In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Marco’s Pizza franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Marco’s Pizza franchise, based on Item 7 of the company’s 2018 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Marco’s Pizza franchise, based on Items 5 and 6 of the company’s 2018 FDD
- Section IV – Number of franchised and company-owned Marco’s Pizza outlets at the start of the year and the end of the year for 2015, 2016, and 2017, based on Item 20 of the company’s 2018 FDD
- Section V – Presentation and analysis of Marco’s Pizza’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:
- 2017 net royalty sales for the 743 System-wide Stores (703 Franchised Stores and 40 Company-Managed Stores) that were open for business for 52 weeks in Marco’s Pizza’s 2017 fiscal year ended December 31, 2017, by sales range
- 2017 average, high, and low net royalty sales for the 743 System-wide Stores (703 Franchised Stores and 40 Company-Managed Stores) that were open for business for 52 weeks in Marco’s Pizza’s 2017 fiscal year ended December 31, 2017
- 2011-2017 average net royalty sales for the System-wide, Company-Managed, and Franchised Stores in operation for at least 1 full year as of the end of each fiscal year listed
- 2017 average net royalty sales for traditional locations and Family Video locations
- change in average net royalty sales for the last 7 years (dollar amount and percent of change from the prior year listed, and dollar amount and percent of change over the results of 2010)
- number of System-wide Stores with net royalty sales over $1,000,000, by year for the last 7 fiscal years
- 2017 average net royalty sales, direct costs (food, paper, direct labor, management salary), indirect labor, operating expenses, fixed expenses (including rent), advertising expenses, and store level income before owner’s compensation, taxes, depreciation, interest, and administration for the 40 Company-Managed Stores that were open and managed by Marco’s Pizza’s affiliates during the entire 52-week period ending December 31, 2017
Section I – Background Information
14 Things You Need to Know About the Marco’s Pizza Franchise
Celebrates 40th Anniversary
1. Marco’s Pizza is celebrating its 40th anniversary this year. Tony Libardi, president of Marco’s Pizza, said, “It’s hard to believe that a company that’s considered to be one of the fastest-growing companies in the U.S. today is 40 years old. It’s a very unique place to be.” The brand is also celebrating its recent milestones, including $550 million in system sales and 111 new store openings in 2017, and landing in the Top 25 of Entrepreneur’s 2018 Franchise 500.
2. To keep the brand moving forward while honoring its past, Marco’s Pizza recently unveiled its “Hello Primo” brand refresh. The new campaign tells the story of the brand’s quality, authenticity, and value. Part of that initiative has been the introduction of the new “Milan” store design, which creates a more compelling in-store experience to help franchisees add greater dine-in revenues.
3. Libardi added, “It gives us a unique position to be able to differentiate ourselves from the bigger brands and gives us other avenues for revenue. We’ve paid a lot of attention to details – we’re hyper-focused on every touch point that the guest experiences.”
Promotes Tony Libardi to President as Company Moves Toward 1,000 Stores
4. At the beginning of 2018, Marco’s Pizza announced the promotion of chief operations officer Tony Libardi to president. The move comes at a pivotal time as the brand rapidly approaches the opening of its 1,000th store and celebrates its 40th anniversary year. Libardi, a firm believer in the service profit model, will ramp up the company’s focus on people, product, and process to uphold the brand promise and grow to new heights.
5. Accordingly, Libardi’s priorities will center on employee development, franchisee support, maximizing technology, and maintaining steady and rapid growth. Key initiatives driving this new era of growth will include the addition of franchise advisory boards, an unveiling of a new restaurant prototype, and a celebration of the brand’s Italian heritage as it approaches its 40th anniversary.
6. Libardi said, “Marco’s Pizza is only as successful as the people behind the brand. As I step into this new role, my energies will focus on building future leaders at the corporate and store-level to accelerate our success in becoming a premier 1,000+ unit company. Our leadership team has built a culture of accountability vital to our growth. As we move forward, we plan to enhance this culture and encourage collaboration, unity, and trust among our franchisees, employees, and guests. When everyone grows together, we become an unstoppable force.”
Expands Relationship with FoodTec Solutions
7. Around the beginning of March 2018, Marco’s Pizza announced that it had expanded its relationship with FoodTec Solutions to further develop technology including point-of-sale, delivery, back office, on-line ordering, mobile apps, and various other applications. Under the new agreement, FoodTec provides Marco’s Pizza franchisees – as well as company-owned restaurants – with a single technology platform that competes very effectively in the market to drive revenue, control operations, and reduce costs.
8. The FoodTec platform provides Marco’s with cloud-based solutions as well as a resilient POS solution at store level. With the integration of FoodTec’s Target Market, On-Line Ordering, Customer Apps, and Delivery IQ solutions, Marco’s will have a single integrated solution across its entire enterprise of approximately 1,000 stores and growing rapidly.
9. Rick Stanbridge, vice president/chief information officer of Marco’s Pizza, said, “This technology initiative will enable Marco’s Pizza to implement new and constantly changing marketing initiatives as we grow to 1,500 plus stores and beyond. Our goal was to find the ‘best fit’ solution for our stores that would also enable the company to centralize our marketing efforts. We believe that the benefits of FoodTec’s single-platform and totally integrated solution far exceeded the challenges of a multi-vendor technology approach.”
10. Marco’s Pizza was founded in 1978 by Pasquale “Pat” Giammarco in Toledo, Ohio. Giammarco immigrated to the U.S. in 1966 when he was just nine years old. He said that he had always remembered the food from Italy and grew up helping his father run a pizzeria. Giammarco helped his father refine and perfect the secret sauce recipe that is used at all Marco’s Pizza locations today.
11. Following in his father’s footsteps, Giammarco wanted to start his own pizzeria business and opened the first Marco’s Pizza in 1978. The following year, Giammarco started franchising the concept and expanded to over 100 locations by the early 2000s.
12. Around this time, Giammarco met the current Marco’s Pizza owner Jack Butorac. After analyzing the potential growth of Marco’s Pizza, Butorac felt that he could take the company to the next level. He was a fan of the pizza but said that Giammarco didn’t know how to properly brand and differentiate Marco’s Pizza from its competitors. In 2003, Butorac started consulting with Giammarco and soon after, bought the franchising rights to Marco’s Pizza.
13. Since then, Marco’s Pizza has more than doubled in size across 35 states, Puerto Rico, the Bahamas, and India.
Entrepreneur’s Franchise 500
14. Marco’s Pizza ranked No. 25 on Entrepreneur’s 2018 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Marco’s Pizza franchise costs, based on Item 7 of the company’s 2018 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Marco’s Pizza’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2018 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 537
- Outlets at the End of the Year: 634
- Net Change: +97
- Outlets at the Start of the Year: 634
- Outlets at the End of the Year: 734
- Net Change: +100
- Outlets at the Start of the Year: 734
- Outlets at the End of the Year: 825
- Net Change: +91
- Outlets at the Start of the Year: 33
- Outlets at the End of the Year: 33
- Net Change: 0
- Outlets at the Start of the Year: 33
- Outlets at the End of the Year: 36
- Net Change: +3
- Outlets at the Start of the Year: 36
- Outlets at the End of the Year: 42
- Net Change: +6
Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis
- Marco’s Pizza has prepared this financial performance representation to reflect the Net Royalty Sales of 703 Marco’s Pizza Stores operated by Franchisees (“Franchised Stores”), and 40 Company-Managed Stores (as defined below), that were open during the entire 52-week period ending December 31, 2017.
- This information does not include the performance of 124 new Stores that were not open for the entire 52-week period in 2017.
- The operating results include results for 503 Limited Seating Stores and 240 Expanded Seating Stores.
- This financial performance representation also reflects certain operating results for 40 Company-Managed Stores that were open and in operation for the entire fiscal year ending December 31, 2017, based on internally prepared accounting statements.
- “Company-Managed Stores” include all Stores owned by Cleveland Marco’s, LLC and all other Stores that Cleveland Marco’s, LLC manages for a fee that are owned by Marco’s Pizza’s affiliated entities including Authentic Pizza, LLC, Marco’s Indiana, LLC, Orlando Marco’s, LLC, and 45 Pizza, LLC (collectively, “Company-Managed Stores”).
- Cleveland Marco’s, LLC has an equity ownership interest in Authentic Pizza, LLC, and both Cleveland Marco’s, LLC and Marco’s Pizza’s CEO has an equity interest in Marco’s Indiana, LLC and 45 Pizza, LLC.
Chart 1 – Net Royalty Sales of System-wide Stores (2017) by Ranges
- Chart 1 below provides the ranges of the Net Royalty Sales for the 743 System-wide Stores (703 Franchised Stores and 40 Company-Managed Stores) that were open for business for 52 weeks in Marco’s Pizza’s 2017 fiscal year ended December 31, 2017.