In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Pieology franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Pieology 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 Pieology franchise, based on Items 5 and 6 of the company’s 2019 FDD
- Section IV – Number of franchised and company-owned Pieology 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 Pieology’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:
- 2018 average, median, lowest, and highest gross sales for the 19 company-owned Pieology Restaurants that had been in operation in established Pieology markets (all in California) for at least two years as of the end of the 2018 fiscal year
- 2018 average, median, lowest, and highest gross sales for the 38 franchised Pieology Restaurants that had been in operation in established Pieology markets (all in California) for at least two years as of the end of the 2018 fiscal year
Section I – Background Information
18 Things You Need to Know About the Pieology Franchise
Launches Plant-Based Protein Toppings
1. In late January 2019, Pieology became the first fast-casual pizza brand to offer customers not just one, but three new “meat” toppings made of high-quality plant proteins that taste and look just like the real deal.
2. Following the successful launch of a new menu with six premium crusts, the widest selection of offerings in the segment, Pieology continues to expand its menu innovation appealing to new audiences. The company methodically internalizes consumer feedback to deliver on-trend offerings for its personally-inspired next-gen pizzas.
3. The new “Spicy Italian Sausage Rounds,” “Beef Meatball,” and “Diced Chicken” toppings are vegan, non-GMO verified, contain no cholesterol or soluble fats, and are packed with protein. “Spicy Italian Sausage Rounds” are full of protein – about 14 grams per 3-ounce serving – and are seasoned and juicy with a pinch of spice; “Beef Meatball” is tender, tastes and browns like real beef, and contains about 14 grams of protein per serving; while the “Diced Chicken” topping is mild and contains about 20 grams per serving. Premium plant-base toppings will cost an additional one-dollar per ounce.
4. Chad Bailey, vice president of marketing for Pieology, said, “Although vegans, vegetarians and flexitarians will love the new pizza options, the premium toppings are a healthy choice for anyone who wants to enjoy a new style of protein. Over the last few decades, culinary innovation has greatly advanced in the area of plant-based proteins bringing their taste and texture to a remarkable meat-like level. Even our non-vegan guests have been shocked at how tasty our premium plant proteins are and how well they pair with pizza. We’re pleased to be able to serve creativity and provide our guests with a broader assortment of delicious, high-quality toppings than ever before.”
5. At the time of the announcement, Pieology was already offering its new Premium Plant Toppings at 24 locations in California and Las Vegas. Pieology began rolling out the Premium Plant Toppings to all of its continental locations and Guam on February 12.
6. Bailey added, “We know our customers come to us for the best and newest pizza innovations. This is a great new way to eat your veggies, especially when combined with our guest favorite, gluten-free Cauliflower Crust that is also loaded with fiber and vitamins.”
Opens First Non-Traditional College Campus Location
7. At the end of February 2019, Pieology celebrated the grand opening of its first non-traditional location with a a special ribbon-cutting ceremony at California State University, Fullerton, just down the road from the company’s birthplace. Gregg Imamoto, CEO of Pieology, joined Framroze “Fram” Virjee, president of CSUF, and student leader Riley Duncan at the grand opening ceremony.
8. At the request of Virjee, the celebratory ribbon was clipped using a special pizza cutter. CSUF Auxiliary Service Corporation (ASC), the organization that oversees the various business enterprises on campus, is the new Pieology licensee.
9. The first Pieology opened just down the street and the Cal State Fullerton community has played an important part in Pieology’s success story. “This is our first opening on a college campus and we’re excited to be working with the high-caliber ASC team. We’re expecting strong growth in this non-traditional segment, as we develop win-win relationships with many more respected school foodservice providers,” said Imamoto.
Now Offering Six Premium Crust Varieties
10. In mid-October 2018, Pieology launched a new menu that now includes six premium crust varieties. Expanding the fast-casual chain’s robust menu offerings, Pieology is excited to offer Hand-Crafted Deep Dish, Artisan Thin, Artisan Thin Hearty Wheat, PieRise™ THICK, Cauliflower Crust, and Gluten-Free, offering customers even more ways to customize and create their perfect pie.
11. Chad Bailey, vice president of marketing for Pieology, said, “As a leader in the fast-casual pizza industry, Pieology is always looking for new and innovative ways to evolve our menu to bring new varieties and fresh offerings to satisfy consumers’ taste. We know the best pizza starts with the best crust, and are excited to offer Pieology fans even more crust options to top off with our mouthwatering array of fresh toppings.”
12. These new premium offerings come on the heels of the overwhelmingly successful launch of the Cauliflower Crust, which will remain a permanent menu item for those seeking a healthy, veggie-packed alternative to traditional pizza crust. The new crust offerings are available at Pieology stores across the country in six premium varieties:
- Hand-Crafted Deep Dish: Hand-pressed the night before to allow it to rise overnight, this crust is truly indulgent with cheesy, crunchy, caramelized edges. (Due to the time and craftsmanship that goes into Pieology’s new Deep Dish crust, limited quantities will be made fresh daily).
- Artisan Thin: The classic crust you know and love. House-made and hand-stretched, this extra-thin crust is crispy on the bottom and fluffy on the top.
- Artisan Thin Hearty Wheat: Made with a proprietary blend of grains, this wholesome, extra-thin wheat crust is bursting with flavor with a satisfying yet light crust.
- PieRise™ THICK: Made with an extra helping of Pieology’s house-made, fresh signature dough for a thick, fluffy top and crisp bottom. A great option for take-out or delivery.
- Cauliflower Crust: This unique, crispy crust is packed with veggies and mixed with a hint of cheese and brown rice, making it the perfect healthful pairing for any toppings – not to mention, naturally gluten-free! (This product contains milk and eggs, is gluten-gree and rBST-free).
- Gluten-Free: A light, vegan-friendly option that is full of taste and free of gluten. (Pieology’s Gluten-Free pizza crust is made with gluten-free ingredients, however, all of its pizzas are prepared in a common kitchen with the risk of gluten exposure. Pieology does not recommend its gluten-free pizzas for customers with celiac disease. Customers with gluten sensitivities should also exercise caution and judgment when ordering the brand’s gluten-free pizzas).
13. Pieology was founded in 2011 by Carl Chang and his business partner James Markham in Fullerton, California. Chang is the brother of tennis player Michael Chang, who is a significant investor in Pieology. According to Chang, fast food pizza was “somewhat broken” and he wanted to offer an affordable pizza brand that had a similar customization concept to Chipotle’s.
14. The first Pieology store was located near California State University, Fullerton and was initially called Pie-ology Pizzeria. Before starting their own business, both Chang and Markham had been involved with the development of MOD Pizza, which has a similar concept to Pieology. Markham left Pieology after a year and around this same time, Chang opened a second Pieology in Irvine near the University of California, Irvine.
15. For the first few years, Pieology’s growth was restricted to company-owned stores in Southern California. Over the next few years, Chang continued to open a mix of company-owned and franchise stores across the United States.
16. In 2016, Pieology opened its first location outside of the U.S. in the American territory of Guam. That same year, Pieology received an investment from Andrew and Peggy Cherng, the founders of Panda Express. Additionally, Pieology acquired one of its rivals, Project Pie.
17. Although Chang had wanted about 30 percent of Pieology’s stores to be company-owned, in 2018, he decided to restructure the company and focus solely on franchising. As a result, some company-owned stores were closed, but franchise locations were planned for new and existing markets. Also in 2018, Pieology opened its first international location in Mexico and announced that it would also move into Spain.
Entrepreneur’s Franchise 500
18. Pieology did not rank on Entrepreneur’s 2019 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Pieology 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 Pieology’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: 62
- Outlets at the End of the Year: 97
- Net Change: +35
- Outlets at the Start of the Year: 97
- Outlets at the End of the Year: 111
- Net Change: +14
- Outlets at the Start of the Year: 111
- Outlets at the End of the Year: 112
- Net Change: +1
- Outlets at the Start of the Year: 16
- Outlets at the End of the Year: 33
- Net Change: +17
- 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: 22
- Net Change: -11
Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis
- There were 134 Pieology Restaurants operating as of December 31, 2018, 33 of which are company-owned and operated. During the fiscal year ended December 31, 2018, there were 57 Pieology restaurants (the “Covered Restaurants”) that had been in operation in established Pieology markets (all in California) for at least two years as of the end of that fiscal year.
- None of the Covered Restaurants is located at a Non-Traditional Location, and the sales figures in this Item 19 are not derived from, based on, or otherwise related to any Restaurant located in a Non-Traditional Location.
- Restaurants that have been in operation for at least two years are considered to have reached operational maturity and have established trade identity in the market in which they operate.
- As used in this Item 19, “established Pieology markets” means contiguous population areas where there is a concentration of at least 5 operating Pieology restaurants, which is the minimum number of restaurants required to be developed pursuant to a Development Rights Agreement.
- Franchisees operated 38 of the Covered Restaurants (the “Franchised Covered Restaurants”), and Pieology operated the other 19 Covered Restaurants (the “Company-Owned Covered Restaurants”).
- These financial performance representations reflect the historical average Gross Sales for the Franchised Covered Restaurants and the Company-Owned Covered Restaurants during fiscal year 2018.
- Pieology breaks its fiscal years into 13 “Periods,” and the fiscal year ends on the last Monday of the calendar year. Generally each fiscal year comprises of 52 business weeks. In 2018, there were 53 Mondays during the calendar year, hence Pieology’s fiscal year ending December 31, 2018, consists of 53 business weeks.
- The Covered Restaurants had higher average Gross Sales during fiscal year 2018 than the average for all other Pieology Restaurants, which were not in established Pieology markets and were not in California.
- All of the sales figures in the following table pertain to Gross Sales that occurred during Pieology’s fiscal year 2018 from Company-Owned Covered Restaurants or from Franchised Covered Restaurants, as indicated.
Company-Owned Covered Restaurants