Penn Station East Coast Subs Franchise Cost, Revenue & Review 2026
- Investment
- $474K – $765K
- Disclosed sales
- $815K
- gross sales, not profit
- SBA charge-off
- 0.0%
- on 14 loans
Data from FDD filing + SBA 7(a) records
Analysis by FranchiseVerdict Research · Methodology
Penn Station East Coast Subs is a quick-service franchise serving grilled-to-order submarine sandwiches, fresh-cut fries, and fresh-squeezed lemonade. Franchisees run compact shops managing food prep, counter service, and staffing.
FranchiseVerdict summary · 2026
A Penn Station East Coast Subs franchise requires a total initial investment of $474K – $765K, including a $25K franchise fee and an ongoing 2.0% royalty[2]. Per the 2025 FDD, average unit revenue was $815K[2]. SBA 7(a) loans show a 0.0% charge-off rate across 14 loans[1]. FranchiseVerdict grade: A (Strongest tier), an editorial assessment, not investment advice. Run a live ROI scan →
Sources, dates and evidence
FDD issued: · Data extracted: · Last cited check: · Staleness risk: medium - issued 12 to 24 months ago; a newer filing is likely on file
Evidence: strong✓ Investment (Item 7)✓ Item 19 status✓ Units and owners (Item 20)✓ SBA loan coverage✓ Litigation (Item 3)✓ Financial statements (Item 21)✓ Franchisor identityhow this is scored7 of 8 headline figures on this page cite a page of the filing; the rest are marked “Not cited” beside the figure.
Overview
- Investment
- $474K – $765K
- 73rd pct Service Resta…
- Avg gross sales
- $815K
- Net sales14th pct Service Resta…
- Royalty
- 2.0%
- 1st pct Service Resta…
- Units
- 322
- 86th pct Service Resta…
- SBA charge-off
- 0.0%
- % of SBA 7(a) loans not repaid · median varies by category
Quick verdict · Quick-Service Restaurants · color = vs category peers
Green = favorable by >10% vs Quick-Service Restaurants median · No shading = within ±10% · Red = unfavorable by >10% · Source: FDD filings + SBA 7(a)
Data from public FDD filings and SBA records. Not financial advice. Methodology
Bottom line
- COSTTotal investment $474K – $765K including a $25K franchise fee, 2.0% ongoing royalty.
- RETURNSAverage unit revenue of $815K/year (median $771K), with an estimated 10% cash-on-cash return (based on EBITDA (in dollar amounts)).
- RISKVerdict A (Strongest tier), verdict score 93/100 (higher is better). SBA loan charge-off rate of 0.0% across 14 loans (well below the franchise average, based on all SBA 7(a) franchise lending, 2010–2025).
- GROWTHNegative: net -1 franchised outlets in the latest year (6 opened, 6 closed) (Item 20).
- OWNERS67% of franchisees own multiple units, a high repeat-buyer signal suggests strong unit economics.
Item 1 · who you're contracting with
The Franchisor
Corporate structure & franchisor financials
- Legal entity
- Penn Station, Inc.
- CEO title
- Chief Executive Officer
- Jeffrey J. Osterfeld
- CEO experience
- 1987 yrs
- Years in role or industry
- Founder active
- Yes
- Original founder still leading the business
- Incorporated in
- OH
- HQ
- 1226 US Highway 50, Milford, Ohio 45150
- Auditor
- Shriver & Company
- Audited financials
- Franchisor revenue
- $22.3M
- vs $22.6M prior year
- Management churn noted
- Frequent turnover
- Item 2 disclosed frequent executive changes
Affiliated brands
- Penn Station Realty Ltd
Other brands the franchisor or its parent operates (Item 1).
Overview
About
- CEO
- Jeffrey J. Osterfeld
- Headquarters
- OH
- Founded
- 1985
- FDD year
- 2025
- States available
- 15
Can you afford it, and what does the money buy?
Entry cost runs 28% above the typical quick-service restaurants franchise.
Source: FDD 2025 · Items 5–7
Full Item 7 breakdown18 line items
Initial investment breakdown
| Line item | Low | High | |
|---|---|---|---|
| Site Development Fee for Single-Unit Franchiseesnot refundable | $4K | $4K | |
| Territory Fee for Multi-Unit Franchiseesnot refundable | $7K | $7K | |
| Initial Franchise Feenot refundable | $25K | $25K | |
| Real Property | — | — | |
| Store Constructionnot refundable | $262K | $381K | |
| Equipmentnot refundable | $149K | $235K | |
| Opening Inventorynot refundable | $5K | $15K | |
| Telephone Depositnot refundable | $25 | $150 | |
| Insurance (per year)not refundable | $596 | $7K | |
| Lease Security Depositnot refundable | $840 | $12K | |
| Utility Depositnot refundable | $25 | $2K | |
| Additional Funds for First 3 Monthsnot refundable | $10K | $21K | |
| Site Advertising for Openingnot refundable | $0 | $10K | |
| Design Fees for Constructionnot refundable | $15K | $20K | |
| Legal Fees; Organizational Costsnot refundable | $316 | $12K | |
| Pre-Opening Interest Costnot refundable | $0 | $11K | |
| Travel, Room and Board to Attend Training Programnot refundable | $2K | $10K | |
| Permits/Licensesnot refundable | $100 | $2K | |
| Total initial investment | $481K | $772K |
Line items extracted from FDD Item 7. Ranges reflect the franchisor's stated low and high per line. Total is the sum of line-item lows / highs — actual costs may fall outside this range depending on market and build-out scope.
Item 7 · what it costs to open + operate
The Vitals
- Total investment
- $474K – $765K
- Bottom third — review vs category
- Liquid capital req'd
- $10K – $21K
- Top 40% of category vs category
- Franchise fee
- $25K – $25K
- Top 40% of category vs category
- Royalty
- 2.0%
- Tiered by sales volume · typical 6–8%
- Ad fund
- 2.0%
- typical 3–5%
- Total fee load
- 4.0%
- vs 9–13% typical
- Payback period
- 9.6 yrs
- From FDD / Item 19
Ongoing fees · Item 6
| Fee | Amount |
|---|---|
| Royalty | 2.0% of net sales |
| Marketing / ad fund | 2.0% of net sales |
| Training fee | $300 |
| Transfer fee | $3K |
| Renewal fee | $5K |
| Inventory (initial) | $5K – $15K |
| Total fee load | 4.0% of rev |
A 4.0% total fee load is unusually lean. More of each revenue dollar stays with the franchisee.
What do units actually make?
Average unit sales run 16% below the quick-service restaurants norm.
Reported as net sales, not gross sales
Source: FDD 2025 · Item 19
Single-unit · not modelled
Returns at a glance
An FDD discloses gross sales, not profit, and the operating costs that turn one into the other are in no filing. We publish no modelled return for Penn Station East Coast Subs until someone supplies them — yours, in the models below.
—
Not modelled yet
An FDD discloses gross sales, not profit. We hold no sourced figure for COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
Total invested capital · disclosed
$635K
Item 7 initial investment plus working capital, as filed — the one figure here that needs no assumption.
ROI & LBO modelsSingle-unit · 25-unit portfolio · editable
FDD-reported earnings
The FDD reports $117K as EBITDA (in dollar amounts). This is a disclosed figure, not our estimate — we publish no modelled profit for Penn Station East Coast Subs.
What one unit earns on your invested capital
Model A · Single-Unit Return
Computes unlevered return on invested capital (ROIC) for a single franchise unit, read against the 30–60% reference band · Yale SOM, Post-MBA Path Exhibit 2 (2023). Below that band a passive index fund likely outperforms; above it the franchisor has pricing power you're subsidizing.
Note: Item 19 revenue is what the franchisor discloses, and it is the top line only — gross sales are not profit. No FDD discloses the operating costs that turn one into the other, so those fields start empty and nothing is modelled until you supply them from your own lease quote, labor market and build-out budget.
Returns model · single-unit ROIC
What would one Penn Station East Coast Subs unit return on the cash you put in?
Illustrative category typicals — not sourced to any filing, survey or sample. Replace them with figures from franchisee validation calls before you rely on the output.
Unlevered ROIC · per unit
Your modelled return on total invested capital, before any debt financing.
—
An FDD discloses gross sales, not profit. We hold no sourced figure for COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
What 25 units return when you use SBA financing
Model B · Return on Equity: Debt-Financed Acquisition
Models a 25-unit portfolio acquisition financed with an SBA 7(a) loan. Shows equity IRR (your return on cash invested), DSCR (how safely the cash flow covers debt service), and the capital stack (SBA + seller + equity breakdown).
This is the “search fund” or “entrepreneurship through acquisition” scenario: you buy an existing multi-unit operator, use leverage to amplify returns, and either operate or hire management. The 25-unit size is the typical minimum for an SBA-backed franchise portfolio acquisition to pencil as a full-time income.
What “return on equity” means here: if you put in $500K of your own cash and the business generates enough EBITDA to pay down debt and grow, your equity IRR is the annual return on that $500K, including the value created when you eventually sell. Target IRR for a search fund is typically 25–35%.
Not modelled yet
An FDD discloses gross sales, not profit. We hold no sourced figure for COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
A 25-unit return is built on a per-unit EBITDA. Fill in the operating costs in Model A above and this model runs on that figure, or take the whole scenario to the full ROI workbench, where the portfolio and LBO models accept your own per-unit economics directly.
These models are for research and scenario planning only. Not investment advice. Actual results depend on your specific location, management, and market conditions. Consult a franchise attorney and accountant before signing any franchise agreement.
Item 19 · Source: 2025 FDD
Financial Performance
Reported as net sales, not gross sales
- Avg gross sales
- $815K
- Per unit, per year
- Median gross sales
- $771K
- Avg ebitda (in dollar amounts)
- $117K
- Reported as EBITDA (in dollar amounts) in FDD Item 19
- Cash-on-cash
- 10.4%
- Based on EBITDA (in dollar amounts) / investment midpoint
Gross sales are revenue before expenses — not profit. Actual owner earnings depend on rent, labor, royalties, marketing fees, and debt service.
- Item 19 type
- net sales and operating income
- Sample size
- 312 outlets
- vs category median 19 · large
- Range (low → high)
- $302K→$1.9MCited, not corroborated — printed on page 72 of the 2025 FDD. Nothing else in our record independently restates or re-derives it.
- Cohort dispersion (min → max)
- Quartile band
- $494K→$1.2M
- Bottom 25% → top 25%
- Reporting year
- 2024
- Fiscal year the figures cover
- Source filing
- FDD 2025
- Disclosed in the 2025 filing, covering 2024
- Transparency
- 10 / 10
- vs category median 4 / 10 · above
Compared against 781 Quick-Service Restaurants brands
Operator outlook
What the numbers say
Data-driven interpretation of this brand's financial disclosures, fee structure, and system trajectory.
Unit economics
Average unit generates $815K/year in gross sales. Revenue-to-investment ratio: 1.3x.
Fee burden
Total ongoing fee load of 4.0% — below the Quick-Service Restaurants median of 7.5%.
Disclosure
Transparency score 10/10 — this franchisor discloses detailed breakdowns (quartiles, segments, or cohort data). Buyers can model unit economics with higher confidence.
Operator retention
System roughly stable (+0.9% 3-year CAGR) with 322 units.
Multi-unit rate
67% of franchisees own multiple units — high repeat-buyer rate signals strong unit economics and operator satisfaction.
Source: FDD Item 19 financial performance representations and publicly filed FDD data. Past performance is not indicative of future results. Verify all figures with the franchisor and current franchisees before making any investment decision.
vs Quick-Service Restaurants medians
How Penn Station East Coast Subs Compares
Category median of published Quick-Service Restaurants brands that report the figure; the middle half spans the 25th to 75th percentile and n counts the brands behind it. Medians are used because a few very large systems pull an average far from the typical brand. Revenue is disclosed gross sales, not profit.
Is the system healthy?
Source: FDD 2025 · Item 20
Unit growth
Item 20 · unit dynamics
The Growth Chart
- Total units
- 322
- Opened
- 6
- Last reporting year
- Closed
- 6
- Terminated
- 6
- Franchisor ended the franchise (per Item 20)
- Non-renewed
- 0
- Term expired, not renewed (per Item 20)
- Turnover rate
- 0.9%
- Company-owned
- 1
- Corporate units in the system
- % franchised
- 100%
- vs corporate-owned
- Multi-unit owners
- 66.7%
- Net growth (3-yr)
- +0.9%
- Net unit change over 3 years
- 3-yr CAGR
- +0.9%
- Compounded over last 3 years
Last fiscal year · Item 20 exits and transfers
- Terminated
- 6
- Not renewed
- 0
- Transferred
- 25
- Reacquired
- 0
- Franchisor bought back
- Signed, not yet open
- 0
- 0.00 per open outlet · Item 20 Table 5
- Projected new
- 6
- Franchisor's next-year forecast
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 7 states with active franchisees
The Territory Map
Derived from franchisee contact records. Shows states with at least one current operator. Not where the franchisor is registered to sell new units (that data is re-extracting in a future refresh).
States derived from franchisee contact records (FDD Item 20). Shows states with at least one current operator on file. Full state registration data (Item 12) will appear on a future FDD refresh.
Available to sell in · Item 12
- California
- Hawaii
- Illinois
- Maryland
- Michigan
- Minnesota
- North Dakota
- Rhode Island
- South Dakota
- Virginia
- Washington
- Wisconsin
States where the franchisor is registered to sell new franchises (FDD registration filings).
Where the owners are · Item 20 owner list
97 current owners across 8 states.
- IN 53
- KY 24
- IL 13
- OH 3
- GA 1
- KS 1
- SC 1
- US 1
Counts only, from the list the franchisor prints in Item 20. Names and phone numbers are for your own due diligence and are not shown here.
SBA loan performance
Government records
SBA Loan Data
Aggregated from SBA 7(a) and 504 loan disclosures, public data unique to FranchiseVerdict.
- Total loans
- 14
- Loan volume
- $9.9M
- Median loan
- $371K
- 50th percentile
- Charge-off rate
- 0.0%
- on 14 loans · rates vary by category · see methodology
Historical SBA 7(a) lending data, not predictive of future performance. How SBA charge-off rates are calculated
- Repayment rate (PIF)
- 100.0%
- 5-yr charge-off
- N/A
- Loans approved 2021+
- Active lenders
- 10
- Defaults
- 0
- Typical loan rate
- 7.3%
- avg rate to borrowers
- Franchised industry avg
- 10.8%
- brand beats franchise avg ↓
- Jobs supported
- 530
- 5.4 per loan
- Lender concentration
- 36%
- top lender's share
Borrower mix: 29% went to startups / new businesses, 71% to established operators
Franchise vs independent — in limited-service restaurants, franchised businesses charge off at 10.8% vs 10.0% for independents — franchising is associated with 8% higher SBA default risk in this category.
Top lenders financing Penn Station East Coast Subs franchisees
Showing 3 of 10 lenders. The full breakdown — every lender, state distribution, interest rates & risk ratings — is in the SBA Lending Report below.
Explore lender portfolios on Bank Reports or regional data on State Reports.
Lender network · 7(a) + 504
SBA Lending Report
Full lending analysis for Penn Station East Coast Subs from SBA 7(a) FOIA data.
- Principal loss rate
- 0.0%
- Avg SBA guarantee
- 69%
- Avg interest rate
- 7.26%
- Lender concentration
- 35.7%
- Job velocity
- 5.4 per $100K
- NAICS benchmark
- 8.7%
- NAICS 722513
- Jobs supported
- 530
Top SBA lendersTop lender holds 36% of loans
| # | Lender | Loans | Volume | Default % |
|---|---|---|---|---|
| 1 | The Huntington National Bank | 5 | $969K | N/A |
| 2 | Citizens Bank | 1 | $392K | N/A |
| 3 | Republic Bank & Trust Company | 1 | $4.7M | N/A |
| 4 | PNC Bank, National Association | 1 | $350K | N/A |
| 5 | United FCU | 1 | $573K | N/A |
| 6 | Meridian Bank | 1 | $647K | 0.0% |
| 7 | Heritage Bank Inc | 1 | $1.5M | N/A |
| 8 | Pathward National Association | 1 | $515K | N/A |
| 9 | Comerica Bank | 1 | $80K | N/A |
| 10 | BayFirst National Bank | 1 | $150K | N/A |
Geographic failure vector
| State | Loans | Defaults | Rate |
|---|---|---|---|
| MIMichigan | 6 | 0 | -- |
| OHOhio | 4 | 0 | -- |
| NCNorth Carolina | 2 | 0 | 0.0% |
| INIndiana | 1 | 0 | -- |
| KYKentucky | 1 | 0 | -- |
SBA 7(a) lending trend
Borrower profile
Source: SBA 7(a) + 504 FOIA loan-level data, matched by FranchiseVerdict
With a 0.0% charge-off rate across 14 loans, banks have historically viewed this brand favorably for lending.
What could kill this investment?
SBA loans charge off at 0.0% — 100% below the 16.0% national norm, i.e. lower lender-observed risk.
Source: SBA 7(a) FOIA · FDD Items 3, 21
Risk analysis
FranchiseVerdict rating + FDD Items 3, 4, 8, 16, 21
Risk & Legal
Mature, stable but stagnant franchise system with declining unit count, compressed profit margins, and limited financial transparency—suitable only for operators comfortable with modest returns and patient capital.
Litigation (Item 3)
Subject: officers or affiliates. The franchisor is not a named party in these cases.
No litigation required to be disclosed
Bankruptcy (Item 4)
None disclosed
Audited financials (Item 21)
Yes · Shriver & Company
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
Item 21 audited financial statements (Exhibit I) for FYE Dec 31 2024/2023/2022 are present in the FDD but rendered as blank/image-only pages in the text extract; no figures recoverable.
Supplier relationship · Items 8 & 16
- Franchisor sells you products: No
- Kickbacks from required suppliers: Yes
- Must buy proprietary products: Yes
- Restricted to system-approved products: Yes
- Can negotiate own supplier terms: No
Score breakdown · what drove the 93 / 100 verdict
- 01MINORDeclining unit count (-0.3% YoY on 322 units) suggests stagnant or contracting system growth
- 02MINORWide royalty range (0-8%) creates unpredictable cost structure; unclear how many units hit 8% tier vs. benefit from abatement
- 03MINORNet income of $117,415 on $816,785 revenue (14.4% margin) is modest for QSR; leaves little buffer for economic downturns or underperformance
- 04MINORHigh initial investment ($473K–$765K) paired with modest average net income creates extended payback period risk
Severity inferred from the FDD text · not a regulatory classification
What are you signing up for?
Ongoing fees run about 4.0% of sales (royalty + ad fund), before rent and labor.
Source: FDD 2025 · Items 11, 12, 17
FDD Items 12, 15, 17 · continued from Risk & Legal
Contract & Territory Detail
| Initial term | 10 years |
|---|---|
| Renewal term | 10 years |
| Allowed renewalsℹ | 1 |
| Territory type | Exclusive territory |
| Protected territory | Yes |
| Exclusive territoryℹ | Yes |
| Territory radius | 1 mi |
| Online sales rightsℹ | Granted |
| Franchisor can compete | No |
| Hire a manager? | Allowed |
| Owner-operator | Required |
| Non-compete (years)ℹ | 2 years |
| Non-compete (miles)ℹ | 5 mi |
| Right of first refusalℹ | Yes |
| Transfer requires consent | Yes |
| Termination notice | 30 days |
| Termination groundsℹ | 1 |
| Curable defaultsℹ | 3 |
| Mandatory arbitration | No |
| Arbitration location | Cincinnati, Ohio |
| Jury trial waiver | Yes |
| Governing law | OH |
| Litigation count | 0 |
View Item 3 litigation summary
No litigation required to be disclosed
Items 10, 11
Training & Operations
- Classroom training
- 30 hrs
- On-the-job training
- 250 hrs
- Training location
- Cincinnati, Ohio (designated Restaurant and Penn Station Corporate Office)
- Ongoing training
- Required
- Time to open
- 4 mo
- From signing to launch
- Site selection
- franchisee
- Franchisor financing
- Not offered
- Item 10
- POS system
- North Key
- Operating tech stack
Items 5 & 11
Franchisor Support
Technology: North Key
Item 20 · call current owners
Franchisee Contacts
97 owners to call
Name · phone · city · state. Extracted from FDD Item 20
Frequently asked questions
Frequently Asked Questions
How much does it cost to open a Penn Station East Coast Subs franchise?
The total investment to open a Penn Station East Coast Subs franchise ranges from $474K – $765K, with an initial franchise fee of $25K. This includes real estate, equipment, inventory, and working capital as disclosed in their Franchise Disclosure Document (FDD).
What do Penn Station East Coast Subs franchise owners earn?
According to Item 19 of the Penn Station East Coast Subs FDD, the average gross sales per unit is $815K. The median is $771K. Important context: Reported as net sales, not gross sales. Note: this is gross revenue, not profit. Actual owner earnings vary based on location, operating costs, and management.
Who owns Penn Station East Coast Subs?
Penn Station East Coast Subs is franchised by Penn Station, Inc.. Source: FDD Item 1, 2025 filing.
What is Item 19 in the Penn Station East Coast Subs FDD?
The FDD section where a franchisor may disclose financial performance of its outlets. Disclosure is optional and formats vary; figures are typically gross sales, which is revenue before expenses, not profit. FranchiseVerdict extracts these figures directly from the Penn Station East Coast Subs FDD and qualifies whose outlets they describe.
What is Penn Station East Coast Subs's franchise failure rate?
Based on SBA 7(a) loan data, Penn Station East Coast Subs has a charge-off rate of 0.0% across 14 loans, meaning 0.0% of franchise loans were charged off. Charge-off rates are one proxy for franchise risk, though they do not capture all closures. This data comes from FOIA-sourced SBA lending records.
How many Penn Station East Coast Subs franchise locations are there?
As of their most recent FDD filing, Penn Station East Coast Subs has 322 total units in the United States, including 321 franchised units and 1 company-owned units. 6 new units were opened in the latest reporting year.
Is Penn Station East Coast Subs a good franchise to buy?
FranchiseVerdict rates Penn Station East Coast Subs as a A-grade franchise with a verdict score of 93 out of 100 (higher is better). The grade is a deterministic score built from six weighted dimensions — financial health, unit economics, unit growth, scale, legal, and transparency — then calibrated against SBA loan charge-off rates and FDD age. Transparency is one of the six, so a filing that discloses less scores lower on that dimension than one that discloses more. Our rating is based solely on publicly available FDD and government data; we recommend speaking with current franchisees before making any investment decision. This is not investment advice.
Data sourced from public FDD filings and SBA 7(a) FOIA records. Not financial advice.
For franchisors
Are you the franchisor?
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Data extracted from public FDD filings and SBA 7(a) loan disclosures (FOIA). This information is provided for research purposes only and does not constitute financial, legal, or investment advice. Verify all figures with the franchisor's current Franchise Disclosure Document before making any investment decision.