How to Finance The Cheese Steak Shop Franchise: Philly Steaks
By Anthony Cornella
The Cheese Steak Shop franchise loan typically pays for a compact sandwich restaurant built around one piece of equipment that matters more than any other: the flat-top grill where steak, onions and cheese come together to order. The brand presents itself as an authentic Philadelphia-style cheesesteak concept with more than four decades behind it, and it is now inviting new owners to open across the western states.
This article looks at financing from a borrower’s point of view: what the franchisor publishes about fees and training, what you will need to confirm in the Franchise Disclosure Document (FDD), how the brand’s SBA Franchise Directory listing helps, and how lenders size a loan for a new shop or an existing one.
US Professional Funding is not affiliated with, sponsored by or endorsed by The Cheese Steak Shop; the name is used only to describe the business. Figures from the franchisor’s disclosure document and website 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, so review the current FDD with a franchise attorney and an accountant before you commit.
The Cheese Steak Shop Franchise Loan at a Glance
- Concept: Philly-style cheesesteaks cooked on a flat-top grill, with catering, gift cards, online pickup ordering and a loyalty program.
- Initial franchise fee: $17,500, according to the franchisor’s franchise page.
- Total investment, net worth and liquidity: the franchise page shows more than one set of figures, so rely on Item 7 of the current FDD and the franchisor’s written qualification criteria.
- Royalty and marketing fees: not published on the franchise page; see Item 6 of the FDD.
- Training: a 4-week program that starts with 4 to 5 days of classroom instruction at the corporate office, followed by in-store training and up to 2 weeks of on-site help at opening.
- Time to open: typically about 6 to 12 months from signing the franchise agreement.
- Footprint: the brand’s online ordering menu lists 23 shops, all in California, and the franchisor is seeking owners from New Mexico to Washington.
- SBA Franchise Directory: listed under code S8826 with no additional notes.
What Is The Cheese Steak Shop?
The Cheese Steak Shop serves East Coast-style cheesesteak sandwiches and says it has been doing so for more than 40 years. Its franchise materials stress a few things: a flat-top grilling method, fresh ingredients, a “no-nonsense” focus on quality and a Philadelphia identity it sums up with the phrase “brotherly love.”
The 23 shops listed for online ordering are spread across the San Francisco Bay Area and Northern California, from San Francisco, Oakland and San Jose to Walnut Creek, Livermore, Roseville, Chico and Yuba City. That matters to a lender: the brand has deep roots in one region, but an owner opening in Arizona, Oregon or New Mexico would be introducing the name to new customers.
Why lenders see it as a manageable restaurant. A narrow menu and simple kitchen line keep the equipment list short. Lenders focus on the lease, labor, beef and bread costs, and how quickly a new shop builds traffic.
The Cheese Steak Shop Franchise Costs
Initial franchise fee. The franchise page lists a $17,500 franchise fee. It is only one line of the initial investment and is usually paid at signing, before a loan funds. Confirm in Item 5 when it is due, whether any part is refundable and whether reduced fees apply to additional shops.
Total investment. The franchise page gives one investment range in its summary of the numbers and a different range in its FAQ, and it does the same with the net worth and liquidity requirements. It also says costs vary with the size and location of the shop. Build your loan request from the Item 7 table in the FDD you receive and a contractor’s bid for your space.
Real estate and build-out. Most shops are leased spaces in neighborhood shopping centers and street retail. The build-out typically covers ventilation and a hood over the grill line, plumbing, electrical, flooring, a front counter, seating and signage.
Equipment. Expect the Item 7 equipment line to include the flat-top grill, refrigerated prep tables, walk-in refrigeration, a slicer, bread warmers, smallwares and a point-of-sale system tied to online ordering. The grill hood and fire-suppression system are among the costliest parts of the build-out, so have any existing hood, grease trap and walk-in inspected before you sign a lease on a former restaurant space.
Opening costs and working capital. Opening inventory, deposits and an additional-funds reserve for the first months round out the investment; treat the FDD’s estimate as a floor.
When you review Item 7, look for these line items and their ranges:
- Initial franchise fee
- Leasehold improvements and construction
- Equipment, furniture and fixtures
- Signage and decor
- Opening inventory and supplies
- Training travel and grand-opening marketing
- Security deposits, licenses and permits
- Additional funds for the initial operating period
Ongoing Fees and How They Affect Your Loan
The franchise page does not publish the royalty or any marketing fund contribution, so Item 6 of the FDD is the place to find them, along with technology, renewal, transfer and training fees. Most restaurant royalties are a percentage of gross sales, which means they come out of every sale before rent, payroll or loan payments.
Lenders build the royalty and marketing fees directly into projected cash flow, then test whether the shop can still cover debt service if sales come in lower than planned. Because beef and bread drive food cost, showing how the shop handles supplier price changes makes a stronger case.
Brand updates. A franchisee quoted on the franchise page describes a recent rebrand with a new logo and upgraded technology. When buying an existing shop, budget for any updates still outstanding.
Franchisor Requirements for New Owners
The franchisor says it looks for energetic, business-minded owners with a strong work ethic, a solid handle on personal finances and a passion for food service, and that prior business experience is a priority. Because the franchise page states two different sets of net worth and liquidity thresholds, ask the franchise team for its current written requirements before you apply for a loan.
The franchise page outlines the path in order:
- Submit a franchise application
- Complete the franchisor’s qualification review
- Meet the franchise team
- Secure a real estate deal for the shop
- Complete the legal review and sign the franchise agreement
- Finish training and prepare opening marketing
Line up financing conversations before the real estate step, so the lease you sign matches a budget you can fund.
Ways to Own The Cheese Steak Shop
A new shop. A new location is a start-up loan underwritten on projections, experience and the lease. Our restaurant start-up financing page explains how these requests are structured.
Buying an existing shop. With most units in one region, resales do come up as owners retire or relocate. The lender can underwrite real sales and expenses, though the transfer needs franchisor approval and usually a transfer fee. Learn more about financing a franchise restaurant acquisition and read our checklist for buying a franchise resale.
More than one shop. The franchisor is seeking owners across a wide western territory. An owner who plans several shops in a new market should ask how development rights, fees and opening schedules work under the FDD.
Financing Options for The Cheese Steak Shop Franchise
SBA 7(a) loans. Because the brand is on the SBA Franchise Directory, an SBA 7(a) loan can typically fund build-out, equipment, the franchise fee, working capital or the purchase of an existing shop in one package.
SBA 504 loans. The SBA 504 program is designed for owner-occupied real estate and long-lived fixed assets. It fits only if you buy the building or a condo unit for the shop; most owners lease.
Conventional term loans. Strong borrowers and existing operators sometimes use a conventional business loan instead.
Equipment financing. The grill, refrigeration, slicers, warmers and point-of-sale hardware can be financed or leased separately, which preserves cash for opening. See our restaurant equipment financing and leasing options.
Working capital and lines of credit. A new shop needs a cushion for payroll, beef and bread orders and marketing while it builds a following. Explore restaurant working capital.
Seller financing on resales. A seller may agree to carry part of the price on an existing shop. A seller note is typically subordinate to the senior loan, and SBA program rules may limit how it is structured, so raise it early.
SBA Loans for The Cheese Steak Shop Franchisees
SBA lenders generally require a franchise brand to appear on the SBA Franchise Directory before they can make an SBA-guaranteed loan to one of its franchisees. A listing does not approve any borrower.
For The Cheese Steak Shop franchise loan, the directory lists the brand under code S8826 with no additional notes. In plain English, a lender can review the franchise relationship without special addenda flagged on the directory, and the request moves on to the usual questions about you, the lease and the projections. The SBA 7(a) program maximum is currently $5 million, though program rules can change.
SBA application tips. Gather the FDD, franchise agreement, a lease or letter of intent, and bids. Add a personal financial statement, tax returns and a resume. Our SBA loan calculator can give rough payment estimates for planning; it is not an offer or approval.
How Lenders Evaluate a Cheese Steak Shop Deal
Credit, net worth and liquidity. Expect a review of your credit and tax returns, a personal guarantee and a look at the reserves you will have left after your cash injection.
Industry and management experience. Restaurant or business management experience helps, as does the franchisor’s training, which includes administrative and accounting instruction.
Business plan and projections. For The Cheese Steak Shop franchise loan, build projections around lunch and dinner traffic, catering, online pickup orders and loyalty members. Outside California, explain how you will build awareness.
The FDD and franchise agreement. Lenders look at Items 5, 6, 7, 17 and 19, the term and renewal rights and transfer conditions. See how lenders read a Franchise Disclosure Document.
Site and lease. A lease term that runs at least as long as the loan, reasonable rent for the trade area and parking for takeout customers all help.
Historical financials for resales. Expect to provide several years of profit and loss statements, sales reports and tax returns for the shop you are buying.
Multi-Unit Growth
An owner who opens a second or third shop can usually lean on the first shop’s operating history. Lenders look at combined cash flow and management depth. Our guide to multi-unit franchise financing covers how loans are sized as an owner grows.
Real-World Scenarios
A Bay Area manager buying a retiring owner’s shop. A longtime restaurant manager buys an established shop. The lender underwrites the shop’s actual sales and expenses.
A new shop in Nevada. An entrepreneur with retail management experience opens the brand’s first shop in a new city. The SBA 7(a) request covers build-out, equipment, working capital and extra opening marketing.
An existing operator adding a second shop. An owner with one established shop leases a former sandwich space nearby, finances the grill separately and funds the build-out with a term loan.
Common Mistakes to Avoid
- Building a budget from a single figure on the franchise page instead of the FDD’s Item 7 table
- Signing a lease before you know the full build-out and equipment cost
- Leaving out royalty and marketing fees when you project cash flow
- Underestimating how long a new shop takes to build traffic in a market where the brand is unknown
- Skipping an inspection of the hood, grease trap and refrigeration in a second-generation space
For more pitfalls, read the restaurant loan mistakes that cost owners the most.
Next Steps to Finance Your Cheese Steak Shop Franchise
Step 1: Request the FDD. Apply, complete the qualification review and get the current disclosure document.
Step 2: Confirm the numbers in writing. Ask the franchise team for current investment, net worth and liquidity requirements and compare them with Items 5, 6 and 7.
Step 3: Talk to a financing specialist. Learn how much you can borrow before you commit to a site.
Step 4: Choose a site and build projections. Gather a lease proposal, bids and quotes, and project sales with a realistic ramp-up.
Step 5: Apply and coordinate approvals. Keep the loan, lease, franchise agreement and training schedule in sync.
Step 6: Close and open. Fund construction, finish training and open with your reserve in place.
The Cheese Steak Shop Franchise Loan FAQs
How much does The Cheese Steak Shop franchise cost?
The franchise page shows more than one investment range and says costs vary by size and location. Use the Item 7 table in the current FDD and real bids for your site to set your budget.
What is the franchise fee?
The franchise page lists a $17,500 franchise fee.
What royalty does the brand charge?
The franchise page does not publish it. Item 6 of the FDD lists the royalty, marketing contributions and other ongoing fees.
How much liquid capital and net worth do I need?
The franchise page lists two different sets of requirements, so ask the franchisor for its current written criteria before applying for a loan.
Is The Cheese Steak Shop eligible for SBA loans?
Yes. It is listed on the SBA Franchise Directory under code S8826 with no additional notes. Each borrower still needs to qualify.
Can I buy an existing Cheese Steak Shop?
Yes, if the franchisor approves the transfer. Lenders underwrite the shop’s actual financial history, and an SBA 7(a) loan can fund the purchase.
Can a first-time owner get The Cheese Steak Shop franchise loan?
Often, yes, if you bring restaurant or management experience, a solid cash injection and a good site.
Can I finance the grill and equipment separately?
Yes. Equipment financing or leasing can cover the grill, refrigeration and point-of-sale hardware.
How long does it take to open?
Typically about 6 to 12 months from signing the franchise agreement, according to the franchisor.
Does the franchisor offer financing?
The franchise page does not describe any franchisor financing. Check Item 10 of the FDD.
Final Thoughts
The Cheese Steak Shop offers a simple menu, a modest franchise fee and decades of history in Northern California. The work of securing The Cheese Steak Shop franchise loan is in the details the franchise page leaves open: confirm the investment range, fees and qualification thresholds in the FDD, choose a site with a realistic build-out, and keep enough working capital to carry a new shop until local diners discover it.
US Professional Funding helps franchise owners and buyers finance start-ups, acquisitions, equipment and working capital. Learn more about our franchise financing programs and our restaurant financing solutions.
