Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

  • Anytime Fitness
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  • Menchie's
  • Orange Leaf Frozen Yogurt
  • Planet Fitness
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Franchise Chatter Guide: America’s Pizza Franchises Vying for a Slice of the Pie

by Franchise Chatter on March 31, 2014

in Franchise Chatter Guides, Pizza Franchises



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Don't Invest in a Franchise Until You Check Out This List

Americans have a love affair with pizza. Italian immigrants brought it to big city America in the early 20th century, but the food really took off as a staple of our eating out budget when American GIs brought a craving for pizza home with them after serving in Italy during World War II.

Since then pizza and pizza restaurants have experienced consistent — and seemingly recession proof — growth. Here are a few noteworthy statistics on pizza consumption:

  • A whopping 93 percent of Americans eat pizza at least once per month.
  • The average American eats 46 slices per year (that’s an average of 350 slices per second!).
  • In a Gallup survey of American families with children 18 and under, 68 percent reported that they have pizza as part of their special occasions.
  • Children ages 3 -11 prefer pizza out of all lunches and dinner selections, according to a Gallup poll.

With those kinds of numbers, it makes sense that pizza restaurants make up nearly 20 percent of all restaurants in the nation. Recent data shows that pizza store openings have increased by an average of 13 percent per year since 2011 and comprise about 10 percent of all restaurant openings.

Americans have not let the sluggish economy deter them from eating restaurant-quality pizza, especially if they can take it out or get home delivery. However, statistics do show that we are seeking better quality and maybe even more creativity for our money.

According to recent research by the Chicago-based food industry consulting firm Technomic, 34 percent of diners reported they were willing to pay more for gourmet ingredients on their pizzas, and 33 percent of the respondents said they were interested in trying innovative toppings (up from 13 percent two years earlier).



The Technomic study, which is part of its Pizza Consumer Trend Report, also found that 41 percent of American pizza consumers would like their pizzerias to offer healthier ingredients, such as whole wheat crusts, organic toppings and organic crusts, all-natural ingredients and locally-obtained ingredients.

In addition, results from a PMQ Pizza Magazine survey show that 86 percent of pizza customers prefer to choose their own pizza toppings rather than order a pre-selected set of ingredients.

The nation’s largest pizza chains are responding to this customized trend with offerings ranging from goat cheese and fennel sausage toppings to jalapenos and pickles, and from gluten-free crusts to flatbread.

To make things convenient for customers, most franchises now offer the ease of online ordering and payment for carry-out and deliveries, with the top chains reporting that digital orders are behind about 40 percent of their sales.

In addition to being on the forefront of online ordering, pizza franchises are looking more and more to using social media for their marketing strategies. Since many customers now search online for recommendations on blog sites or on Facebook or Twitter before making a pizza order, pizza franchises are finding social media sites to be an important way to reach new customers.

According to a recent study by Technomic, almost 20 percent of survey respondents said price, coupons or discount promotions influenced their pizza purchases.

Today, franchised pizza chains command a 60 percent share of the nearly $40 billion U.S. pizza market. If you are considering being part of this popular sector, here is a breakdown of some of the nation’s top franchisors:

Domino’s

Domino's Pizza Photo by Rasidel Slika

Founded: 1960
Began Franchising: 1967
Headquarters: Ann Arbor, Michigan
Main products: pizza, pasta, sandwiches
Number of locations: 10,000
Number of franchises: 9,600
Startup costs: $119,950 to $461,700

Domino’s Pizza began in 1960 when brothers Tom and James Monaghan paid a $75 down payment and borrowed $900 to purchase a small pizza place in Ypsilanti, Michigan, near Eastern Michigan University. Within a year James traded his half of the business to his brother so that he could buy a used Volkswagen Beetle. In 1965 Tom Monaghan renamed his business Domino’s Pizza, Inc., and the first franchised store opened in 1967 in Ypsilanti.



Tom Monaghan’s original plan was to add a new dot to the company domino logo with every new store, but as the chain rapidly expanded, he had to abandon that idea.

In 2010, Domino’s recreated its pizza with a new sauce, a different crust and different cheeses to rave reviews. Today Domino’s — the company dropped the word “Pizza” from its red and blue logo to reflect its menu diversification in 2012 — has more than 10,000 stores worldwide and is the recognized world leader in pizza delivery.

Why Domino’s?: Domino’s has thrived on the consistency of its product and therefore takes its training for franchisees very seriously. Before you open your first location you are required to complete a six-week training program at a company training center. The program includes leadership, best practices, computer operations, human resources and financial analysis.

Domino’s, which also offers ongoing training and support to franchise owners, offers franchise fee discounts to women, minorities and veterans.

Pizza Hut

Pizza Hut by Rommel66

Founded: 1958
Began Franchising: 1959
Headquarters: Plano, Texas
Main products: pizza, pasta, wings
Number of locations: 14,357
Number of franchises: 5,555
Startup costs: $300,000 to $2.2 million

The granddaddy of them all, Pizza Hut was started when two brothers, Frank and Dan Carney, borrowed $600 from their mother to purchase some used equipment and to rent a small building on a busy intersection in their hometown of Wichita, Kansas. Today, Pizza Hut is owned by Yum! Brands, the parent company of A&W Restaurants, KFC, Long John Silver’s and Taco Bell, and it has locations throughout the world.

Why Pizza Hut?:  In recent years, Pizza Hut has focused more on smaller stores for the lucrative carry-out and delivery market. As an industry leader and trend-setter, Pizza Hut experiments with new products frequently, including changing its crusts and toppings and pricing strategies. Recently, Pizza Hut added a range of fire-baked flatbread pizzas to its menu, a $10 any-topping large pizza, and a $10 Dinner Box, which includes a medium rectangular one-topping pizza, five breadsticks, and 10 cinnamon sticks.

Papa John’s

Papa John's Pizza Photo by JillOW

Founded: 1984
Began franchising: 1986
Headquarters: Louisville, Kentucky
Main products: pizza, wings, chicken poppers
Number of locations: 4,200
Number of franchises: 2,476
Startup costs: $115,000 to $500,000

Founder John Schnatter began by delivering pizzas from a remodeled closet at the back of Mick’s Lounge, his father’s Jeffersonville, Indiana tavern. Today, Schnatter — known for his trademark red shirt and his slogan “Better Ingredients. Better Pizza. Papa John’s” — is the CEO of a publicly-held company that has about 4,200 Papa John’s restaurants in all 50 states and 35 countries.

In 2002, Papa John’s became the first pizza chain to make online ordering available to all of its U.S. customers. In addition to ordering dinner, patrons can view specials, print out coupons, purchase or reload a gift card and arrange catering on the chain’s website.

Why Papa John’s?:  Papa John’s has a strong incentive program for U.S. franchisees, including no franchise fees, a free set of ovens, food credits and zero royalties during the first year in business. Papa John’s is big on custom pizzas and delivers on a simple premise of using fresh, quality ingredients to bake a good pizza quickly.

Papa Murphy’s

Papa Murphy's Take 'N' Bake Pizza Photo by lindsayloveshermac

Founded: 1981
Began Franchising: 1982
Headquarters: Vancouver, Washington
Main products: take-and-bake pizza
Number of locations: 1,380
Number of franchises: 1,320
Startup costs: $215,905 to $378,421

Papa Murphy’s is the company Terry Collins created by merging Hillsboro, Oregon-based pizza Papa Aldo’s and Petaluma, California-based chain Murphy’s Pizza together in 1995. Now the fifth largest pizza chain in the country, Papa Murphy’s has been owned by Lee Equity Partners since 2010. Papa Murphy’s has carved out an impressive niche for itself by creating custom pizzas that patrons take home and bake themselves. Customers can order in person, by phone or online.

Why Papa Murphy’s?:  Since Papa Murphy’s features a take-and-bake concept, the stores require less equipment and less space — which means less start-up costs — than other pizza chains. In addition, some states allow Papa Murphy’s pizzas to be purchased with EBT or food stamps.

CiCi’s Pizza

Cici's Pizza Buffet Photo

Founded: 1985
Began Franchising: 1987
Headquarters: Coppell, Texas
Main products: pizza, pasta, salad buffet
Number of locations: 650
Number of franchises: 474
Startup costs: $370,000 to $625,000

At a time when many chains are focusing on delivery and carry-out, CiCi’s has created a successful pizza buffet concept that especially appeals to budget-conscious families who want to eat out. Founded by Joe Croce and Mike Cole in 1985 in Plano Texas, CiCi’s has expanded to 34 states.

Customers can make selections from an all-you-can-eat buffet of 28 varieties of pizza, pasta, salads and desserts. This growing chain has the benefit of four revenue streams: the custom buffet, catering, to-go orders, as well as a game room.

Why CiCi’s?:  CiCi’s is in the midst of its “Build the Brand” financing and incentive program to add 500 new restaurants by 2020. As part of the program, CiCi’s has allocated $5 million to provide select qualified multi-unit franchisees with the funds to open a minimum of five restaurants.

Marco’s Pizza

Marco's Pizza Photo by s_kessler

Founded: 1978
Began Franchising: 1979
Headquarters: Toledo, Ohio
Main products: pizzas and subs
Number of locations: 380
Number of franchises: 279
Startup costs: $179,500 to $349,000

Native Italian Pasquale “Pat” Giammarco, set out in 1978 to create an authentic Italian pizza chain with Marco’s Pizza. Although the chain has changed hands since then, Pat’s sauce recipe, use of dough that is made fresh daily and pledge to deliver within 30 minutes still remain with the company.

Marcos offers franchisees specific training in applying PEP — Pizza Evaluation Process — which includes guidelines on making the dough and sauces, on applying its three-cheese blend and toppings and even on making sure the pizza is the correct distance from the edge of the tray.

Why Marco’s?:  Marco’s is on the fast track. The chain has doubled in size in the past five years and hopes to hit the 500-store mark by mid-2014. Marco’s success is based on the consumer who is willing to pay a bit more to get what it calls “Ah!thentic Italian Pizza.”

Little Caesars

Little Caesars Pizza Photo by The Salvation Army St. Louis

Founded: 1959
Began Franchising: 1962
Headquarters: Detroit, Michigan
Main products: carry-out pizza
Number of locations: about 6,800
Number of franchises: about 4,825
Startup costs: $221,000 to $654,000

Famous for its catchphrase “Pizza! Pizza!” which was introduced in 1979, Little Caesars Pizza started out 20 years earlier in a Garden City, Michigan strip mall. The original store, which was first named “Little Caesars Pizza Treat,” is still open today. Although they later streamlined the menu, co-owners Mike and Marian Ilitch first sold pizzas in a single long package as well as hot dogs, chicken, shrimp and fish.

Starting in 2004, the chain launched its successful “Hot-N-Ready” promotion — a large pepperoni pizza sold for $5 — which is now a permanent fixture of the menu. It also has a Deep! Deep! Dish pan pizza for $8, launched in 2013 and a new $5 deep dish and Pepsi lunch combo.

Why Little Caesars?:  Little Caesars remains a family-owned business that is still headed by its founders. The chain has been innovating in the pizza industry, introducing drive-through windows at some locations and developing a pizza conveyor oven to speed up production. Its biggest mark has been in expanding pizza to the lunch market, in effect helping pizza complete with burgers for a fast meal.

And here’s an up and comer in the industry to keep an eye on:

Toppers Pizza

Toppers Pizza Photo by marbinski

Founded: 1991
Began Franchising: 2000
Headquarters: Whitewater, Wisconsin
Main products: pizza and bread sticks
Number of locations: 53
Number of franchises: 49
Start-up costs: $302,000 to $528,500

Toppers Pizza goes against the flow of the bigger chains by offering specialty pizzas with unusual toppings, such as oven roasted potatoes, mac n’ cheese and French fried onions as well as breadsticks with dipping sauce flavors such as chocolate bacon, chipotle ranch and cinnamon.

Founder Scott Gittrich learned about the pizza business from the ground up by working as a delivery driver for Domino’s while he was a student at the University of Illinois in 1984. After working his way up in the company to director of operations for a group of Domino’s franchises, Gittrich decided to open his own pizza restaurant in 1991.

Why Toppers? Toppers has developed a loyal client base by polling customers on their preferences. The chain is popular among the 18- to 34-year-old age group and targets this millennial market by staying open late — 3 a.m. or later — to accommodate late night business.

Potential Problems

Purchasing a pizza restaurant franchise can be a good business opportunity. With a pizza franchise, you are buying an established, well-known brand and a loyal customer base. You also receive marketing support while maintaining some independence as a business owner.

However, there are a few potential cons to owning a franchised pizza business. First, fresh pizzas rely on a constant supply of fresh produce for toppings, wheat and other ingredients for dough, meats and cheese that are subject to frequent and wide fluctuations in price.

In addition, keep in mind that as patrons demand items such as whole wheat crust or fresh Roma tomatoes, your supply costs could go up dramatically. Of course, you can charge customers more for specialty pizzas, but be careful you do not get stuck with an overabundance of costly perishable items, such as goat cheese, for example.

Another potential pitfall is the cost of pizza ovens. You may be tempted to purchase used equipment, but unless the previously-owned ovens come with a warranty, you may be headed for trouble. Talk to your franchisor about a possible lease arrangement for new ovens.

Finally, be sure to check with your franchisor about delivery requirements. Offering pizza delivery means added costs in terms of vehicles and insurance as well as added staff and training. Make sure you know what you are getting in for.

Consumers have shown that even during a sluggish economy, fresh pizza is a good value for their money. As pizza franchises respond and adapt to consumer lifestyle and taste trends, this industry should continue to experience growth and long-term profitability. Is it time for you to get your slice of the action?



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