FDD Talk 2017: What You Need to Know About the PizzaRev 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 PizzaRev franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a PizzaRev 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 PizzaRev franchise, based on Items 5 and 6 of the company’s 2017 FDD

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

• 2016 average, median, high, and low revenues for the 17 company-owned PizzaRev Restaurants, 9 franchised PizzaRev Restaurants, and 26 company-owned and franchised PizzaRev Restaurants (combined) that had been in operation for at least 18 months as of December 25, 2016

• 2016 average, median, high, and low cost of goods sold and labor costs for the 17 company-owned PizzaRev Restaurants that had been in operation for at least 18 months as of December 25, 2016

Section I – Background Information

11 Things You Need to Know About the PizzaRev Franchise

Cleveland Avenue Becomes Strategic Partner and Majority Investor

1.  In late May, PizzaRev announced that it had formed a strategic partnership with Cleveland Avenue, LLC, a Chicago-based accelerator that strategically invests in innovative, consumer-focused restaurant, food, and beverage concepts. Cleveland Avenue also became a majority investor in PizzaRev.

2.  Don Thompson, founder and CEO of Cleveland Avenue (and former CEO of McDonald’s), said that his company is “delighted to join forces with PizzaRev and begin working together toward achieving long-term sustained success.” Thompson also says that Cleveland Avenue was drawn to PizzaRev because of its potential for scale and growth.

Celebrated 5th Anniversary

3.  April 20, 2017 marked PizzaRev’s 5th Anniversary and to celebrate this milestone, customers who visited participating locations that day received a $5 voucher with any purchase. Customers were able to use the vouchers between April 21 to May 31 to take $5 off a purchase of $10 or more.

4.  As a bonus, each voucher was made from recycled paper embedded with basil seeds that could be planted. To help people with planting and taking care of the basil, PizzaRev provided care instructions on its website.

“Free Pizza For Life” Contest

5.  At the beginning of May, PizzaRev launched its “Be Revolutionary” contest to celebrate the brand’s growth and progress over the last five years. To enter the contest, customers were required to submit an answer to the question “What does it mean to Be Revolutionary?” via Instagram, Facebook, or Twitter, using #BeRevolutionary, for a chance to win free pizza for life.

6.  PizzaRev also awarded weekly prizes including free pizza through the PizzaRev mobile app, and PizzaRev swag. The contest ran from early May through the start of July. The winner, which was Hailey Pointer, was revealed near the end of July. Pointer’s entry said that she plans to start a clothing line with her siblings that will give back to local animal shelters.

Seasonal Special

7.  To kick off the summer season, PizzaRev launched a new Seasonal Special in early May, the Thai Chicken pizza. The pizza features a new Thai sizzle sauce, sweet chili chicken, buffalo milk mozzarella, freshly chopped green onions, cilantro, and shredded carrots.

8.  Nicholas Eckerman, co-founder and CEO of PizzaRev, said that the Thai Chicken pizza is unlike anything the company has ever had on its menu and that it “will surprise and delight” PizzaRev’s fans. The pizza is available for a limited time at all PizzaRev locations and customers can add the Thai sizzle sauce or sweet chili chicken to any Craft Your Own pizza.

Company History

9.  PizzaRev was founded in 2012 by Rodney Eckerman and Irv Zuckerman, and their sons Nicholas Eckerman and Jeff Zuckerman in Los Angeles, California. PizzaRev is the brainchild of Nicholas Eckerman, who pitched the idea of a higher quality pizza that was fast enough for anyone to eat on their lunch break to his father Rodney Eckerman in 2011.

10.  The company’s name, which is short for “Pizza Revolution,” stems from the idea of empowering customers to build their own pizza. PizzaRev began franchising in 2013 when it opened the first location outside of Los Angeles county in Oxnard, California. The first international location opened in 2016 in Monterrey, Mexico. Today, there are nearly 50 PizzaRev locations in the U.S. and Mexico.

Entrepreneur’s Franchise 500

11.  PizzaRev has only been franchising since 2013 and has yet to appear on Entrepreneur’s annual Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of PizzaRev franchise costs, based on Item 7 of the company’s 2017 FDD.

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

• Please click here for detailed information on PizzaRev’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

• PizzaRev provides prospective franchisees with the financial information contained in this Item 19 about the revenues of 26 PizzaRev Restaurants that had been in operation for at least 18 months as of December 25, 2016, and certain costs for the company-owned Restaurants included in this Item.

• Restaurants in operation for at least 18 months were included in this Item because this is a sufficient period of time for the Restaurants to be fully operational and have an established operating history in their market areas.

• The financial information disclosed in this Item is for the 52-week period ending December 25, 2016. The financial information disclosed in this Item for the company-owned Restaurants has been prepared by and is the responsibility of PizzaRev’s management. PizzaRev’s auditors have not audited, reviewed, complied, or performed any procedures on the financial information in this Item.

• The company-owned and franchised PizzaRev restaurants included in this Item offer substantially similar menu items and services to their customers. However, the amount of revenues generated and the costs incurred by PizzaRev Restaurants differ, depending upon a variety of factors.

• Information regarding the “mature” Restaurants is included in this Item. PizzaRev defines mature as those Restaurants open for a minimum of 18 months. This allows for fluctuations within the first six operating months and provides data for a full 12 months.

• PizzaRev operates under a 4-4-5 fiscal calendar with the 2016 fiscal year end occurring on December 25, 2016.

• The financial performance representations disclosed below are derived from the actual revenues and expenses of the mature PizzaRev Restaurants that were in operation for the entire 52-week period ending on December 25, 2016.

• As of December 25, 2016, there were 26 mature company-owned and franchised PizzaRev Restaurants located in the states of California, Minnesota, South Dakota, Texas, and Utah.

Part 1 – Revenues Generated During 52 Weeks Ending December 25, 2016

Company-Owned Restaurants Included in This Item