Penn Station, Inc. Franchise Cost, Revenue & Review 2026
Analysis by FranchiseVerdict Research · Methodology
FranchiseVerdict summary · 2026
A Penn Station, Inc. franchise requires a total initial investment of $441K – $820K, including a $25K franchise fee. Per the latest FDD, average unit revenue was $820K[2]. SBA 7(a) loans show a 2.0% charge-off rate across 50 loans[1]. FranchiseVerdict grade: A (Strongest tier), an editorial assessment, not investment advice. Run a live ROI scan →
Data last verified
Overview
- Investment
- $441K – $820K
- 21st pct Service Resta…
- Avg gross sales
- $820K
- Net sales2nd pct Service Resta…
- Royalty
- N/A
- Units
- 322
- 35th pct Service Resta…
- SBA charge-off
- 2.0%
- % of SBA 7(a) loans not repaid · median varies by category
Quick verdict · Full-Service Restaurants · color = vs category peers
Green = favorable by >10% vs Full-Service Restaurants avg · 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 $441K – $820K including a $25K franchise fee.
- RETURNSAverage unit revenue of $820K/year (median $779K), with an estimated 15% cash-on-cash return (based on Operating Income (in dollar amounts) ... ANNUAL AVERAGE 173,674).
- RISKVerdict A (Strongest tier), verdict score 73/100 (higher is better). SBA loan charge-off rate of 2.0% across 50 loans (well below the franchise average, based on all SBA 7(a) franchise lending, 2010–2025).
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
- Incorporated in
- Ohio
- HQ
- 1226 US Highway 50, Milford, Ohio 45150
Overview
About
Franchisor of upscale, prepared-to-order East Coast style cheesesteak, submarine, and other sandwich restaurants under the Penn Station East Coast Subs brand.
- CEO
- Jeffrey J. Osterfeld
- Headquarters
- Ohio
- Founded
- 1985
- States available
- 14
Can you afford it, and what does the money buy?
Entry cost runs 46% below the typical full-service restaurants franchise.
Source: FDD · Items 5–7
FDD Item 7
Initial investment breakdown
| Cost component | Low | High |
|---|---|---|
| Initial franchise fee | $25K | $25K |
| Working capital (3–6 mo) | $10K | $21K |
| Equipment, build-out, other | $406K | $774K |
| Total initial investment | $441K | $820K |
Source: Penn Station, Inc. FDD, Items 5 and 7[2]. “Equipment, build-out, other” is computed as total minus disclosed line items above.
Item 7 · what it costs to open + operate
The Vitals
- Total investment
- $441K – $820K
- Top 40% of category vs category
- Liquid capital req'd
- $10K – $21K
- Top 40% of category vs category
- Franchise fee
- $25K – $25K
- Top 40% of category vs category
- Royalty
- Tiered monthly royalty on net sales: 0-2% on net sales <$…
- Ad fund
- 2.0%
- typical 3–5%
- Payback period
- 6.6 yrs
- From FDD / Item 19
Ongoing fees · Item 6
| Fee | Amount |
|---|---|
| Marketing / ad fund | 2.0% of gross sales |
| Transfer fee | $3K |
| Renewal fee | $5K |
What do units actually make?
Average unit sales run 54% below the full-service restaurants norm.
Reported as net sales, not gross sales
Source: FDD · 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, Inc. 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 royalty rate, 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
$646K
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 $174K as Operating Income (in dollar amounts) ... ANNUAL AVERAGE 173,674. This is a disclosed figure, not our estimate — we publish no modelled profit for Penn Station, Inc..
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, Inc. 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 royalty rate, 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 royalty rate, 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.
Financial Performance
Reported as net sales, not gross sales
- Avg gross sales
- $820K
- Per unit, per year
- Median gross sales
- $779K
- Avg operating income (in dollar amounts) ... annual average 173,674
- $174K
- Reported as Operating Income (in dollar amounts) ... ANNUAL AVERAGE 173,674 in FDD Item 19
- Cash-on-cash
- 15.2%
- Based on Operating Income (in dollar amounts) ... ANNUAL AVERAGE 173,674 / 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
- historical financial performance representation
- Sample size
- 317 outlets
- vs category median 18 · large
- Range (low → high)
- $274K→$1.9M
- Cohort dispersion (min → max)
- Reporting year
- 2025
- Fiscal year the figures cover
Compared against 805 Full-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 $820K/year in gross sales. Revenue-to-investment ratio: 1.3x.
Operator retention
System roughly stable (-0.3% 3-year CAGR) with 322 units.
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 Full-Service Restaurants averages
How Penn Station, Inc. Compares
Is the system healthy?
Source: FDD · Item 20
Unit growth
Item 20 · unit dynamics
The Growth Chart
- Total units
- 322
- Opened
- 9
- Last reporting year
- Closed
- 5
- Terminated
- 0
- Franchisor ended the franchise (per Item 20)
- Non-renewed
- 0
- Term expired, not renewed (per Item 20)
- Turnover rate
- 1.3%
- Company-owned
- 1
- Corporate units in the system
- % franchised
- 100%
- vs corporate-owned
- Net growth (3-yr)
- -0.3%
- Net unit change over 3 years
- 3-yr CAGR
- -0.3%
- Compounded over last 3 years
3-year detail · Item 20
- Opened (3yr)
- 4
- Closed (3yr)
- 4
- Terminated (3yr)
- 0
- Non-renewed (3yr)
- 0
- Reacquired (3yr)
- 0
- Franchisor bought back
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 12 · 14 states reported
The Territory Map
FDD Item 12 reports the state count, but the specific list isn't in our current data. The map will appear once we re-extract from the FDD or enough franchisee contacts are available.
14
states with franchisees (per FDD Item 12)
SBA loan performance
Government records
SBA Loan Data
Aggregated from SBA 7(a) and 504 loan disclosures, public data unique to FranchiseVerdict.
- Total loans
- 50
- Loan volume
- $19.5M
- Median loan
- $350K
- 50th percentile
- Charge-off rate
- 2.0%
- 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)
- 98.0%
- 5-yr charge-off
- N/A
- Loans approved 2021+
- Active lenders
- 19
- Defaults
- 1
- Typical loan rate
- 6.0%
- avg rate to borrowers
- vs industry
- N/A
- NAICS 7222
- Jobs supported
- 1,374
- 7.0 per loan
- Lender concentration
- 14%
- top lender's share
Borrower mix: 0% went to startups / new businesses, 100% to established operators
Vintage analysis
Penn Station, Inc. charge-off rate by loan vintage
Top lenders financing Penn Station, Inc. franchisees
Showing 3 of 19 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.
What could kill this investment?
SBA loans charge off at 2.0% — 88% 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
Litigation (Item 3)
No litigation required to be disclosed in Item 3.
Bankruptcy (Item 4)
None disclosed
Audited financials (Item 21)
Yes
Supplier relationship · Items 8 & 16
- Must buy proprietary products: Yes
- Restricted to system-approved products: Yes
What are you signing up for?
Source: FDD · 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 |
| Protected territory | Yes |
| Exclusive territoryℹ | Yes |
| Franchisor can compete | Yes |
| 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 | 60 days |
| Mandatory arbitration | No |
| Governing law | Ohio |
| Litigation count | 0 |
View Item 3 litigation summary
No litigation required to be disclosed in Item 3.
Items 10, 11
Training & Operations
- Classroom training
- 25 hrs
- On-the-job training
- 202 hrs
- Training location
- Designated Restaurant / Penn Station Corporate Office, Cincinnati, Ohio
- Ongoing training
- Required
- Site selection
- Franchisee, with franchisor consent required
- Franchisor financing
- Not offered
- Item 10
- POS system
- North Key POS system
- Operating tech stack
Items 5 & 11
Franchisor Support
Technology: North Key POS system
Frequently asked questions
Frequently Asked Questions
How much does it cost to open a Penn Station, Inc. franchise?
The total investment to open a Penn Station, Inc. franchise ranges from $441K – $820K, 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, Inc. franchise owners earn?
According to Item 19 of the Penn Station, Inc. FDD, the average gross sales per unit is $820K. The median is $779K. 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.
What is Item 19 in the Penn Station, Inc. 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, Inc. FDD and qualifies whose outlets they describe.
What is Penn Station, Inc.'s franchise failure rate?
Based on SBA 7(a) loan data, Penn Station, Inc. has a charge-off rate of 2.0% across 50 loans, meaning 2.0% 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, Inc. franchise locations are there?
As of their most recent FDD filing, Penn Station, Inc. has 322 total units in the United States, including 321 franchised units and 1 company-owned units. 9 new units were opened in the latest reporting year.
Is Penn Station, Inc. a good franchise to buy?
FranchiseVerdict rates Penn Station, Inc. as a A-grade franchise with a verdict score of 73 out of 100 (higher is better), based on our analysis of investment costs, revenue data, SBA loan performance, and growth trends. 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.