FDD Talk 2017: What You Need to Know About the Hungry Howie’s Franchise Opportunity (Financial Performance Analysis, Costs and Fees)

In this FDD Talk 2017 post, you’ll learn the following:

• Section I – Background information on the Hungry Howie’s franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Hungry Howie’s franchise, based on Item 7 of the company’s 2017 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Hungry Howie’s franchise, based on Items 5 and 6 of the company’s 2017 FDD

• Section IV – Presentation and analysis of Hungry Howie’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:

• 2016 average gross sales for the 281 franchised, 30 affiliated, and all 311 Hungry Howie’s restaurants (separately stated) that were open for the entire 52-week period from December 28, 2015 to December 25, 2016

• 2016 average gross sales, food costs, paper costs, and labor costs for the 236 franchised, 30 affiliated, and all 266 Hungry Howie’s restaurants (separately stated) that provided select cost information in income statements submitted to the franchisor for the entire 52-week period from December 28, 2015 to December 25, 2016

Section I – Background Information

13 Things You Need to Know About the Hungry Howie’s Franchise

Growth Plans for 2017

1.  At the beginning of the year, Hungry Howie’s announced that it had plans for rapid growth in 2017, building upon its continued same-store sales growth for 27 consecutive quarters. Same-store sales grew by 2.84% in 2016.

2.  The company said that it plans to open 25 locations by the end of the year in various markets such as Houston, Texas; Bakersfield, California; Provo, Utah; and Raleigh, North Carolina. Hungry Howie’s also said that it is aiming for over 30 new franchise agreements signed in 2017.

Multi-Unit Development Deals in Utah and North Carolina

3.  In early May, Hungry Howie’s announced plans for expansion into North Carolina and Utah with a 5-store multi-unit agreement in North Carolina and a 3-store multi-unit agreement in Utah.

4.  Eric Fairbanks, who is already a multi-unit franchise owner for Hungry Howie’s, signed the area development deal for stores in Gaston, Iredell, and Mecklenburg counties in North Carolina. Fairbanks owns 11 other Hungry Howie’s locations and plans to hit 17 stores by 2018, with three planned to open by the end of this year.

5.  Richard Livermore is new to the Hungry Howie’s franchise and plans to open 3 locations in Logan, Utah, with the first location opening sometime over the summer.

New Loyalty Rewards Program

6.  At the beginning of February, Hungry Howie’s launched its new loyalty rewards program, Howie Rewards, offering its fans a new way to earn free pizzas. Customers who sign up for the loyalty program receive 10 Howie Points just for joining.

7.  Having added online ordering in 2015, Hungry Howie’s hopes the new loyalty rewards program will continue to encourage its customers to order online or through its mobile app. Through Howie Rewards, customers will receive 10 points for every qualifying online or mobile app purchase with a pre-tax total of $10, and after accruing 60 Howie Points, customers can redeem them for a free medium two-topping pizza.

8.  According to Hungry Howie’s, the loyalty program “aims to achieve an incremental boost in sales, a bolstered fan base and enlarged return traffic.”

4-Cent Pizzas for the Fourth of July

9.  To celebrate Independence Day in the United States, Hungry Howie’s offered a medium one-topping pizza for 4 cents to customers who purchased a large one-topping pizza at the regular price by using the online promo code JULY4. The deal was valid for online and carry out orders and ran from July 1 to July 4 at participating Hungry Howie’s locations.

10.  Hungry Howie’s had a similar deal during Tax Day in the U.S. by offering customers a medium one-topping pizza for 15 cents when they bought a large one-topping pizza at the regular price with the promo code TAXTIME.

Company History

11.  The first Hungry Howie’s was opened by Jamers Hearn in 1973 in Taylor, Michigan. Steve Jackson, who delivered pizzas for Hearn, eventually became Hearn’s business partner.

12.  In 1982, Jackson and Hearn decided to franchise the business and the first franchise was awarded a year later in 1983. By the end of the 80s, there were over 160 Hungry Howie’s in the U.S. Since then, Hungry Howie’s has continued to thrive and today there are over 550 locations in 21 states.

Entrepreneur’s Franchise 500

13.  Hungry Howie’s has ranked on Entrepreneur’s annual Franchise 500 list almost every year in the past decade, except in 2010 and 2011. The company’s highest rank was No. 78 in 2013, while its lowest rank was No. 274 in 2017.

Section II – Estimated Costs

• Please click here for detailed estimates of Hungry Howie’s franchise costs, based on Item 7 of the company’s 2017 FDD (updated).

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Hungry Howie’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.

Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis

• The financial performance representations below are based on the historical performance of a subset of existing Hungry Howie’s Units.

Part 1 – Average and Median Annual Gross Sales of Certain Hungry Howie’s Units for the 52 Weeks Ended December 25, 2016

• The franchisor examined the Gross Sales of certain Hungry Howie’s Units that were open for the entire 52-week period from December 28, 2015 through December 25, 2016 (the “Measuring Period”). Such information was obtained from point of sales systems at each individual unit.

• The data below was derived from Gross Sales information from Franchised Units, Affiliated Units, and All Units.

Gross Sales

Franchised Units