In this FDD Talk 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 2019 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 2019 FDD
- Section IV – Number of franchised and company-owned Toppers Pizza outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD
- Section V – Presentation and analysis of Toppers Pizza’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:
- 2018 average gross sales, cost of goods sold, gross profit, operating expenses, and EBITDA for 19 of 21 Toppers Pizza restaurants that were open and continuously operated by the franchisor’s affiliate for a minimum of one full fiscal year as of December 30, 2018
- 2018 average gross sales for all Toppers Pizza restaurants (both affiliate-owned and franchised) that were open as of December 30, 2018, 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
17 Things You Need to Know About the Toppers Pizza Franchise
Ad Campaign Draws Ire of Competitor Domino’s Pizza
1. Last summer (2018), Toppers Pizza launched a new ad campaign titled “Us vs. Them,” to highlight the fact that Toppers makes its dough fresh in-house daily. The ad featured a truck with Domino’s logo and branding under the wording: “Them. Dough fresh off the semi.” Next to that, a Toppers worker was shown with a bag of flour under the words: “Us. Dough made fresh in-house daily.”
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2. After the ad campaign went live, a customer sent the picture to Domino’s and a few days later, Toppers Pizza was hit with a cease and desist order. According to a report by CNBC, Domino’s order, written by legal department member Dawn Bushart, said, “It has recently been brought to our attention that your company’s marketing strategies include advertisement that defames our brand and incorporates our registered trademark. The use of the Domino’s logo in this fashion is damaging to our brand, unlawful, and an infringement of our federally registered trademark.”
3. In response, Scott Gittrich, founder and president of Toppers Pizza, wrote a blog post in which he refused to back down and said that the company had no intention of stopping the ad, which at the time was set to launch across all media platforms. Gittrich said, “Excuse me for telling the truth! Listen, we don’t have Wall Street money to rain down the advertising. We have quality. We have that our people care and believe in what we do. We have a killer menu with bold flavors and great ingredients.”
4. Although Domino’s threatened to “take further legal action,” Gittrich added that Toppers Pizza was confident that what it was saying and how it was saying it “is not only completely legal and fair, it’s the truth.” Gittrich continued, “Domino’s is a Wall Street darling, dough-made-in-a-factory, tech company that happens to make pizza, pizza place. They should just be proud and own and embrace that. Toppers is the made-from-scratch, made-with-love, locally owned and fighting the good fight pizza place; and we are going to own and embrace that.”
Expands Value Menu
5. At the beginning of April 2019, Toppers Pizza launched its newest value menu item, pretzel bites. Previously, the brand had rolled out a “Pick Any 2 or More for $9.99” value meal in early 2018, followed a few months later with a complementary “Pick Any 2 or More for $5.99” value menu. The savory pretzel bites are the latest addition to the $5.99 value menu.
6. Toppers’ $5.99 value menu lets customers choose any two of the following: baked mac ‘n cheese, gooey monkey bread, half-pound orders of boneless wings, and single orders of Topperstix, plus any medium two-topping pizza.
7. Scott Gittrich, founder and president of Toppers Pizza, said, “For almost 30 years, we’ve been relentlessly committed to doing pizza better. That means that our fans shouldn’t compromise on quality in pursuit of affordability. Our ever-expanding value menus reflect that.”
8. The newest addition to the menu, Toppers’ pretzel bites, are snack-ready morsels fried to perfection and dusted with sea salt. Customers can pick from any dippin’ sauce, including nacho cheese, the brand favorite. The $5.99 value item includes 12 pretzel bites.
9. Scott Iverson, vice president of marketing for Toppers Pizza, added, “We work tirelessly to make sure our pizza lovers enjoy a variety of complementary options that we develop after closely attending to the data. Our new pretzel bites are the latest way Toppers is showing up for the demand of our fans, and we’re excited to continue to deliver on bold new flavors beyond our second-to-none pizza.”
Celebrates National Pizza Day with Contest to Win Free Pizza for a Year
10. At the end of January 2019, Toppers Pizza announced that it would be celebrating this year’s National Pizza Day, which was on February 9, by offering customers a chance to win Free Food for a Year. The system-wide contest ran between Super Bowl Sunday on February 3 and National Pizza Day on February 9. Every “Pick Any 2 or More for $9.99 each” offer that a customer orders online entered them into a drawing for a chance to win Free Food for a Year with one winner selected every day during the contest.
11. In the same announcement, Toppers Pizza also mentioned that the brand saw a 50.24% increase in sales on Super Bowl Sunday the previous year compared to an average Sunday. The company sold more than 13,000 pizzas and more than 6,000 orders of Topperstix system-wide and anticipated a similarly big day for this year’s big game.
12. According to Scott Gittrich, founder and president of Toppers Pizza, “Ever since introducing our Pick Any 2 or More for $9.99 each deal a year ago, it’s been a huge hit. So, we wanted to thank those fans by giving each of them the chance to win free Toppers for a year simply by enjoying Toppers. This week is one of the busiest of the year and we’re going to have fun as we keep cranking out the best pizza and Topperstix on earth.”
13. Toppers Pizza was founded in 1991 by Scott Gittrich in Champaign, Illinois. Before saving $30,000 to open his own pizza restaurant, Gittrich had spent years working for Domino’s and had worked his way up in the company from a delivery driver to director of operations for a group of 22 franchise locations in Charlotte, North Carolina.
14. Initially Gittrich had called his restaurant Topper’s Pizza, but dropped the apostrophe to adopt a more informal and friendly identity.
15. Although the original Toppers Pizza restaurant closed in the mid-1990s, Gittrich had already opened another location in Whitewater, Wisconsin in 1993 (the company moved its headquarters from Champaign to Whitewater). Gittrich began franchising the Toppers Pizza concept in 1997 and the first franchised location opened in Eau Claire, Wisconsin.
16. Over the years, Toppers Pizza has grown slowly and through a mix of company-owned stores and franchised locations. Toppers Pizza mainly targets college students and millennials and most of the chain’s stores remain open until 3 a.m. or later.
17. Today, there are Toppers Pizza locations in Arkansas, Colorado, Indiana, Illinois, Minnesota, North Carolina, Ohio, Kentucky, Nebraska, Michigan, Texas, Virginia, Wisconsin, and Wyoming.
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18. Toppers Pizza did not rank on Entrepreneur’s 2019 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Toppers Pizza franchise costs, based on Item 7 of the company’s 2019 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 2019 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 48
- Outlets at the End of the Year: 53
- Net Change: +5
- Outlets at the Start of the Year: 53
- Outlets at the End of the Year: 60
- Net Change: +7
- Outlets at the Start of the Year: 60
- Outlets at the End of the Year: 56
- Net Change: -4
- Outlets at the Start of the Year: 25
- Outlets at the End of the Year: 23
- Net Change: -2
- Outlets at the Start of the Year: 23
- Outlets at the End of the Year: 22
- Net Change: -1
- Outlets at the Start of the Year: 22
- Outlets at the End of the Year: 21
- Net Change: -1
Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis
Part 1 – 2018 Profit and Loss for Affiliate-Owned Restaurants
- The following table contains profit and loss information for the fiscal year ended December 30, 2018 for 19 of 21 restaurants that were open and continuously operated by the franchisor’s affiliate for a minimum of one full fiscal year as of December 30, 2018.
- The franchisor’s affiliate purchased 2 restaurants from a franchisee in 2017. Because of unique expenses incurred during 2017 and 2018 in transitioning those restaurants into affiliate-owned restaurants, the franchisor has excluded those restaurants from the results in Part 1. The franchisor does not believe excluding those 2 restaurants materially affects the information presented in Part 1.
- The franchisor does not have all of the information necessary in order to provide the same information for franchised restaurants, but the franchisor does not believe there to be any material financial or operational differences between these affiliate-owned restaurants and franchised restaurants.
Average Gross Sales, Expenses, and EBITDA for Affiliate-Owned Restaurants Open for a Minimum of One Full Fiscal Year as of December 30, 2018