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FDD Talk 2015: The PizzaRev Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on April 21, 2015

in Fast Casual Restaurant Franchise, FDD Talk 2017: Food Franchises, Franchise Earnings, Pizza Franchises



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PizzaRev Line

In this FDD Talk 2015 post, you’ll learn the following:

  • Section I – Background information on the PizzaRev franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a PizzRev franchise, based on Item 7 of the company’s 2015 FDD
  • Section III – Presentation and analysis of PizzaRev’s financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:
  • 2014 actual revenues, cost of goods sold, labor costs, total controllables, and total non-controllables for each of the 3 operational affiliate-owned PizzaRev Restaurants that had been in operation for at least 18 months as of December 28, 2014
  • 2014 average, high, and low revenues for the 3 operational affiliate-owned PizzaRev Restaurants that had been in operation for at least 18 months as of December 28, 2014

Section I – Background Information

PizzaRev has only been on the fast-casual pizza scene since 2012, but it continues to grow. The chain opened its 20th location in January 2015 in La Habra, Calif., and by April had 27 stores.

The Los Angeles-based pizza chain has 27 locations in five states: 20 in its home state of California, three in Utah, two in Minnesota, one in South Dakota and one in Texas. The chain will soon add two California locations in Culver City and Santa Barbara, and will expand to four new states with stores in Boulder, Colorado; Las Vegas, Nevada; Long Island, New York; and Columbus, Ohio.

Buffalo Wild Wings Connection

PizzaRev was founded in 2012 by co-CEOs Ira Zuckerman and Rodney Eckerman and was named Best New Restaurant 2013 by L.A. Daily News.



Minneapolis-based Buffalo Wild Wings has a minority stake in PizzaRev, in a 2013 partnership that was named Deal of the Year in 2014 by Franchise Times, and was PizzaRev’s first franchisee when the pizza chain started its franchising program in 2013.

The Buffalo Wild Wings connection brought the expertise and leadership of CEO Sally Smith to the restaurant-novice PizzaRev CEOs, and brought Buffalo Wild Wings the first building block in its mission to invest in emerging brands.

It also brought PizzaRev to Minnesota. Two stores opened in 2014 in Hopkins and Edina, both Minneapolis suburbs, in May and August, respectively, and more are expected to open in the Twin Cities of Minneapolis and St. Paul.

Build Your Own Pizza

PizzaRev sells 11-inch personal pizzas that customers can customize by choosing among crusts, sauces, cheeses and more than 30 toppings. Customers order in a cafeteria-type line and order their toppings like they might at a sub shop. All pizzas in each restaurant are the same price, regardless of toppings, and are ready in three minutes, baked in a 900-degree stone-hearth oven.

Gluten-free crust sauce and cheese choices are available, as well as numerous gluten-free toppings. The gluten-free crust is vegan, and PizzaRev also offers Daiya vegan cheese and more than a dozen vegetable toppings.

The “Rev It Up” station gives customers access to typical extras such as Parmesan cheese and red pepper flakes as well as sauces. The stores have touch-screen soft drink machines through an agreement with The Coca-Cola Company.

The restaurants do not offer delivery, just dine-in and carry out, but the chain’s catering service will deliver (or orders can be picked up) if arrangements are made ahead of time.

Honors

  • Ranked 15th in Fast Casual’s 2014 Top 100 Movers and Shakers. The list recognizes growing companies and people who are leaders in the fast-casual restaurant industry.
  • CNN in February 2015 named PizzaRev one of 10 brands to watch, via data collected from Czar Metrics and Bellwether Food Group. Noted were the three-minute wait for the oven-fired pizza, simple pricing, and expansion plans.

Franchise Bonanza

PizzaRev opened 13 stores in 2014 and signed agreements with a number of franchise groups:

  • January 2014: Four franchise agreements to expand the brand in Southern California and move into Utah, Nebraska, North Dakota and South Dakota.
  • May 2014: A franchise agreement to expand into St. Louis, Mo., and Austin, Texas.
  • October 2014: Five franchise agreements to expand to Boulder, Colo.; Washington, D.C.; Las Vegas; Long Island, New York; and Columbus, Ohio. At least 40 stores are planned in these markets.

In February 2015, PizzaRev signed two new franchise agreements to bring stores to Sacramento and Riverside County, California. Two San Diego PizzaRev restaurants opened in March, continuing the chain’s expansion in Southern California, and franchisee Chris Kenny plans to open four more San Diego stores.

Eye on Nutrition

PizzaRev in December 2014 launched a nutrition portal that provides complete allergen information as well as a nutrition calculator. The portal, which is optimized for mobile devices, comes from Nutritionix, an open database of nutritional information, and can be accessed via the chain’s online menu.



Revving Up with Sriracha

PizzaRev in March 2015 introduced a seasonal Sriracha Sausage pizza that was on the menu for a limited time. Sriracha sauce is among the sauces at the “Rev It Up” station where customers can kick up their pizzas a bit.

Section II – Estimated Costs

  • Please click here for detailed estimates of PizzaRev franchise costs, based on Item 7 of the company’s 2015 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2015 FDD) and Analysis



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