FDD Talk 2019: Boston’s Pizza Restaurant & Sports Bar Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Boston’s Pizza Restaurant & Sports Bar franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Boston’s Pizza Restaurant & Sports Bar 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 Boston’s Pizza Restaurant & Sports Bar franchise, based on Items 5 and 6 of the company’s 2019 FDD

• Section IV – Number of franchised and company-owned Boston’s Pizza Restaurant & Sports Bar 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 Boston’s Pizza Restaurant & Sports Bar’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:

• 2018 average, median, high, and low sales volume for the top one-third, middle one-third, bottom one-third, and all 20 franchised Boston’s Pizza Restaurant & Sports Bar restaurants located in the United States that have been open for more than 24 consecutive months as of December 31, 2018

• 2018 average, median, high, and low sales volume for the 2 affiliate-owned Boston’s Pizza Restaurant & Sports Bar restaurants located in the United States that have been open for more than 24 consecutive months as of December 31, 2018

Section I – Background Information

21 Things You Need to Know About the Boston’s Pizza Restaurant & Sports Bar Franchise

Unveiled New Strategic Plan to Ramp Up Growth

1.  In mid-April 2019, Boston’s Pizza Restaurant & Sports Bar unveiled its new strategic plan for record-breaking growth this year. The brand’s shifted focus towards a redesign of both menu and restaurant-build positions Boston’s for market dominance in 2019 and for years to come. The new approach incorporates significant upgrades to the franchise model – from the size and design of the restaurant all the way down to the menu itself, further positioning the brand for scalability and potential increased return on investment for franchise partners.

2.  The store redesign incorporates a more flexible footprint, opening opportunity for smaller sites to reduce costs for franchise owners, and makes the brand a better fit for larger urban cities. It also integrates improved technology, upgraded patio spaces with fire pits, and much more.

3.  Stores that have undergone renovations in the brand’s home base, Texas, have already seen significant increases in revenue – peaking at 22 percent growth. The renovation continues as four existing restaurants plan to undergo a refresh in the Northwest, Midwest, and Southeast by 2020.

4.  Additionally, Boston’s plans to launch a new menu sometime this year, centralized on the brand’s signature ingredient – its famous, made-from-scratch dough. The brand’s simplified menu not only homes in on a 50-year traditional recipe, but also lowers food costs for operators by emphasizing dough-based products, ultimately helping to boost return on investment. No stranger to innovation, the brand looks to continue taking innovative strides forward to refine operations and the franchise opportunity for current and potential franchise partners.

5.  Jeff Melnick, president of Boston’s Pizza Restaurant & Sports Bar, said, “The numbers behind our redesigned restaurants, menu and franchise development plans put Boston’s in a position for growth through franchising in order to be America’s best sports restaurant. We look forward to and are committed to seeking out the right franchise partners with a passion for the brand, its values and for making an impact on the community to help us do so.”

6.  In the last half of 2018, Boston’s sales growth was up 0.9 percent over the prior year, and same-store sales growth is budgeted to continue rising higher than the current industry standard during 2019. In addition to impressive sales growth projections, Boston’s strives to grow its footprint by 30 percent every year for the next three years in the United States.

7.  The brand is projecting to open six new restaurants in 2019 – five of which will be in brand new markets. These new restaurants will be followed by a projected nine and twelve new units respectively in the years following, putting Boston’s on track to more than double its footprint in the United States.

Launches New Menu to Evolve and Modernize

8.  Near the end of June 2019, Boston’s Pizza Restaurant & Sports Bar announced that it was focusing on its top-notch quality and gourmet menu items in a new innovative menu. Customers can now experience 80-plus items when they hang out with family, meet up to watch a game, or celebrate a milestone at the restaurant and sports bar. Over 20 of the menu items are making their debut at Boston’s after the gourmet pizza franchise studied market trends, collected guest feedback, and worked with industry experts to bring the new menu to life.

9.  Gourmet favorites like the Mama Meata pizza and the classic Barbecue Chicken pizza remain on the menu, but the brand’s goal of shrinking the size of the menu, making it easier to digest, led to some tough decisions where cuts needed to be made. To offset the removal of specific items, the brand shared recipes of the ones that didn’t make the cut on the brand’s national social media channels.

10.  Boston’s evolution in its core offering – pizza – also led to the brand partnering with CauliPower, a brand carrying some serious street cred that features delicious pizza dough made of cauliflower that is gluten-free and dairy-free.

11.  The lineup of seven new gourmet pizzas was designed to bring taste buds to life, with creations like the Hawaiian BBQ Pizza with mozzarella, ham, pineapple, bacon, Korean barbecue sauce, and green onion; Truffled Mushroom Thin Crust Pizza with Alfredo sauce, mozzarella, button mushrooms, a wild mushroom blend, and truffle Parmesan cheese; and Shrimp on Fire Thin Crust with pizza sauce topped with Cajun grilled shrimp, red and green bell peppers, mozzarella, and green onions.

12.  Boston’s is also offering healthier alternatives to match every lifestyle. The new Beyond Burger, a 100 percent plant-based burger patty which tastes like real meat, and the Quinoa Bowl offer customers healthier options while remaining true to the brand in offering food that is paired well with sports and family gatherings.

13.  For those looking to indulge, back by popular demand and to cap off a perfect summer meal, Boston’s has brought back the Chocolate Explosion, a creamy chocolate mousse with chunks of cheesecake, caramel, toffee, pecans, and almonds on a chocolate crust.

14.  According to Katie Borger, senior director of marketing for Boston’s, “It was important to us to make a ninety degree turn in our menu offering to begin with. Our menu rollout is part of an iterative process where we promise to bring more frequent and relevant innovation to our franchisees and guests. The landscape is too competitive for us to bank on pizza culture to carry us through. We need to be at the forefront of innovation without the gimmicks and ensure the passion we have for food and our age-old traditions of scratch-made dough really shine through to differentiate us as a brand.”

Launches Express Lunch for Customers on the Go

15.  At the beginning of March 2019, Boston’s Pizza Restaurant & Sports Bar introduced its new Express Lunch program for a limited time. From March 4 through May 6, customers dining in from 11 a.m. to 12:30 p.m. were able to experience a full-service lunch in 20 minutes guaranteed or the meal was free. By delivering new and loyal customers the promise of quality, affordable food at a fast pace, Boston’s aims to meet the needs of busy, working individuals looking for a quality meal in a timely manner.

16.  Katie Borger, senior director of marketing for Boston’s, said, “We need to make an impact at lunch by informing guests that we should be a part of the consideration set. We know consumers are looking for quality, value, and speed. Boston’s can deliver upon all three. In the busy world we live in, Boston’s is excited to be the source of great food, friends and fun – even if it’s only for twenty minutes.”

17.  Boston’s new Express Lunch included the following combinations:

• Soup & Salad Combo – House or side Caesar salad with a bowl of soup;
• Sandwich Combo – Selection of a house or side Caesar salad or bowl of soup with a half portion sandwich;
• Nooner Combo – Any of Boston’s individual-sized gourmet pizzas and a side Caesar or house salad.

18.  In addition to the Express Lunch, Boston’s also offered a handful of deals accompanying March Madness. From March 17 to March 24, customers could get a pizza and a pint for $10.99. From March 25 to 31, during the Sweet Sixteen, customers could order a double order of boneless wings for $16. Lastly, during The Final Four from April 1 to 8, customers were able to order a large 4 topping pizza for $19.99.

Company History

19.  Boston’s Pizza Restaurant & Sports Bar began as Boston Pizza and Spaghetti House in 1964 when Greek immigrant Gus Agioritis opened a restaurant in Edmonton, Alberta, Canada. The first Boston Pizza and Spaghetti House restaurant was a success and Agioritis decided to start franchising the concept in 1968 after he was approached by Jim Treliving, a Royal Canadian Mounted Police officer. Treliving partnered with George Melville, a chartered accountant, to open numerous Boston Pizza locations in British Columbia.

20.  In 1978, Agioritis sold Boston Pizza to Ron Coyle, who ran the business for just a few years before selling the chain to Treliving and Melville in 1983. Under Treliving and Melville’s leadership, Boston Pizza grew throughout Western Canada. In the 1990s, Boston Pizza expanded to Eastern Canada as well as the United States. A U.S. headquarters was set up in Dallas, Texas and the U.S. name of the brand was changed to Boston’s The Gourmet Pizza and eventually to its current name, Boston’s Pizza Restaurant & Sports Bar.

21.  Boston’s Pizza Restaurant & Sports Bar has grown slowly in the United States, but the brand maintains a strong presence in Canada.

Entrepreneur’s Franchise 500

22.  Boston’s Pizza Restaurant & Sports Bar ranked No. 464 on Entrepreneur’s 2019 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Boston’s Pizza Restaurant & Sports Bar 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 Boston’s Pizza Restaurant & Sports Bar’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

Franchised

2016

• Outlets at the Start of the Year:  25
• Outlets at the End of the Year:  26
• Net Change:  +1

2017

• Outlets at the Start of the Year:  26
• Outlets at the End of the Year:  22
• Net Change:  -4

2018

• Outlets at the Start of the Year:  22
• Outlets at the End of the Year:  23
• Net Change:  +1

Company-Owned

2016

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  2
• Net Change:  0

2017

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  3
• Net Change:  +1

2018

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  2
• Net Change:  -1

Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis

• This statement includes all Boston’s The Gourmet Pizza Restaurant & Sports Bar Restaurants located in the United States that have been open for more than 24 consecutive months as of December 31, 2018 (“Reporting Period”). These include 20 franchised Restaurants and 2 Restaurants owned by the franchisor’s affiliate (“Item 19 Restaurants”).

• The information below does not include the 1 franchised Restaurant that was not open and operating for the full Reporting Period.

• Part 1 shows the results of the top one-third (7 out of 20) franchised Restaurants. Part 2 shows the results of the middle one-third (7 out of 20) franchised Restaurants. Part 3 shows the results of the lower one-third (6 out of 20) franchised Restaurants. Part 4 shows the results of the 2 affiliate-owned Restaurants.

• Amounts presented represent the total of food, beverage, and other sales net of sales tax, as polled by the franchisor directly from each of the Item 19 Restaurants’ point-of-sale system.

• Sales as shown in this statement do not equate to “Gross Sales” as defined in the Franchise Agreement, instead the term “Sales Volume” relates to the amount captured by each Restaurant’s point of sale system, without any adjustments or credits.

Part 1 – Statement of Average Sales of Top One-Third (7 Out of 20) Franchised Boston’s The Gourmet Pizza Restaurant & Sports Bar for the Year Ended December 31, 2018