🍟 8/16/2021 – Angry Crab Shack And Hounds Town

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👇

Angry Crab Shack

10 Locations Later: A Look Back through Angry Crab Shack's History - Angry Crab Franchise Opportunity

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

Hounds Town

Hounds Town USA Franchise Sales Lead Wins “Pathways to Entrepreneurship” Program, Will Open Colorado's First Hounds Town USA

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

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