In this FDD Talk 2017 post, you’ll learn the following:
- Section I – Background information on the Blaze Pizza franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Blaze Pizza 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 Blaze Pizza franchise, based on Items 5 and 6 of the company’s 2017 FDD
- Section IV – Presentation and analysis of Blaze Pizza’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
- 2016 average gross sales for the 64 franchised Blaze Pizza Restaurants that had been in operation for at least 18 months ending December 26, 2016
- 2016 average gross sales for the 5 corporate Blaze Pizza Restaurants that had been in operation for at least 18 months ending December 26, 2016
Section I – Background Information
14 Things You Need to Know About the Blaze Pizza Franchise
World-Famous Athlete LeBron James Has Aided Blaze Pizza in Its Success
1. In early July, Forbes published an article about how world-famous NBA star LeBron James, who has been an investor in Blaze Pizza since the start of the company, has influenced the pizza chain’s success. Blaze Pizza has grown from two to 200 franchises in four years, making it the fastest-growing U.S. food chain ever, according to research firm Technomic.
2. According to Jim Mizes, Blaze Pizza’s CEO, LeBron James helps bring greater brand awareness of the company to the public. James often promotes Blaze Pizza to his 91 million followers across all of his social media channels including Facebook, Instagram, and Twitter.
3. LeBron James’ financial advisor Paul Wachter of Main Street Advisors connected James with Blaze Pizza in 2012, shortly after Elise and Rick Wetzel opened the first two restaurants. James along with restaurateur Larry Levy of Levy Restaurants and James’ business manager, Maverick Carter, also own the rights to Blaze franchises in the South Florida and Chicago markets. They currently have 17 franchises total (12 in Chicago and five in South Florida) with plans to open more.
4. In 2015, James ended a $15 million endorsement deal with McDonald’s in order to take on a bigger role in Blaze Pizza. ABC News reports that James’ stake in Blaze Pizza is worth $35 to $40 million, according to its sources.
5. In 2016, James went undercover as a pizza maker named “Ron” for a television commercial that went viral with more than 2 million views on YouTube. The company plans to include James in more marketing campaigns across advertising channels, social media, and in-store appearances.
Plans to Open 100 Locations in the Middle East and Northern Africa
6. On July 17, Blaze Pizza announced that it had entered into an exclusive development agreement with the Kuwait-based M.H. Alshaya Co. to build and operate multiple Blaze Pizza restaurants across the Middle East and Northern Africa.
7. According to the agreement, M.H. Alshaya Co. will develop 100 restaurants in 11 countries including the United Arab Emirates, Kuwait, Saudi Arabia, Lebanon, Egypt, and Morocco. The first five restaurants are scheduled to open in Kuwait and the UAE in 2018.
8. The agreement is the first that Blaze Pizza has entered into to expand outside of North America and it is also the brand’s largest development deal to date. Mohammad Alshaya, Executive Chairman of M.H. Alshaya Co., says, “Blaze Pizza is a very exciting and disruptive brand that fits nicely into our restaurant portfolio alongside Starbucks and Shake Shack.” Alshaya also believes that his company will be able to “build Blaze into the dominant pizza brand in the Middle East and throughout the region.”
Targets $1 Billion in Sales by 2022
9. In early March, Blaze Pizza released a report highlighting the company’s achievements from 2013 through the start of 2017 and disclosing future goals for 2018 to 2022. According to the press release, system wide sales were up 83 percent to $185 million in 2016 over 2015. The company also projected that system wide sales will exceed $292 million by the end of the year.
10. Jim Mizes, COO at the time of the press release (currently Blaze Pizza’s CEO and President), said that Blaze Pizza expects system wide sales to exceed $1 billion within the next five years. Blaze Pizza also plans to have 375 restaurants open by the end of 2018 and 855 restaurants operating by the end of 2022.
11. Blaze Pizza was founded in 2011 by Elise and Rick Wetzel of Wetzel’s Pretzels. The restaurant’s customizable pizza concept was modeled after Chipotle’s made-to-order approach to serving customers.
12. The first location opened in Irvine, California in August 2012. Two months later, the flagship location opened in Pasadena, California. Franchising began that same year. Blaze Pizza was almost immediately successful and during the first year of operation, the Irvine location made about $1.8 million in sales while the Pasadena location made $2.5 million in sales.
13. Since 2012, the company has continued to open locations across the country and in 2015, Blaze Pizza opened its first international location in Toronto, Ontario, Canada. Today, there are over 200 locations in the U.S. and three in Canada.
Entrepreneur’s Franchise 500
14. In 2017, Blaze Pizza made its debut on Entrepreneur’s annual Franchise 500 list at No. 42. The company also ranked on Entrepreneur’s 2017 Top New Franchises list at No. 2.
Section II – Estimated Costs
- Please click here for detailed estimates of Blaze Pizza 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 Blaze Pizza’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
Average Gross Sales for Restaurants That Had Been in Operation for At Least 18 Months
- As of December 26, 2016, there were 169 Blaze Pizza Restaurants in operation (164 franchised Restaurants and 5 corporate Restaurants).
- Blaze Pizza competes in an emerging category of fast casual, artisanal pizza. As such, stores reach maturity generally after 18 months.
- Of the 169 Restaurants, 64 franchised Restaurants and 5 corporate Restaurants had been in operation for at least 18 months ending December 26, 2016 (the “Reporting Group”).
- The information in the table below shows the average Gross Sales of the franchised Restaurants and corporate Restaurants in the Reporting Group from December 27, 2015 through December 26, 2016.