Schlotzsky’s Deli
Bottom line
- Total investment $675K – $2.3M including a $36K franchise fee, 6.0% ongoing royalty.
- Average unit revenue of $1.2M/year (median $1.1M).
- Rated STRONG with a risk score of 52/100. SBA loan default rate of 0.0% across 516 loans (below the industry average).
- System contracting at -9.5% CAGR over 3 years. Investigate whether closures are franchisor-driven (consolidation) or franchisee-driven (economics).
Item 1 · who you're contracting with
The Franchisor
Yale framework · single-unit ROIC
Returns Analysis
Pulls Item 7 (investment) and Item 19 (revenue) from this brand's FDD into the Yale unlevered-ROIC formula. Override any input to stress-test it against your own assumptions.
The model · Yale framework
What would one Schlotzsky’s Deli unit return on the cash you put in?
Unlevered ROIC · per unit
10%
Below typical band (30–60%)
Levered LBO scenario · Yale Crease Capital framing
What would 25 Schlotzsky’s Deli units return on equity?
Equity IRR · 5-yr
49.9%
7.57× MOIC
Year-1 DSCR
1.88×
EBITDA ÷ debt service
Equity required
$1.4M
on $6.9M purchase
Total debt
$5.6M
SBA $3.5M + senior + seller note
Overview
About
Franchisees operate casual-service deli restaurants serving made-to-order sandwiches, salads, and soups. Daily operations include food preparation, inventory management, staffing, customer service, and maintaining brand standards. The model requires active management of labor costs, food waste, and peak-hour coordination in a competitive quick-service market.
Item 7 · what it costs
The Vitals
Item 19
Financial Performance
Item 20 · unit dynamics
The Growth Chart
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 18 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 phone area codes (Item 20). Approximate — ported numbers may show the original state, not the franchisee's current location.
Government records
SBA Loan Data
Aggregated from SBA 7(a) loan disclosures, public data unique to FranchiseVerdict.
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
Risk & Legal
Schlotzsky's presents elevated risk due to shrinking unit count, withheld profitability data, affiliate litigation, and unclear return potential in a consolidating deli category.
Score breakdown · what drove the 52 / 100 rating
- 01MINORUnit count declining 4.6% YoY (294 units) indicates contracting franchise system
- 02MINORNo Item 19 (Net Income) disclosure prevents validation of $1.16M average revenue profitability
- 03HIGHParent company litigation involving no-poaching, data privacy, and disclosure omissions suggests governance and transparency issues
- 04MEDHigh investment range ($675K-$2.26M) paired with declining unit count and undisclosed profitability creates ROI uncertainty
- 05MINOR6% royalty on net sales is standard but unprofitable locations compound the burden
- 06MINOR20-year term locks franchisees into long commitment during brand contraction
Severity inferred from the FDD text · not a regulatory classification
FDD Items 5, 6, 12, 17 · continued from Risk & Legal
Contract & Territory Detail
Item 11
Training & Operations
Item 20
Franchisee Contacts
Phone numbers extracted directly from this brand's FDD Item 20. After purchase, you'll also receive a list of validation questions tailored to this brand.
Franchisee contacts
97 numbers
One-time purchase · CSV download · Validation questions included
FDD download
Schlotzsky’s Deli · FDD (2026) PDF