In this FDD Talk 2017 post, you’ll learn the following:
- Section I – Background information on the Toppers Pizza franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Toppers 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 Toppers Pizza franchise, based on Items 5 and 6 of the company’s 2017 FDD
- Section IV – Presentation and analysis of Toppers Pizza’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
- 2016 average gross sales, cost of goods sold, gross profit, operating expenses, and EBITDA for all 20 Toppers Pizza restaurants that were open and continuously operated by the franchisor’s affiliate for a minimum of two full fiscal years as of January 1, 2017; for all 17 Toppers Pizza restaurants that were open and continuously operated by the franchisor’s affiliate for a minimum of three full fiscal years as of January 1, 2017; and for all 15 Toppers Pizza restaurants that were open and continuously operated by the franchisor’s affiliate for a minimum of four full fiscal years as of January 1, 2017
- 2016 average gross sales for all Toppers Pizza restaurants (both affiliate-owned and franchised) that were open as of January 1, 2017, and that had been open and operating for at least one full fiscal year, at least two full fiscal years, at least three full fiscal years, at least four full fiscal years, and at least five full fiscal years, respectively
Section I – Background Information
14 Things You Need to Know About the Toppers Pizza Franchise
New Store Prototype Design to Enhance Brand Transparency
1. At the start of 2017, Toppers Pizza announced the system-wide rollout of its new and improved store prototype, the Toppers Show Kitchen. The open design was created as a way to remain relevant to younger customers who often demand transparency from the brands they buy from.
2. Toppers’ new layout allows customers to interact with Toppers Team Members and lets them get an up-close look at the high-quality toppings the brand is known for. The prototype was unveiled in Milwaukee some time in November 2016. Customers and Toppers employees gave the new prototype a thumbs up noting that the new design was better, cleaner, livelier, and more inviting.
3. Scott Gittrich, the founder of Toppers Pizza, said, “Customers today want to see their food and the people preparing their food. They want to know what’s going on and they want to feel a connection with what they’re about to eat. We’re proud to say that we still make our food from scratch in a way that most of our competitors don’t. By opening up the kitchen, we’re inviting guests to see that for themselves.”
4. Toppers plans to use the new prototype design in every new market the brand enters; any existing locations can opt for the Show Kitchen when it comes time to remodel.
5. David Biederman, Chief Development Officer of Toppers Pizza, believes that the Show Kitchen will further solidify Toppers’ reputation for serving better pizza, which is one of the brand’s key differentiators in a saturated market. Biederman also notes that the new prototype comes at a cost that is reasonable for franchisees.
Large Deal with East Coast Multi-Unit Operator
6. In early August, Toppers Pizza announced that it had signed a 22-unit deal with Mike McLaughlin and his business partner Willie Frank to open Toppers Pizza restaurants in the northern Virginia and southern Maryland areas over the next seven years. Frank and McLaughlin currently operate nine Five Guys Burgers & Fries restaurants in the same area and said that they had been looking for a second brand to invest in for many years.
7. McLaughlin says that he and Frank had researched several fast-casual pizza chains but weren’t sure which ones would survive long term. The business partners were drawn to the fact that Toppers has an old-school delivery model yet understands that “technology is revolutionizing what pizza delivery guys are doing.”
Voted as One of America’s Favorite Pizza Chains
8. At the end of February, The Daily Meal released its list of America’s 35 Favorite Pizza Chains. This was the fourth year in a row that the website asked its readers to vote on their favorite pizza chains. Toppers Pizza took the number one spot due to its loyal following and its “craveable” Topperstix.
9. The Daily Meal also noted that Toppers Pizza has grown rapidly, doubling its size in just three years. The website believes that Toppers’ new Show Kitchen and the brand’s commitment to customer service and fresh toppings are a “recipe for success and loyalty.”
10. Toppers Pizza was founded in 1991 by Scott Gittrich in Champaign, Illinois. Prior to starting his own pizza business, Gittrich rose through the ranks of Domino’s Pizza and eventually served as a director of operations for a group of 22 franchise locations in Charlotte, North Carolina.
11. Gittrich opened the second Toppers Pizza location in 1993 in Whitewater, Wisconsin soon after adding the brand’s signature Topperstix to the menu. Toppers Pizza started franchising in 1997, with the first franchised store opening in Eau Claire, Wisconsin.
12. The chain is primarily located in the Midwestern region of the U.S. and targets college students and customers between the ages of 18 and 34 years old. To accommodate its target audience, most Toppers Pizza locations stay open until 3 a.m. to bring in late-night business.
13. Today, there are more than 70 Toppers Pizza locations in the states of Arkansas, Indiana, Minnesota, Ohio, North Carolina, Kentucky, Nebraska, Michigan, Texas, and Wisconsin.
Entrepreneur’s Franchise 500
14. Toppers Pizza has appeared on Entrepreneur’s annual Franchise 500 list five times over the last
ten years. The company’s highest rank was No. 335 in 2011, while its lowest rank was No. 414 in 2017.
Section II – Estimated Costs
- Please click here for detailed estimates of Toppers Pizza 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 Toppers 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
Part 1 – 2016 Profit and Loss for Affiliate-Owned Restaurants
- The following table depicts (a) average EBITDA and (b) EBITDA as a percentage of Gross Sales for the fiscal year ended January 1, 2017 for all 20 restaurants that were open and continuously operated by the franchisor’s affiliate for a minimum of two full fiscal years as of January 1, 2017; for all 17 restaurants that were open and continuously operated by the franchisor’s affiliate for a minimum of three full fiscal years as of January 1, 2017; and for all 15 restaurants that were open and continuously operated by the franchisor’s affiliate for a minimum of four full fiscal years as of January 1, 2017.
- The franchisor does not have all of the information necessary in order to provide the same information for franchised restaurants.
Average Gross Sales, Expenses, and EBITDA for Restaurants Open Two Full Fiscal Years