How to Finance a CAO Bakery & Cafe Franchise: Cuban Bakery Costs
By Anthony Cornella
A CAO Bakery & Cafe franchise loan funds a full-service Cuban bakery and coffee counter: ovens, display cases, an espresso station, a build-out sized for long hours and steady foot traffic, and the working capital to staff it all. For buyers who know the South Florida bakery tradition, it is a chance to bring that format to a new neighborhood with an established playbook behind it.
This article covers the costs CAO publishes, how its royalty and marketing fees affect cash flow, the formats it offers, its SBA Franchise Directory status and the financing structures that typically fit a bakery cafe.
US Professional Funding is not affiliated with, sponsored by or endorsed by CAO Bakery & Cafe; the name is used only to describe the business. Figures from the franchisor’s materials and disclosure document can change, loan programs and terms vary by lender and borrower, and every loan is subject to lender review and approval. Nothing here is legal, tax or investment advice; review the current Franchise Disclosure Document (FDD) and franchise agreement with a qualified franchise attorney and accountant.
CAO Bakery & Cafe Franchise Loan at a Glance
- Initial franchise fee: $40,000, payable when the franchise agreement is signed, according to CAO’s franchising website.
- Royalty: 5% of the prior month’s gross sales.
- Marketing fund: 2% of the prior month’s gross sales.
- Estimated initial investment: $365,800 to $698,000, as published by the franchisor.
- Formats: inline retail centers, stand-alone or drive-thru buildings, and kiosks in venues such as food halls, stadiums and airports.
- Training: about five weeks before opening, plus up to two weeks of on-site opening assistance.
- SBA Franchise Directory: listed (code S8701), with a note about the lease addendum when real estate secures the loan.
What Is CAO Bakery & Cafe?
CAO Bakery & Cafe is a Cuban bakery and cafe concept from South Florida. The company says the name honors the Cao family, whose baking traditions span three generations, and that CAO also stands for “Cuban American Original.” The brand was founded by Antonio (Tony) Cao and Carlos De Varona, childhood friends from Hialeah, Florida, who opened the first stand-alone, 24-hour CAO location in late 2015.
The company describes its mission as modernizing the neighborhood bakery: Cuban baked goods alongside cafecito and coffee drinks. Its locations are concentrated across Miami-Dade and Broward counties, in neighborhoods such as Pinecrest, Kendall, Coral Way, Fort Lauderdale and Hollywood.
Why lenders view CAO the way they do. A bakery cafe combines retail food service with production baking, so it is more equipment-intensive than a coffee shop and more labor-intensive than many quick-service formats. Lenders look closely at the owner’s food service experience, the site’s traffic and parking, and whether projections reflect early-morning and all-day dayparts realistically. Because most of CAO’s history is in South Florida, lenders entering a new market will lean on the operator’s background and the franchisor’s support.
CAO Bakery & Cafe Franchise Costs
Initial franchise fee. CAO’s franchising website states that the initial franchise fee is $40,000, due upon execution of the franchise agreement. The company says the fee covers an exclusive territory, site selection and lease negotiation guidance, planning assistance, owner and manager training, on-site assistance and the operations manual.
Real estate and build-out. Costs vary with the format and, as the franchisor notes, with size per square foot. An inline unit in a retail center usually means leasehold improvements to a shell space, while a stand-alone or drive-thru building can mean ground-up construction or a full conversion. Bakery production needs adequate electrical service, ventilation, plumbing and floor drains, which can drive build-out costs. Our article on restaurant build-out financing explains how lenders fund these improvements.
Equipment. Expect deck or convection ovens, proofers, mixers, sheeters, refrigeration, display cases, espresso machines and point-of-sale technology.
Opening costs and working capital. Opening inventory, pre-opening payroll during training, grand opening marketing and an operating reserve round out the budget.
Total investment. CAO publishes an estimated total investment of $365,800 to $698,000. The franchisor’s website does not break that total into line items, so request the Item 7 table in the current FDD. Typical Item 7 categories for a bakery cafe include:
- Initial franchise fee
- Leasehold improvements or construction
- Kitchen, bakery and beverage equipment
- Furniture, fixtures, signage and decor
- Technology and point-of-sale systems
- Opening inventory and supplies
- Training expenses, deposits, licenses and professional fees
- Additional funds for the initial operating period
Where a figure on the franchisor’s pages shows as blank or zero, treat it as a placeholder and rely on the FDD instead.
Ongoing Fees and How They Affect Your Loan
Royalty. CAO charges a continuing royalty of 5% of the prior month’s gross sales.
Marketing fund. Franchisees contribute 2% of the prior month’s gross sales to the marketing fund.
Other costs. Check Item 6 of the FDD for technology, transfer, renewal and remodel obligations.
How lenders factor these costs in. Together, royalty and marketing take 7% of gross sales before rent, labor, ingredients and debt service. Lenders build those percentages into monthly projections and then test whether the bakery covers its loan payments with a cushion, which is why a realistic sales ramp matters for a CAO Bakery & Cafe franchise loan.
Franchisor Requirements for New Owners
CAO’s franchising pages do not publish a minimum net worth or liquid capital figure, so ask the franchisor for its current financial qualifications and confirm them in the FDD. Based on its published process and support, expect:
- Application and review: an online application followed by discussions with the franchise team.
- Training: roughly five weeks of classroom and on-the-job training, held at least 30 days but not more than 45 days before opening.
- Opening support: up to two weeks of on-site assistance around opening.
- Site approval: help with scouting, site selection and lease negotiation, plus exterior and interior design guidance.
Ways to Own a CAO Bakery & Cafe
A new inline or stand-alone bakery. Most new owners will open a new unit. Financing covers the fee, build-out, equipment and working capital, and lenders underwrite on projections and experience. Our franchise start-up financing page explains the structure.
A drive-thru or owned building. Where an owner buys the land or building, real estate financing becomes part of the package, and the SBA directory note discussed below applies.
A non-traditional kiosk. Kiosks in food halls, stadiums or airports usually involve smaller build-outs but venue agreements that lenders will review closely.
Buying an existing franchise. As franchised units mature, resales may become available, letting lenders underwrite actual results. See our article on buying a franchise resale.
Financing Options for a CAO Bakery & Cafe Franchise
SBA 7(a) loans. Because CAO is on the SBA Franchise Directory, an SBA 7(a) loan can combine the franchise fee, build-out, equipment and working capital in one loan, and can include real estate.
SBA 504 loans. For a stand-alone or drive-thru building the owner will occupy, an SBA 504 loan can finance land, construction and long-lived equipment. Our article on franchise real estate financing compares the options.
Conventional term loans. Experienced operators with strong liquidity may use a conventional business loan, especially for later units.
Equipment financing. Ovens, proofers, mixers, refrigeration, display cases and espresso equipment can be financed separately, preserving cash. See restaurant equipment financing and leasing.
Working capital and lines of credit. Early-morning baking means payroll and ingredient costs start before the doors open, and pre-opening training adds labor before revenue. A working capital loan or line of credit covers that gap. Learn more about restaurant working capital.
Seller financing on resales. When buying an existing unit, a seller may carry part of the price; any seller note is typically subordinate to the senior lender, and SBA rules may limit its terms.
SBA Loans for CAO Bakery & Cafe Franchisees
SBA lenders generally require a franchise brand to appear on the SBA Franchise Directory before making an SBA-guaranteed loan to one of its franchisees. CAO Bakery & Cafe is listed under code S8701, which means its franchise agreement has been reviewed for SBA eligibility. Each borrower must still qualify on credit, cash flow and collateral.
What the directory note means. The listing says that when the real estate where the franchise business is located will secure the SBA-guaranteed loan, the Addendum to Lease may not be executed. In plain English, the note indicates that CAO’s franchise documents include a lease addendum for franchisees who lease their sites. If you own the property and pledge it as collateral, there is no third-party lease to amend, and that addendum should not be signed as part of an SBA loan closing. Your lender and attorney will confirm which documents apply.
The SBA 7(a) program maximum is currently $5 million, though program rules can change. Use our SBA loan calculator for early planning estimates, which are not an offer or approval.
Application tips. Bring the full FDD, the franchise agreement, a site plan or letter of intent, contractor bids, equipment quotes and monthly projections that include the royalty and marketing fund.
How Lenders Evaluate a CAO Bakery & Cafe Deal
Personal credit and financial history. Expect a review of credit, tax returns and a personal financial statement, plus a personal guarantee.
Net worth and liquidity. Lenders want to see your equity injection and reserves after closing.
Industry and management experience. Restaurant, bakery or hospitality management experience is a major factor for a bakery cafe.
Business plan and projections. Build in morning, lunch and afternoon traffic, labor for early baking shifts and ingredient costs.
The FDD and franchise agreement. Lenders review fees, the term, renewal and transfer rights, and any franchisor financing in Item 10. Our explainer on how lenders read a Franchise Disclosure Document covers the key items.
Site and lease or real estate. Lenders look at the lease term relative to the loan, visibility, parking and drive-thru stacking where relevant.
Historical financials for resales. For an existing unit, lenders compare point-of-sale reports with tax returns.
Bakery Equipment and Build-Out
A CAO unit is part bakery, part cafe. Production equipment such as ovens, proofers, mixers and sheeters has long useful lives and can support its own financing, while the build-out must handle heat, ventilation and utilities for baking, so obtain firm contractor bids before closing.
Multi-Unit Growth and Development Agreements
CAO offers an exclusive territory with each franchise, and owners who want several units should ask whether a development agreement is available. Lenders typically finance a second or third bakery after the first shows stable results, often combining cash flow from existing units with projections for the new one. Ask the franchisor about development schedules before committing to multiple sites.
Real-World Scenarios
A restaurant manager opening an inline unit. An experienced manager leases an end-cap in a busy retail center, uses an SBA 7(a) loan for the fee, build-out and equipment, and keeps a working capital reserve for the first months.
A drive-thru on owned land. An investor-operator buys a pad site and finances land and construction through an SBA 504 loan, with equipment financed separately, and no lease addendum is signed because the real estate secures the loan.
A kiosk in a venue. An owner opens a kiosk in a food hall with a smaller build-out, financing equipment and working capital and reviewing the venue agreement with the lender.
Common Mistakes to Avoid
- Underestimating bakery utility and ventilation build-out costs
- Forgetting the 7% of sales that goes to royalty and marketing
- Skipping a working capital reserve for pre-opening training and early baking shifts
- Relying on figures from the franchisor’s website without checking the FDD
- Signing a lease shorter than the loan term
- Misunderstanding the lease addendum rules when real estate secures the loan
For more pitfalls, read the restaurant loan mistakes that cost owners the most.
Next Steps to Finance Your CAO Bakery & Cafe Franchise
Step 1: Request and review the FDD. Study fees, Item 7 and the franchise agreement with a franchise attorney and accountant.
Step 2: Choose a format and site. Pick inline, stand-alone, drive-thru or kiosk, and work with the franchisor on site selection.
Step 3: Gather bids and build projections. Get contractor and equipment quotes and model sales, labor, ingredients and all fees.
Step 4: Talk with a financing specialist. Compare SBA 7(a), SBA 504, conventional and equipment options for your CAO Bakery & Cafe franchise loan.
Step 5: Apply, close and train. Submit your documents, close the loan and complete training before opening.
CAO Bakery & Cafe Franchise Loan FAQs
How much does a CAO Bakery & Cafe franchise cost?
The franchisor publishes an estimated total investment of $365,800 to $698,000. Confirm the current range in Item 7 of the FDD.
What is the CAO franchise fee?
CAO’s franchising website lists a $40,000 initial franchise fee, due when the franchise agreement is signed.
What royalty does CAO charge?
A continuing royalty of 5% of the prior month’s gross sales, plus a 2% marketing fund contribution.
How much liquid capital or net worth do I need?
CAO’s franchising pages do not publish a minimum, so ask the franchisor and check the FDD. Lenders will also require an equity injection and reserves.
Can I get an SBA loan for a CAO Bakery & Cafe franchise?
Yes, the brand is listed on the SBA Franchise Directory, so a CAO Bakery & Cafe franchise loan can be reviewed under SBA programs. Each borrower must still qualify.
Can I finance bakery equipment separately?
Yes. Ovens, mixers, refrigeration and espresso equipment can be financed or leased separately from the main loan.
Can I buy the building instead of leasing?
Yes, where a stand-alone or drive-thru site is available. SBA 504 or 7(a) financing can include real estate, and the directory note on the lease addendum applies.
Does CAO offer financing?
Check Item 10 of the current FDD for any franchisor financing. Most owners arrange their own loans.
Can a first-time owner get a CAO Bakery & Cafe franchise loan?
It is possible if the franchisor approves the candidate, but lenders weigh food service management experience heavily for a bakery cafe.
How long is the franchise term?
The term and renewal rights are set out in Item 17 of the FDD. Lenders compare the remaining term with the loan term.
What documents do I need?
Tax returns, a personal financial statement, the FDD and franchise agreement, a site plan or lease, contractor and equipment bids, and monthly projections.
Does the FDD include financial performance information?
Review Item 19 of the current FDD to see whether it includes financial performance representations.
Final Thoughts
A CAO bakery brings an established South Florida format to a new market, but it is a production-heavy business that needs a solid build-out, the right equipment and enough working capital to reach steady sales. Buyers who verify every figure in the FDD, choose the right format and match financing to it give themselves the strongest start.
US Professional Funding helps franchise owners finance start-ups, build-outs, equipment, real estate and working capital. Learn more about our franchise financing and restaurant financing solutions.
