FDD Talk 2016: The Pita Pit Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

In this FDD Talk 2016 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 2016 FDD

• Section III – Presentation and analysis of Pita Pit’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:

• 2015 average, high, and low net sales, food cost percentage, labor cost percentage, and rent for the 65 Pita Pit franchised restaurants that voluntarily provided specific information to the franchisor in response to a survey

• 2015 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

Pita Pit Pushing for More Growth in 2016 and Beyond

Pita Pit had its best growth year in 2015 as it celebrated its 20th anniversary, and the milestones continue in 2016 with the chain’s 600th location, which opened in February in Quincy, Washington.

Nelson Lang and John Sotiriadis started Pita Pit in 1995 with a single Canadian location in Kingston, Ontario. They started franchising in Canada in 1997 and opened franchising in the United States two years later. The U.S. headquarters are in Coeur d’Alene, Idaho.

“Our 600th worldwide store opening is a great milestone for the brand and illustrates how Pita Pit has answered consumer demands for a healthier alternative to fast food,” Pita Pit President Cory Bowman said in a company press release. “2015 was a landmark year and the momentum is clearly carrying over into 2016, with plans to open at least another 45 new locations through our growing franchise community.”

The brand also increased its footprint in 2015 with openings in 10 new markets.

Multi-unit franchising was a major focus as well; more than 40 percent of Pita Pit franchisees are now classified as multi-unit owners, and the company predicts that number will continue to grow in 2016. The company is particularly looking for master franchisees and multi-unit franchisees.

Diners Increasingly Focusing on “Fresh and Healthy”

Pita Pit expects 10 percent growth in 2016, with 45 new locations opening in at least six markets, including Cleveland, Ohio; San Antonio and Houston, Texas; and Kansas City, Missouri/Kansas, according to the press release.

“The fresh and healthy concept has become increasingly popular, and it’s clear the trend is here to stay,” Bowman said. “Our growth over the last year is evidence that speaks to changing consumer demands for more healthy and personalized options.”

Pita Pit’s offerings come with lower amounts of fats and carbohydrates. Healthy pitas are stuffed with fresh ingredients like romaine lettuce, tomatoes, onions, cucumbers, bell peppers and more. Proteins such as chicken and bacon appear in specialty offerings like the Chicken Souvlaki Pita and the BLT Pita.

For vegetarians or people looking to cut down on meat, Pita Pit offers a Spicy Black Bean Pita, a Fresh Garden Pita and a Hummus Pita. Salads, soups and other extras can make it a full meal.

Specialty Pita or Build Your Own? You Decide

Diners can select a specialty pita and customize it, or they can start or build their own from a menu, starting by choosing white or wheat bread, or “fork style” as a salad. Then they choose a cheese and add toppings and sauce from an extensive list. The build-a-pita menu on the Pita Pit website also suggests toppings and sauces for the specialty subs.

Restaurants Take Advantage of High Daytime Traffic

Pita Pit restaurants are generally between 1,000 and 1,500 square feet and ideally are end caps with main-road visibility and strong employment in the area surrounding the location. Sites should have high foot and vehicular traffic, especially during the day.

Chain Rises to its Best Position on Franchise 500

Pita Pit was ranked No. 113 in Entrepreneur’s Franchise 500 for 2016. It’s the highest spot the company has reached, up 10 points from 2015’s rank of No. 123.

The chain ended 2015 with 223 U.S. franchises, 331 franchises outside the U.S., and 16 company-owned restaurants. Pita Pit has restaurants in Canada, the U.S., Australia, Brazil, France, India, Saudi Arabia, New Zealand, Panama, Singapore, Trinidad and Tobago, the United Kingdom and the United Arab Emirates.

Section II – Estimated Costs

• Please click here for detailed estimates of Pita Pit franchise costs, based on Item 7 of the company’s 2016 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis