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

by Franchise Chatter on January 25, 2016

in FDD Talk 2017: Food Franchises, Franchise Earnings, Sandwich Franchise

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Pita Pit Photo by FRUGGL

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

  • Section I – Background information on the Pita Pit franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Pita Pit franchise, based on Item 7 of the company’s 2015 FDD
  • Section III – Presentation and analysis of Pita Pit’s financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:
  • 2014 average, high, and low net sales, food cost percentage, labor cost percentage, and rent for the 66 Pita Pit franchised restaurants that voluntarily provided specific information to the franchisor in response to a survey
  • 2014 actual and average net sales, food cost percentage, labor cost percentage, and rent for the original 3 corporately developed, owned, and operated Pita Pit restaurants, one of which is a national training center

Section I – Background Information

Healthy Menu, Healthy Growth for Pita Pit

The increased focus on healthy dining options is benefitting Pita Pit, which surpassed 500 locations in 2014 and has been one of the fast-growing U.S. quick-service restaurant chains. It ranked No. 123 in Entrepreneur’s Franchise 500 list for 2015.

Pita Pit provides an alterative to typical fast-food restaurants in its Lebanese-style pitas, which feature grilled meats along with vegetables, cheeses and sauces rolled up into a pita. Customers can also get the pitas “fork-style,” served as a salad, and skip the carbs and calories.

An advantage for the chain is that while many restaurants have been adding and promoting healthier, lower-calorie menu items, Pita Pit started out on the healthy side and has marketed itself in that light from the start.

Company Turned 20 in 2015

Pita Pit was founded by Nelson Lang in Ontario in 1995 and opened its first American location in 1999. Pita Pit Inc. was acquired in 2005 by Pita Pit USA, based in Coeur D’Alene, Idaho. The chain’s 500th location opened in June 2014 in Niagara Falls, Ontario, Canada.

Pita Pit celebrated 20 years of operation in July 2015, just before opening its first location in the Denver area, joining Colorado Springs and Fort Collins.

Many Choices on the Menu

The meat pitas on the menu include the Dagwood, the Gyro and the Philly Steak. Veggie options are the Spicy Black Bean, Hummus and Garden pitas, and the restaurants offer a trio of breakfast pitas as well (Steak n’ Eggs, Morning Glory and Meat the Day).

All options have eight cheeses and numerous toppings to choose from, from shredded lettuce to hummus, as well as tzatziki and Caesar sauces. Some toppings, such as roasted red peppers and black beans, and sauces, such as Boom Boom Sauce and sundried tomato pesto vinaigrette, are not available in all locations.

Build-a-Pita System Shows Where the Calories Are

Customers can build their pitas on the Pita Pit website and see the calorie count as they go. The meat and breakfast pitas start out with the calories of the meat, which means the veggie pitas start with zero calories; they can pack a lot of toppings without raising the calorie count substantially.

The breakfast pitas are generally the highest in calories, while the Dagwood and Philly Steak meat pitas are fairly conservative and the Gyro closer in starting calorie count to the breakfast offerings.

Pita Pit Added to College Meal Plan

College students are a big part of the clientele at Pita Pit restaurants, which are often located in campus areas. At the College of William and Mary in Williamsburg, Virginia, the local Pita Pit got a boost when the restaurant was added to the campus meal plan.

Owner Kim Twine told The Flat Hat, the college newspaper, in November 2014 that Pita Pit’s student business has at least doubled, maybe even tripled, because of the chain’s inclusion in the mandatory meal plan, which provides the primary revenue for the restaurant.

Pita Pit was one of four restaurants in Tribe Square, which sits adjacent to the college, that were asked to join the meal plan.

Alternative Locations Provide Advantages

Pita Pit is among quick-service restaurants, such as Subway, that are finding success in convenience store placements. These and other nontraditional locations can increase exposure and make franchise ownership more affordable, since franchisees don’t have to construct free-standing locations.

Section II – Estimated Costs

  • Please click here for detailed estimates of Pita Pit 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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