How Much Does 85 Degrees Bakery Franchise Cost?

Last Updated on April 25, 2024
Written by CPA Alec Pow | Content Reviewed by CFA Alexander Popinker

With its artisanal beverages, visually stunning pastries, and distinctive café branding, 85 Degrees Bakery has carved out a growing niche in the flourishing bakery and specialty coffee franchise industry. The Taiwan-based franchise is widely recognized for elevating typical coffee shops through its commitment to premium ingredients, inventive food and drink presentations, and exceptional customer service.

In this article, we’ll break down the necessary startup expenditures including franchise licensing fees, build-out and renovation expenses, required equipment purchases, and operating capital needed to launch an 85 Degrees Bakery franchise. You’ll also learn about the recurring franchise royalties and marketing fees owed based on gross sales revenue once up and running.

How Much Does 85 Degrees Bakery Franchise Cost?

The total initial investment to open a new 85 Degrees Bakery franchise location currently ranges between $350,000 to $600,000, occasionally exceeding $1 million for premium real estate markets like Manhattan. The main components making up these startup costs include:

Franchise Licensing Fee – $40,000 to $50,000 for the rights to use the company’s branding, logos, recipes, and proprietary operations systems.

Real Estate Selection & Café Build Out – $200,000+ for purchasing or leasing appropriate real estate, renovations, permits, architect fees, and construction costs to complete the interior café buildout according to franchisor-approved design specs. Buildout costs in urban areas often top $300,000 – $500,000.

Furnishings, Equipment & Signage – $75,000 to $150,000+ for all décor, custom millwork, espresso machines, ovens, refrigerators, point-of-sale systems, and external signage/displays sporting the 85°C branding.

Technology Systems & Software – $10,000 to $20,000 for computer hardware, security equipment, loyalty program software, inventory management systems.

Inventory & Initial Food/Beverage Supply – $20,000+ for adequately stocking food ingredients, bakery items, coffees/teas, cups, and packaging required at opening.

Working Capital – $50,000+ for operating funds to cover costs until the café reaches break-even sales.

While 85 Degrees may offer some financing assistance, multi-unit discounts, and exclusive territory incentives to established franchisees, most commonly, investors should budget having at least $250,000 – $500,000 in liquid personal capital to secure prime real estate and complete their café buildout.

The initial investment required to open an 85 Degrees Bakery franchise is estimated to be $35,000 or more, according to DrFranchises. This estimate includes the cost of shop rent, furniture, inventory, and the initial franchise fee, which is about $15,000.

The ongoing costs associated with owning an 85 Degrees Bakery franchise include royalties, marketing fees, and local advertising fees. The royalty fee is 5% of the bakery’s weekly net revenues, while the marketing production fund is 1% of the bakery’s weekly net revenues.

85 Degrees Bakery Café Overview

85 Degrees Bakery founder Wu Chen opened the first bakery café location in 2004 in Taipei, Taiwan, drawing from his training in French pastry techniques to create inventive baked goods with a delicate, airy texture. Signature menu items also included premium coffee drinks brewed at the ideal temperature of 85 degrees Celsius – hence the aptly chosen brand name.

The bakery’s visually stunning pastries, colorful beverage presentations, and exceptional quality quickly earned acclaim. 85 Degrees debuted in the United States with its first franchise storefront in Irvine, California in 2008. Since then, the brand has expanded to over 250 locations worldwide across 12 countries including the U.S., China, Philippines, Australia, and the United Kingdom.

Franchise owners have the benefit of building on this established brand identity and enthusiast customer base while introducing 85°C’s innovative fare to eager new neighborhoods. Now let’s examine the investment requirements.

Why Franchise with 85 Degrees Bakery?

For both new entrepreneurs and existing restaurant investors, 85 Degrees Bakery offers a polished, proven franchise business model with compelling advantages:

• Strong Established Brand– 85°C has built substantial brand awareness and loyalty among bakery café patrons. New franchisees can leverage existing brand equity rather than building from scratch.
• Turnkey Franchise Setup– As a full-fledged franchise chain, 85 Degrees provides end-to-end support including real estate selection, initial training, marketing launch strategies, food sourcing, and even international expansion assistance to multi-unit owners.
• Sleek Retail Design– The bakery’s open, modern interior design featuring woody tables, accents of metal and marble, and prominent menu displays helps convey a sophisticated yet approachable environment suited to metropolitan areas.
• Innovative Product Offerings– Unique menu items like honey cheese bread, sea salt cream-topped beverages, and purple yam pastries help differentiate 85 Degrees from mainstream coffee chains and independent cafés trying to compete on product uniqueness.
• Ideal Urban Locations– 85 Degrees focuses heavily on high-traffic urban areas near offices and colleges to ensure steady foot traffic and target their core Millennial and Gen Z demographic.

For aspiring restaurateurs seeking a polished franchise business model with corporate support, established supply chains, and built-in demand, 85 Degrees Bakery provides a turnkey opportunity in the flourishing bakery café space.

Ongoing Franchise Operating Expenses

Beyond the substantial one-time startup costs, franchise partners must also factor in recurring monthly franchise obligations and operational expenses including:

8% Royalty Fee – Franchisees pay an ongoing royalty fee equal to 8% of their café’s gross sales to the franchisor. This compensates the company for administrative and support services.

2% Marketing Contribution – Additionally, 2% of gross revenues must be contributed into a marketing fund used for broader brand and advertising campaigns.

Rent – Monthly or annual real estate lease/mortgage payments. Typical cafe spaces often run $8,000 – $15,000 per month.

Payroll – Based on staffing requirements and hourly wages in compliance with local minimums. Managers may earn $45,000 – $60,000 annually or more.

Food & Beverage Supplies – Cost of goods sold fluctuates based on sales volume but typically ranges from 25% – 30% of revenue.

Insurance, Utilities & Services – Allocate approx. 10% – 15% of gross sales to cover business insurance, electricity, waste management, and other professional services.

Accurately forecasting revenues versus ongoing franchise obligations ensures sufficient capital to cover recurring overhead.

Training and Support Provided

85 Degrees provides an extensive 4-6 week long initial training program for franchise partners and their management teams at the California headquarters:

• Operations Training– Review in detail all café operating procedures from inventory systems to opening/closing routines and managing payroll, staffing levels, and vendor accounts.
• Product Preparation Instruction– Hands-on training in beverage preparation, bakery techniques and taking customer orders to ensure quality standards.
• Soft Service Openings– Shadow an experienced opening team at an established high-performing location during the final two weeks to gain first-hand insights.

Ongoing support includes:

• Proprietary digital operations manuals and video tutorials
• Access to new product development initiatives
• Social media marketing assets and grand opening launch materials
• Advertising promotions and merchandising calendars
• Operations consulting and quality assurance audits

The extensive corporate training resources help set each franchise unit up for success.

Site Selection Assistance

Finding the optimal location that maximizes traffic and sales for a new 85 Degrees Bakery franchise requires specialized real estate expertise. The company dedicates full-time real estate specialists to help identify and secure ideal locations based on:

• Neighborhood demographics like residential density, worker populations, and average household incomes
• Proximity to high-traffic drivers like office towers, universities, entertainment complexes, high-density residential buildings, and proximity to pedestrians and mass transit access points
• Composition of neighboring tenants and anchor businesses that attract significant foot traffic
• Parking availability, visibility to passing vehicles, and ease of access for picking up mobile orders or deliveries
• Competitive analysis of other bakery-cafés within a 3–5-mile radius
• Impact of traffic patterns, area roadways, and visibility for branding exposure

The right retail site selection makes all the difference for a food and beverage franchise to realize its sales potential. Franchisor approval and ongoing assistance provides valuable local market insights.

Financial Performance & ROI

According to 85 Degrees Bakery’s Franchise Disclosure Document, the average annual unit sales across all currently open franchise locations are:

• Year 1: $800,000+
• Year 3: $900,000+

Given these strong gross sales, the chain boasts an impressive 13.5% profit margin for established locations based on their financial disclosures. However, individual franchisee profitability depends heavily on accurately projecting sales for the respective area, tightly controlling operating expenses, securing favorable lease terms, and effectively managing inventory and waste.

Sufficient working capital reserves to cover operating losses during the first year and slower winter months is highly recommended when budgeting. But overall, the 85 Degrees Bakery financial performance numbers definitely indicate a profitable business model, especially for experienced multi-unit owners.

Legal and Regulatory Requirements

As franchise partners, 85 Degrees Bakery owners must closely adhere to all terms and obligations stipulated in the franchise agreement, which governs use of the company’s branding, marketing tactics, protected service areas, renewal clauses, and termination policies. Deviating from the agreement can lead to forced closure and damages.

Additionally, bakery-café franchise businesses must comply with all relevant federal, state, and local government regulations regarding food service, labor laws, public health policies, business licensing, and accessibility codes. Proper legal and accounting guidance is highly recommended.

Current Cafe Market Trends

85 Degrees Bakery competes in the rapidly expanding bakery-café segment, which saw 5% sales growth from 2016-2021 according to IBISWorld research, benefiting from consumers’ growing desire for photogenic, customizable food and drink options with a focus on quality ingredients.

Top competitors occupying a similar niche include growing Asian bakery-café franchises like Paris Baguette, Argo Tea Café, and Tous Les Jours. However, 85 Degrees Bakery’s highly photogenic menu items and sleek, design-focused store aesthetic help differentiate them from mainstream coffee chains as well as less social media-friendly independent bakeries. Continuing menu innovation and exceptional customer service are very important to maintaining brand distinction in an increasingly crowded food service landscape.

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Making the Decision on Franchising

Potential Advantages of Ownership:

• Strong consumer awareness and loyalty to an established lifestyle bakery brand
• Turnkey operations franchise model with extensive corporate training support
• Prime target urban territories focused on high-traffic, high-density areas
• Unique menu items attracting social media photo shares and word-of-mouth buzz
• Unit economics showing strong average annual sales exceeding $800k

Risks and Drawbacks to Consider:

• Substantial minimum capital investment of $350k – $600k+ required upfront
• Financial risks of securing costly real estate in competitive metro areas
• Ongoing 5-10% royalties and fees payable on gross sales regardless of profitability
• Relies heavily on brand identity and limited menu offerings

For qualified entrepreneurs, 85 Degrees Bakery represents an exciting venture into a growing bakery-café niche. But the substantial financial undertaking requires thorough diligence.

Final Words

In summary, 85 Degrees Bakery offers a specialized franchise opportunity for business-minded investors attracted to the exploding artisanal bakery-café category, which aligns with larger dining trends toward highly Instagrammable foods and premium ingredients.

The brand’s polished aesthetic, built-in customer demand, and franchisor training support provide a strong foundation off which new franchisees can build and innovate. Careful financial planning and cost control is imperative.

For those able to secure prime urban real estate in their market and effectively operate their 85 Degrees Bakery café, the concept shows strong revenue generation potential between $800,000 to $1,200,000+ in annual unit volumes.

If you possess the requisite capital and vision, 85 Degrees Bakery is worth exploring as an exciting bakery-café franchise investment play riding high on broader industry tailwinds. But always enter the endeavor informed on the financial realities and risks involved.

Frequently Asked Questions

How many locations does 85 Degrees bakery have?

As of 2022, 85 Degrees Bakery has over 250 franchise locations open worldwide, across 12 countries including prominent footholds in the United States, China, the Philippines, Taiwan, Singapore, Australia and the United Kingdom.

Why do they call the bakery 85 degrees?

The brand name refers to the optimal water temperature of 85 degrees Celsius (185 degrees Fahrenheit) used by founder Wu Chen to handcraft premium coffee drinks. Their logo highlights 85°C to signify precision culinary craftsmanship.

What is 85c?

85°C is the brand logo commonly used for the franchise to signify the optimal 85-degree Celsius water temperature they use to prepare their signature coffee, espresso and tea drinks. This precise brewing temperature ensures the highest quality standards.