Open a Pizza Business

get into the pizza business.

Get into the Pizza Business. This is a great business to get into, and you get to eat pizza every day. Photo credit (cc) rob_rob2001

We are still working on this article.  Let us know what we’re missing!!

If America had a national food, a good case could be made that it should be Pizza.

Delivery Pizza

First, we have decided to look at the pizza shops that just sell pizzas and are not full fledged restaurants.  The concept behind the take-out or delivery pizza business is that you sell a lot of pizzas with relatively low overhead.  Most of the square footage of your store will be dedicated to the kitchen,  you will not have to pay for a dining area.  You will not have to pay the rent, you will not have to pay to furnish the dining area, you will not have to pay for staff to clean the dining area, and you will not have to pay for staff to serve the food.

Most of these places also sell high margin extras including salads, sodas, and stuff that can be prepared in the same equipment as pizza–such as wings, cheese bread, and deserts.

Like other food businesses, people want to know who is standing behind the pizza in the box.  Locally, this business is dominated by national chains Dominos, Pizza Hut, Little Caesars, Papa Johns, and some local chains like Whatta lotta pizza, Numero Uno Pizza,  and Pizza Patrón .

But there are some independent pizza shops that have made it like Valentino’s Pizza and Munchies Pizza.  And there seems to be more room for the independents to come in than say in the sandwich business.  Perhaps this is because people are loyal to a pizza if they get good quality and good value proposition.  People will stick with their favorite for years–even generations.

So let’s look at what’s involved with opening up a pizza franchise:

Dominos

This is the company that pioneered the pizza delivery concept.  You could have a pizza at your door in thirty minutes or less. Dominos Franchise site  The are looking to recruit successful franchisees form people who manage existing locations.  If you work as a manager for two years, and have $50,000 in liquid assets, you can get into their program.  This is a significantly lower net worth threshold than that of other companies.  Franchise costs are reduced if you are an “internal” franchisee.  Fees are also reduced for veterans, women, or members of a traditionally disadvantaged ethnic or racial group.

 

Pizza Hut

According to their franchise website, Pizza Hut has a high threashold for new franchisees.  They are looking for someone with at least $700,00 in net worth and $350,000 in liquid assets.  They require a two store commitment and want franchisees to have a growth plan to own at leas four stores if opportunities are available.  (This seems to refer to the full size restaurants and not the take out places, but that’s not clear from their website. )  Franchise candidates must have a strong background in the food service industry.  The initial franchise fee is $25,000 and there is a 6% royalty and a 4.5% advertising charge of of gross sales.

They estimate a start up cost around $295,000-$422,000, but since California is a high cost state you can assume that a new Hut in the golden state will be at or above the top of this range.   Imbedded in this assumption is that it will cost #175,000 for the building.  Kind-of hard to believe this is reasonable in our state.

Again, according to their website, we are not in a “growth area” and so the best way to get into a Pizza Hut will be to buy one from an existing owner, and you need to be pre-qualified by Pizza Hut to purchase a franchise.   The contact number for their franchise services is 972-338-8347 .

Little Caesars

According to their Franchise website they are expanding in Orange County.  A franchise costs $193,000-$619,000 and they are looking for someone with a net worth of at least $150,000 and at least $50,000 in liquid assets.  But they are a bit more flexible than some other chains.  They don’t require industry specific experience; and they allow partners to buy a franchise.  They have discovered  Veterans  have what it takes to become a successful franchisee.  If you have a service related disability, the cost reductions can amount to $65,000.

Papa Johns

According to their website  Papa Johns is in an expansion mode.  The franchise fee ($25,000) is waved, they wave the royalty on gross sales for the first year, and you get a free pizza oven!  They estimate that it will cost about $220,000 to start a new unit in a strip center; but this is a national number and costs are generally higher in California.  And you can invest with a partner, in which case you combined assets and experience can be used to qualify.  Thus a partner(s) could primarily be an investor and another partner could be the operator.   They require that the operating partner have significant equity in the business.   The requirements to become a franchissee or buy an existing franchise are:

  • Net worth of at least $150,000 and liquid assets of at least $50,000.
  • Good credit
  •  A background in business management–not necessarily in the food service industry.
The royalty is 5% of gross sales, and each business is required to spend 7% of gross sales on marketing.   Additionally, they require that you spend at least $9,000 on your grand opening if you are starting a new store.  They provide prospective business owners with demographic info to see if your store will be successful.  They must approve all new locations.
Non Traditional Units
They offer a low cost alternative to their stand alone units.  If you can find a good location, this could be more profitable than a regular unit.  Non-traditional units are in  malls, or large venue like a military bases or school campuses.  The franchise fee is reduced to $5,000 and the estimated start up costs can be as low as $56.000 but they go to $260,000.  Again, we are in a high cost area, so expect to be at the upper part of this range.  The marketing contribution is reduced for the nontraditional units to 25% of the traditional units.  But the minimum net worth required is greater than the traditional units ($250,000+).  This is probably because you have to qualify for a lease.
On their website it says that you should start by filling out an application, but you might want to go directly to their franchise development team franchise_opportunities@papajohns.com .

Numero Uno Pizza

Numero Uno has franchising opportunities for both full service restaurants and take out/delivery locations.  Their website does not include any information about costs or availability of a franchise.  They currently only have one Orange County location in Huntington Beach.

Pizza Patrón

http://www.pizzapatron.com/investment.cfm This is a fast growing chain that markets itself to the Hispanic community and the value oriented customer with pizzas starting at $4.99.  As they explain in their website, “[a]lthough we sell traditional American style pizza at our stores, with a few Latin-inspired exceptions, it’s the unique Latin energy surrounding our brand that separates us from our competitors.”  They have been around for over twenty years.  The estimate that it would cost, exclusive of lease expenses, between $200,000 and $273,000 to start a carryout location and $320,000-$450,000 to start a full service restaurant.

Pizza Business Education and Information

Pizza Marketplace . com

Pizza Today Magazine

 

 

(c) 2011 OCBusinessStartUp.com  Photo credit Photo Credit Photo Credit (cc) Rob_Rob2001 www.flickr.com/groups/1648795@N22/ ?link not working.