Little Caesars Franchise Costs: Estimated Initial Investment (Item 7, 2021 FDD)
1. Initial Franchise Fee: $15,000 to $20,000
- The lower end of the range assumes an initial franchise fee of $15,000 applies. However, the initial franchise fee could be as low as zero for a qualifying service-disabled veteran.
2. Rent: $1,500 to $7,000
- The estimate assumes a Little Caesars Restaurant of 1,200 to 1,600 square feet. The estimate is for one month’s rent, which may include base rent and additional rent such as prorated expenses for common area maintenance, property taxes, and insurance. In addition to monthly rent, you may have to pay a lease deposit to the lessor.
- If you purchase real property, the cost would be significantly more than the estimate in the chart, and would vary depending upon the location and other factors.
- Little Caesars may test Restaurants of smaller size in rural or urban areas and/or Non-Traditional Restaurants in locations where retail space is limited or especially costly, such as convenience stores and gas stations; these Restaurants may be as small as 400 to 800 square feet. Little Caesars estimates that the monthly rent for an 800 square foot Restaurant would range from $1,000 to $4,000, but the rent may be higher in urban areas or particular facilities.
3. Leasehold Improvements: $50,000 to $1,000,000
- Leasehold improvements must conform to Little Caesars’ standard specifications. Little Caesars will provide you with prototype plans. You will be responsible for ensuring that your final plans conform to local laws and building codes, which may involve paying architect and/or engineering fees, as well as the cost of building permits.
- Leasehold improvement costs vary considerably according to fair market values in your area, your real estate interest (leasehold or ownership), the size of the Restaurant, location, and whether you or your landlord develops the location.
- The estimated range does not include extraordinary costs, such as costs related to extensive redesign, permitting variances, legal obstacles, impact fees, utility connections, etc.
- Little Caesars may test Restaurants as small as 400 to 800 square feet in certain circumstances. Little Caesars estimates that the cost of leasehold improvements for an 800 square foot Restaurant would range from $50,000 to $150,000, but the cost may be higher in urban areas or particular venues.
- Additional factors that typically affect your initial investment include your cost to negotiate the lease (or buy the property), including legal fees, local real estate market values, terms under which other locations have been leased, how the costs to renovate or develop the land, building, and other site improvements are allocated between you and the landlord, interest costs, and the negotiations of the parties, among others.
4. Fixtures, Equipment, and Signage: $186,000 to $392,000
- Fixtures, equipment, and signage must conform to Little Caesars’ standard specifications. The estimated range is for new items; you may be able to acquire certain equipment or other items used if they are in good condition and meet Little Caesars’ specifications.
- The estimated range includes the Caesar Vision system, dough process, Pizza Portal equipment, and other required pre-opening items from Blue Line. The estimate does not include the price of the M.I.K.E. system, which is optional as of the date of the disclosure document.
- Little Caesars may test Restaurants as small as 400 to 800 square feet in certain circumstances. Little Caesars estimates that the lower end of the estimated cost range for fixtures, equipment, and signage for an 800 square foot Restaurant would be below the low end of the estimated cost range shown above.
5. Grand Opening Advertising: $12,000 to $20,000
- The lower end of the range is the minimum that you must spend for a grand opening local advertising and promotional program. This is for a program that Little Caesars considers basic. The upper end of the range is Little Caesars’ estimate of the cost for what it considers to be a “strong” grand opening plan.
6. Training Expenses: $12,000 to $16,500
- The estimate includes a fee of $125.40 for the National Restaurant Association’s ServSafe program.
7. Start-up Inventory and Supplies: $63,000 to $154,000
- The estimated range given is for supplies and the initial amount of products needed to open the Restaurant. The estimated range includes pre-opening items from Blue Line.
8. Insurance: $1,200 to $2,000
- Before signing a lease and opening the Restaurant, you must obtain, at your own expense, an insurance policy or policies protecting you, Little Caesars and its affiliates, and Little Caesars’ and their respective shareholders, directors, employees, and agents against any demand or claim with respect to personal or bodily injury, death, or property damage, or any loss, liability, or expense arising or occurring at or in connection with the Restaurant.
9. Utility Expenses: $1,000 to $7,500
- In addition to monthly charges, you may need to provide deposits for utilities. The amount of such deposits and utility costs will vary with the location of the Restaurant and the practices of the utility companies.
10. Licenses and Permits: $1,000 to $20,000
- This estimate includes business licenses and health department certificates. Some municipalities have higher fees or charges than others. Little Caesars generally does not permit the sale of alcohol, but if your Restaurant is one of the exceptions allowed to serve alcoholic beverages, your licensing expenses will be greater.
11. Additional Funds for 3 Months: $17,000 to $47,000
- You will need capital to support on-going expenses, such as payroll, to the extent that these costs are not covered by sales revenue. This amount includes accounting and legal expenses. New businesses often generate a negative cash flow.
- Your costs will depend on factors such as: how closely you follow Little Caesars’ methods and procedures; your management skill, experience, and business acumen; local economic conditions; the local market for Little Caesars’ products; the prevailing wage rate; competition; and the sales level reached during the initial period.
- Little Caesars estimates that the amount given will be sufficient to cover on-going expenses in excess of cash receipts for the first 3 months of Restaurant operations, excluding royalty and advertising contributions. This is only an estimate, however, and there is no assurance that additional working capital will not be necessary during or after the initial phase.
- In formulating the estimated amount of additional funds, Little Caesars relied on its 60+ years of operating Restaurants and 58 years of franchising Restaurants. These estimates involve Restaurants which follow Little Caesars’ grand opening and marketing plans.
12. Total: $359,700 to $1,686,000