paying yourself an owners salary, is a great return!

The varying performances could be influenced by a number of things from the competency of the owner, location of the facility, size of the facility and associated operating expenses, etc. A few things are clear however at this early stage:

1. The initial investment is far more attractive than other daycare franchises (for instance, 1 Dogtopia franchise will cost $668k - $1.4M 😲)

2. Early data shows the potential that Hounds Town could be a great multi-unit franchise investment

As we discussed last week, given the trajectory of the pet industry, it’s worth looking at all emerging pet franchises that may benefit from the pet boom!

Recent Press

• Hounds Town Opens it’s First Location in Georgia

• The Husband & Wife Team That Left Corporate to Open a Hounds Town

That’s it for this week’s Franchise Breakdowns. Feel free to reply with any questions or feedback, or leave a comment. If someone sent this your way and you haven’t subscribed yet, you can also do that below. Thanks and see you next week!

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NOTICE REGARDING FRANCHISE INFORMATION

The Wolf of Franchises does NOT guarantee the financial performance of any franchise mentioned. The decision to purchase a licensed affiliate or franchise must be based on your own independent research. The Wolf of Franchises is not liable for any representation made by an affiliate, associate, marketing material, or Franchise Disclosure Document of a franchise with respect to real estate, financial, operations, or marketing performance of the business being acquired.

This information is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. It is for informational purposes only, and any financial data and/or projections is clearly based upon information provided by franchises in their respective Franchise Disclosure Document. The offer of a franchise can only be made through the delivery of a franchise disclosure document, from a certified seller of the brand, which The Wolf of Franchises makes no claim to be. Do not consider any information here as a guarantee of financial performance. The Wolf of Franchises has no affiliation or relationship of any kind with any of the brands covered in this newsletter, but simply provides data that is publicly available online or in Franchise Disclosure Documents.

All data from Franchise Disclosure Document’s is based on past performance, and if you were to purchase a franchise covered in the Wolf of Franchises newsletter, it is entirely possible that you lose your entire investment and go bankrupt.