FDD Talk 2016: The Uno Pizzeria & Grill 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 Uno Pizzeria & Grill franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for an Uno Pizzeria & Grill franchise, based on Item 7 of the company’s 2016 FDD

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

• 2015 average sales for the 75 parent-owned and 36 franchised full service Uno Restaurants open during all of fiscal year 2015

• 2015 average net sales; cost of sales; direct labor; management salary; payroll taxes and benefits; controllables; advertising and business coop; royalties; trash extermination and security; other non-controllables; and earnings before repairs and maintenance, utilities, rent, depreciation, administration, insurance, interest, and taxes for the 75 parent-owned full service Uno Restaurants open during all of fiscal year 2015

Section I – Background Information

The fact that a brand so deeply intertwined in everyone’s mind with Chicago is now headquartered in Boston can be taken as an indication that Uno is having a tough time establishing a new identity for itself.

The company got its start all the way back in 1943 in Chicago, when Ike Sewell and Ric Riccardo came up with a new way to make pizza – the Chicago deep-dish style. It was such a new idea that they had to give away a lot of slices just to get people to try it. Luckily for them, it quickly caught on and their restaurant became a very popular place.

It wasn’t until 1979 that the first Uno outside of Chicago came into being in Boston. Franchising began in earnest in 1980, and the Boston-based franchising arm became corporate headquarters after Sewell died in 1990 and his widow sold the original Chicago restaurants to them.

At one point there were more than 200 locations, but now the chain is down to just over 130 in 21 states, the District of Columbia, South Korea, United Arab Emirates, Honduras, Kuwait, and Saudi Arabia. Here’s how Uno Pizzeria & Grill keeps customers focused on deep thoughts in the super-competitive pizza segment.

Strong Market Demand

It’s no secret that the American public absolutely loves pizza. Take any two-week period and the data says something like two-thirds of Americans will eat some form of pizza, whether in a restaurant, hand-made at home, or warmed up from the grocery store. In fact, pizza weighs in at sixth on the ranking of popularity for dinner entrees. Pizza is a $40 billion market, and lots of companies want to get their slice of the pie, making it a very competitive industry as well.

Identity Crises and Remakes

After the dawn of the new millennium, Uno fell prey to a trend in the casual restaurant segment – to be all things to all people, and to especially appeal to the rising health-conscious consumers. The name was changed from Pizzeria Uno to Uno Chicago Grill. The menu kept expanding until at one point it was 22 pages.

The chain lost its focus on what made it great – pizza, which was eliminated from the name and relegated to page 18 of the menu. Now that’s being changed, and for the better. The new name is Uno Pizzeria & Grill, and the chain is spending $10 million to remodel locations and rebrand everything for success. The new interiors are now more open and modern compared to how they used to be.

A Bright Future?

It’s still too early to tell if the latest efforts to remake the Uno brand is going to reinvigorate the stagnant chain. The attempt that’s being made is the right approach, though, because Uno has to differentiate itself from an already crowded casual-dining segment that includes Applebee’s, Chili’s, Ruby Tuesday, TGI Friday’s, and Red Robin. Deep-dish pizza is what sets Uno apart.

Section II – Estimated Costs

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

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