🍟 3/21/24 – A Convenience Store For….Metal? (50% Gross Margins)

FRANCHISE OF THE WEEK

Metal Supermarket

Fast Facts

Background

  • HQ: Toronto
  • Founded in 1985, franchising since 1987
  • Metal supermarkets is a supplier of industrial metals, including aluminum, stainless steel, hot or cold rolled steel, and more 

Franchise Fees

Financial Overview

  • The below table discloses revenue information on 52 franchised stores in 2022 (no net profit / EBITDA data is shared in the FDD)

The Wolf’s Take 🍟

Okay I know what you’re thinking…this is a *boring* franchise 🥱. And hey, you may be right. After all, not many people grow up wanting to be in the sheet metal supplying business. 

But this is The Wolf Report, where sexy doesn’t always win. The numbers for Metal Supermarkets relative to the investment are pretty phenomenal. And there’s more to this business:

  • B2B customer base
  • Average invoice value of $361.09 in 2022
  • Average gross profit of $1,106,657 (aka ~49% margin) in 2022
  • Can open a unit in an industrial park (much less expensive real estate)
  • Narrow focus on one product that allows for exceptional service

Businesses from many industries – such as construction, repair manufacturing, food processing, etc. have various use cases for sheet metal. 

While I’m no expert on sheet metal, I’d bet the niche focus of this business means there’s limited competition. 

Sure you can buy sheet metal at Home Depot, but there’s a huge difference in buying wholesale from the experts who will handcraft what you need, versus a big box retailer that sells 10k+ SKU’s.

I truly believe businesses like this aren’t at hundreds of locations, simply because many people don’t want to run a “boring” business. 

If you’re simply looking for good 4 wall economics, this could be a good one to look into!

Resources

FROM THE POD

Lucas Mitchell – Five Guys

This was a super fun conversation with return guest, Lucas Mitchell.

Lucas shares how he acquired 5 Five Guys units via SBA loans and raising $700k, and has built that initial portfolio into 20 restaurants and counting!

Check out our conversation here.

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