Detailed Estimates of Donatos Pizza Franchise Costs Based on Item 7 (Estimated Initial Investment) of Donatos Pizza’s 2020 Franchise Disclosure Document
1. Initial Franchise Fee: $30,000
2. Security Deposit Under Lease: $2,000 to $4,200
3. Three Months’ Lease Rent and Real Estate Expense: $6,000 to $12,700
- A typical Donatos Pizza Restaurant’s premises range from 1,400 to 2,500 square feet and are located in-line within a commercial strip center. This range represents the estimated initial investment for a typical Donatos Pizza Restaurant of 2,000 square feet which accommodates 25 to 35 seats, although you may choose to build a stand-alone restaurant at an acceptable site or a restaurant with more or fewer seats. Unless the franchisor specifies otherwise, each Donatos Pizza Restaurant must have a pick-up window.
- Because of the numerous variables that affect the value of a particular piece of real estate, this initial investment range does not reflect the potential purchase cost of real estate or the costs of constructing a building suitable for the Restaurant.
4. Leasehold Improvements/Construction: $34,000 to $260,000
- This figure represents the franchisor’s estimate of your costs for the construction build-out and leasehold improvements based upon $100 per square foot to $130 per square foot for a typical Donatos Pizza Restaurant located inline within a commercial strip center and leasing 2,000 square feet to accommodate 25 to 35 seats.
- All leasehold improvements must conform to the franchisor’s standards and specifications. You are responsible for ensuring your final leasehold improvements conform not only to the franchisor’s specifications, but also all local laws and building codes.
- Your ability to negotiate landlord contributions or allowances for your leasehold improvements will substantially impact your initial investment. Your total net cost to build-out your Restaurant may be significantly impacted by the level of tenant improvement allowances you negotiate and receive from your landlord.
- This fee also includes estimated charges and expenses for architectural permit drawings, permits, construction, remodeling, and decorating costs. This estimate does not include costs associated with constructing a building shell, extensive redesign, permitting variances, legal obstacles, or legal fees in negotiating your lease agreement.
- Additionally, this cost estimate assumes that your landlord will provide you with necessary utility fixtures and connections for your premises, including water and sewer lines, electrical circuit breaker, one 120/208 volt 3 phase 4 wire 400 amp main electricity distribution panel, two-inch gas line (with half pound minimum pressure), telephone sleeves, and HVAC (calculated at approximately 1 ton per 100 square foot) unit with distribution, duct work, grills, and diffusers. If the landlord does not provide the foregoing utility fixtures, your initial cost for leasehold improvements may be greater than the estimate provided.
5. Furniture, Fixtures, and Equipment: $231,000 to $249,500
- This figure is an estimate of the pretax costs for equipment, fixtures, signage, and other fixed assets for your Restaurant. The estimates are based upon the equipment and fixtures necessary for a 2,000 square foot premise, accommodating 25 to 35 seats.
- Equipment, fixtures, and signage must conform to the franchisor’s standards and specifications.
- While the required equipment package for the kitchen and the “back-of-house” of the Restaurant is relatively consistent regardless of the size of your premises, if you lease less than 2,000 square feet for your Restaurant, you will need less equipment and furniture for your dining room and signage purposes, allowing you to stay on the lower end of the estimate. If you lease more than 2,000 square feet for your Restaurant, you will need more equipment and furniture for your dining room, which will bring you the higher end of the estimate.
- This estimate includes equipment such as 3 conveyor 170,000 BTU gas-fired impingement-driven conveyor ovens, but excludes delivery vehicles, the point-of sale equipment, and all Computer System components.
6. Computer System: $16,000 to $18,000
- If you open a new Restaurant, you must buy the designated Computer System. The franchisor sells the Computer System components to you at cost without a mark-up, and such components cost between $6,000 and $8,000, depending upon the size of the Restaurant.
- You must purchase the remaining components of the Computer System from the franchisor’s designated and approved third-party vendors with costs ranging between $10,000 and $13,000.
7. TRIO Software License Fee: $4,500
8. Liquor License: $0 to $10,000
- The franchisor does not require Donatos Pizza Restaurants to obtain a license to serve beer and wine before opening, but you might choose to do so.
- The franchisor developed this estimate based on its and its predecessors’ experience in obtaining liquor licenses in the states and municipalities in which it operates company-owned Donatos Pizza Restaurants. The costs for obtaining a liquor license in other jurisdictions (for example, in jurisdictions that consider a liquor license to be an asset that a licensee can resell) may be substantially higher, up to $100,000 or more.
9. Opening Inventory and Supplies: $10,000 to $15,000
- This is for the initial inventory of products and supplies (including food items, beverages, paper products, uniforms, other production supplies, and similar items) necessary to open the Restaurant according to the franchisor’s Operating Standards. The amount depends mostly on your Restaurant’s size.
10. Grand Opening Marketing Program and Initial Marketing Expenses: $25,000 to $30,000
- You are required to execute a grand opening marketing program for the Restaurant in accordance with the Operating Standards for the grand opening of your Restaurant (the “Grand Opening Marketing Program”). The Grand Opening Program is approximately 15 weeks in duration, spanning 2 to 4 weeks before the Restaurant opens and 12 to 13 weeks after the grand opening of the Restaurant.
- You must spend at least $25,000 on the Grand Opening Marketing Program and may spend more, but the franchisor does not require you to spend more than $30,000.
- All costs and expenses spent on the Grand Opening Marketing Program are in addition to the Marketing Spending Requirement for your Restaurant. The franchisor does not credit your Marketing Spending Requirement with amounts you spend on the Grand Opening Marketing Program.
11. Training Expenses: $1,000 to $20,000
- This item estimates the reasonable travel and living expenses, including airfare, which you will incur when you and your associates attend the initial training programs. It does not include any wages or salary for you or your associates during training.
- This amount does not include the additional Training Fee which would be assessed by the franchisor for training of your second Restaurant or any subsequent Restaurant at which you choose to receive the Opening Training.
12. Miscellaneous Opening Costs: $2,000 to $5,000
- This covers miscellaneous opening costs and expenses, including costs for telephone service; deposits for gas, electricity, and similar items; costs for business licenses; legal and accounting expenses; insurance premiums; and the initial web-based learning management system (LMS) monthly fees in connection with the Donatos University training program. These miscellaneous costs are payable to third parties as incurred or as required by the third parties.
13. Additional Funds for 3 Months: $25,000 to $40,000
- This item estimates your initial start-up expenses (other than the items identified separately in the table). These expenses include payroll costs during the Restaurant’s operation but not any draw or salary for you. These figures are estimates, and the franchisor cannot guarantee that you will not have additional expenses starting the business.
14. Total: $386,500 to $698,900
- The franchisor relied on its predecessors’ experience in operating Donatos Pizza Restaurants since 1963 to compile these estimates (including the estimate of additional funds). These estimates are the costs you can reasonably expect to incur in the opening of your first Restaurant.