Franchise Costs: Detailed Estimates of Pita Pit Franchise Costs (2020 FDD)

Updated August 30, 2020.

Detailed Estimates of Pita Pit Franchise Costs Based on Item 7 (Estimated Initial Investment) of Pita Pit’s 2020 Franchise Disclosure Document

1.  Initial Franchise Fee:  $24,000 to $30,000

2.  Initial Rent and Security Deposit:  $2,400 to $10,000

• The initial start-up expenses include first month’s rent and a security deposit equal to another month’s rent, both paid in advance.

• The space needed for the Restaurant is estimated to be approximately 1,000 – 1,400 square feet.

3.  Opening Cash:  $500 to $1,000

4.  Leasehold Improvements:  $163,269 to $260,500

• These leasehold improvements typically include items such as floor coverings, interior cosmetics, plumbing, electrical work, mechanical work, general construction, architectural services, city plan fees, etc. It may include costs associated with a drive-thru if you decide to include this feature in your restaurant.

• The costs of the improvements will vary from location to location depending on landlord design criteria, contractor pricing, and the condition of the premises. There is no guarantee that your costs will fall within this range.

• If the lessor makes all necessary leasehold improvements, it is possible that such costs will be included in or added to the monthly lease payment, and no front-end out-of-pocket expenses need to be paid by you. In certain circumstances, you may be able to negotiate a tenant inducement from the landlord to offset part of these costs.

• For example, in 2019, 5 franchisees opened new Pita Pit restaurants. During lease negotiations, 3 of these 5 franchisees were able to negotiate the landlord’s payment of tenant improvement (“TI”) money, intended to offset the cost of leasehold improvements.

• The average size of these 3 restaurants was 1,800 square feet. The average TI money paid per location receiving these funds was $26,742 and has been deducted from what otherwise would have been the low-end range for Leasehold Improvements. There is no guarantee you will receive TI money.

5.  Business License:  $200 to $1,000

6.  Insurance:  $255 to $716

• You must purchase insurance coverage as required under your lease or sublease, as required by law, and as required by Pita Pit. Pita Pit requires you to participate in its insurance program through its designated broker.

7.  Store Launch and Local Marketing Program Package:  $3,300 to $4,200

• You are required to participate in the Store Launch and Daily Discipline Marketing Program which includes a grand opening marketing package. This will require you to set up your online ordering, loyalty program, and the social media rating-review aggregator. This will also require that you purchase certain printed materials.

• Printing supply costs will vary depending upon location specifics, such as whether local ordinances allow you to display an exterior A-Frame sign, banners, flags, etc. and the amount of initial stock of promotional material that you have printed.

• The Store Launch and Local Marketing Program Package will vary with the expected volume of sales and may include a banner, “Coming Soon” window graphics, A-Frame sign, sign holder, gift cards, direct mailers, car topper and wrap, various menus, sales tracker, free pita cards, various window clings, business cards, packaging, and various coupons.

• The Store Launch and Local Marketing Program Package will also include a grand opening marketing campaign to include several advertising and promotional tactics designed to create awareness and drive traffic during the store opening timeframe.

• For the sake of economy, consistency of Names and Marks, and quality control, the printed materials may only be purchased from an approved supplier.

8.  Legal and Accounting Fees:  $500 to $2,500

• Legal and accounting fees include monies needed to create your business entity (e.g. incorporation) and set up its books and records.

9.  Initial Furniture, Fixtures, and Equipment Package:  $93,613 to $141,490

• The Restaurant fixturing package includes all kitchen fixtures and equipment, including, but not limited to, walk-in cooler/freezer, chairs and tables, millwork, pita counters, exhaust hood (with fire suppression), griddle, refrigerated sandwich station and chef base, sinks, shelving, electronic cash register or electronic point of sale (POS) system, printers, kitchen display system (for locations with a drive-thru), interior and exterior artwork, murals, and signage, digital menu boards, etc. needed by you to open the Restaurant.

10.  Staff and Management Training Expense:  $1,000 to $3,200

• Expenses in connection with training will vary with the number of people trained and the distance from the training center.

11.  Uniforms and New Store Kit:  $1,243 to $1,586

• Uniforms will include unisex logoed shirts. The New Store Kit will include materials designed to promote your restaurant. It generally includes logoed banners and flags, temporary tattoos, logoed dart pens with stylus, logoed table throw, logoed magnets, logoed identification labels, logoed fitness bottles, and a marketing game.

12.  Initial Inventory Package:  $5,000 to $8,000

• The initial inventory package will depend somewhat upon the size of the initial order and size of the store. Such considerations as shipping time, season, store room size, and other factors dictate the size of the initial inventory.

13.  Additional Funds (for 3 months):  $25,650 to $31,500

• This is an estimate of your initial start-up expenses for the first 3 months of operation. It includes payroll, supplies, online/cellular ordering service, utilities, and ordinary maintenance.

• This estimate does not include the Continuing Fee (royalties), General Advertising Fund Fee, food and beverage costs, or your rent for months 2 and 3 (which may be $1,200 to $5,000 per month depending on your location and local vacancy rates). It does not include a franchisee’s salary.

• This estimate does not reflect any sales revenue you may earn from operations which may help you offset these expenses.

14.  Local Advertising:  1% of Net Sales of the Restaurant

• Under the Franchise Agreement, you must spend 1% of your Net Sales on local advertising each year.

15.  Laptop Computer:  $500 to $1,000

• You are required to purchase a laptop which should be brought to training at Pita Pit’s National Training Center. The laptop must meet certain minimum hardware and software specifications.

16.  Laptop Computer Monthly Software Fees:  $9 to $50

17.  Online Ordering, Gift Card, and Loyalty Program:  $495 to $640

• You are required to implement Pita Pit’s required online/cellular ordering, gift card, and loyalty program through its authorized vendors. Included in this range is your required purchase of a scanner.

18.  Totals:  $321,934 to $497,382

• The total does not include your personal living expenses, applicable taxes (including state sales and use tax which may be applicable to the Furniture, Fixtures, and Equipment, and other items required to open your Restaurant), and local advertising.

• Pita Pit has relied on its experience granting franchises in the United States to provide these estimates. There may be regional differences that it has not considered.

• If you exercise your option to sell Pita Pit’s smoothie line of products, you will have additional investment costs (estimated to range from $5,132 to $8,790).