FDD Talk: Toppers Pizza Franchise Costs, Fees, Average Revenues and/or Profits (2022 Review)

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

• Section I – Estimated initial investment (franchise costs) for a Toppers Pizza franchise, based on Item 7 of the company’s 2022 FDD

• Section II – Initial franchise fee, royalty fee, and marketing fee for a Toppers Pizza franchise, based on Items 5 and 6 of the company’s 2022 FDD

• Section III – Number of franchised and company-owned Toppers Pizza outlets at the start of the year and the end of the year for 2019, 2020, and 2021, based on Item 20 of the company’s 2022 FDD

• Section IV – Background information on the Toppers Pizza franchise opportunity, including relevant news updates

• Section V – Presentation and analysis of Toppers Pizza’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2022 FDD, including information on the:

• 2021 average, median, highest, and lowest gross sales for all Toppers Pizza restaurants (both affiliate-owned and franchised) that were open as of January 2, 2022, and that had been open and operating for at least the full fiscal year

• 2021 average, median, highest, and lowest gross sales, cost of goods sold, cost of labor, and EBITDA for all Toppers Pizza restaurants (both affiliate-owned and franchised) that were open and in operation continuously during the entire 2021 fiscal year and provided complete reports of their profit and loss information

• Section VI – Key ratios, comparables, computations, and analyses for the Toppers Pizza franchise opportunity (exclusive content for Platinum subscribers)

Section I – Toppers Pizza Franchise Costs

• Toppers Pizza franchise costs, based on Item 7 of the company’s 2022 FDD:

• Initial Franchise Fee:  $30,000
• Travel and Living Expenses for Your Initial Training:  $2,000 to $10,000
• Travel and Living Expenses for Toppers Pizza’s Training Team:  $525 to $12,000
• Equipment and Smallwares:  $105,100 to $141,100
• Construction and Leasehold Improvements:  $90,000 to $202,500
• Indoor and Outdoor Signage:  $10,000 to $23,000
• Pre-Opening Salaries and Payroll:  $5,500 to $10,500
• Pre-Opening Rent:  $0 to $12,000
• Utility and Insurance Deposits:  $2,000 to $6,000
• Market Introduction and Team Recruiting Program:  $8,000 to $11,000
• Opening Inventory:  $5,000 to $11,000
• Architectural Fees:  $9,500 to $14,000
• Permits and Professional Fees:  $2,250 to $6,000
• POS System Hardware:  $16,000 to $20,000
• POS System Software Licenses:  $2,500
• POS System Installation:  $2,000 to $5,000
• Project Management:  $7,500
• Opening Extension Fee:  $0 to $5,000
• Additional Funds for 3 Months:  $25,000 to $50,000
• Total Estimated Toppers Pizza Franchise Costs:  $322,875 to $578,100

Section II – Toppers Pizza’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Toppers Pizza’s initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2022 FDD:

• Initial Franchise Fee:  $30,000
• Continuing Royalty:  5.5% of Gross Sales
• Brand Development Fund Fee:  3.3% of Gross Sales

Section III – Number of Franchised and Company-Owned Toppers Pizza Outlets

Franchised

2019

• Outlets at the Start of the Year:  56
• Outlets at the End of the Year:  47
• Net Change:  -9

2020

• Outlets at the Start of the Year:  47
• Outlets at the End of the Year:  47
• Net Change:  0

2021

• Outlets at the Start of the Year:  47
• Outlets at the End of the Year:  44
• Net Change:  -3

Company-Owned

2019

• Outlets at the Start of the Year:  21
• Outlets at the End of the Year:  20
• Net Change:  -1

2020

• Outlets at the Start of the Year:  20
• Outlets at the End of the Year:  20
• Net Change:  0

2021

• Outlets at the Start of the Year:  20
• Outlets at the End of the Year:  26
• Net Change:  +6

Section IV – Background Information on the Toppers Pizza Franchise

17 Things You Need to Know About the Toppers Pizza Franchise

Introduces New Loyalty Program

1.  In mid-June 2021, Toppers Pizza launched a new loyalty program called “The Upper Crust Society.” The program is designed to reward the brand’s best customers with deals and savings on Toppers’ addictive pizza and Topperstix. The Upper Crust Society is a loyalty program like many others in the sense that customers can earn points with each purchase and redeem those points for discounts on Toppers products. The Society is for those who don’t typically join exclusive fancy pants clubs and understand that the finer things in life don’t need to be expensive.

2.  Greg Wold, vice president of marketing for Toppers, said, “We are very excited to launch The Upper Crust Society for our passionate and loyal customers. The program’s tongue in cheek tagline ‘Rewards Exclusively for Everyone’ is meant to make members feel like they are a part of something welcoming and fun without all the crap that typically comes with an exclusive club. And, they get rewarded for eating something they love.”

3.  The rules of The Upper Crust Society are simple. Members will earn 1 point for every dollar spent. For every 100 points, customers will receive a $10 reward they can use toward any Toppers menu items. Toppers is also rewarding new Upper Crust Society members with a free order of Topperstix when they sign up for the program, and they are automatically entered to win free Topperstix for life. The program also has referral and birthday rewards for customers throughout the life of their membership. Customers can track all of their purchases, points, and rewards through the Toppers website.

4.  Toppers CEO Scott Gittrich said, “Toppers Pizza fans are very passionate about our product and order it over and over again. This program is built to show those folks how much we appreciate and value them. It just makes sense for our brand AND our customers. It’s also just very Toppersesque to juxtapose an exclusive club with QSR pizza, it should be a lot of fun!”

5.  Toppers Pizza will be using its loyal fans and select influencers to promote The Upper Crust Society and build excitement for the program through social media. One of those influencers is Jonathan Taylor, NFL running back for the Indianapolis Colts and Toppers Pizza franchisee. Taylor and other social media influencers will use their platforms to promote the program with videos, incentives, and challenges.

6.  Taylor said, “I’m thrilled to be a part of the Toppers organization, and this loyalty program will only add more value and excitement for our already amazing fans. We’ll be active on social media over the coming months to get the word out and get people excited about everything they can earn through the program.”

Rolls Out Plant-Based Menu

7.  In early July 2021, Toppers Pizza rolled out an innovative plant-based menu that capitalizes on its new partnerships with plant-based product companies Beyond Meat, a leader in plant-based meat, and Caulipower. From vegan to gluten-free to plant-based meat, Toppers’ new crust and pizza recipes, along with the vegan pizza and Topperstix, will begin the comprehensive plant-based menu that is designed to accommodate a variety of food lifestyles.

8.  Mac Malchow, director of national marketing and menu innovation for Toppers, said, “We believe our customers’ food preferences and needs shouldn’t prevent them from enjoying our beloved, high-quality pizza, signature wings and Topperstix. Our new partnerships with Beyond Meat and Caulipower allow us to expand our menu offerings to address a growing demand for plant-based products that are both healthy and environmentally friendly.”

9.  Toppers will offer three new menu items featuring Beyond Meat’s newest plant-based chicken product, Beyond Chicken Tenders:

• Buffalo Chicken-Less Topper Pizza – Buffalo sauce, topped with dairy-free mozzarella, crispy plant-based Beyond Chicken Tenders, green onions, and drizzled with dairy-free ranch.

• Vegan Nashville Hot & Crispy Pizza – Toppers’ signature Nashville Hot sauce topped with dairy-free mozzarella, crispy plant-based Beyond Chicken Tenders, garlic-roasted tomatoes, green onions, and drizzled with dairy-free ranch sauce and served with a side of bread & butter pickles.

• Beyond Meat Chicken Tenders – a side of five breaded plant-based Beyond Chicken Tenders served with your choice of dipping sauce.

10.  Tim Smith, Beyond Meat’s vice president of North America sales, foodservice, said, “We’re delighted that Toppers is offering the new, breakthrough Beyond Chicken Tenders as part of their plant-based menu launch at all locations nationwide. Our partnership with Toppers underscores the versatility of Beyond Chicken Tenders and advances our mission to make delicious plant-based meat options accessible to more consumers.”

11.  Crafted to look, cook, and taste like animal-based chicken, Beyond Chicken Tenders offer 14g of protein per serving, have no cholesterol, and are made with no GMOs, antibiotics, or hormones. Through its partnership with Caulipower, Toppers is introducing the Caulipower King premium pizza, featuring Toppers’ homemade pizza sauce, 100% Wisconsin mozzarella and pepper jack cheeses, pepperoni, and hand-picked sausage on top of a 12″ gluten-free cauliflower crust made by Caulipower.

12.  Julie Lim, president of sales, foodservice for Caulipower, added, “Toppers has always been a leader in menu innovation, and the launch of its comprehensive plant-based menu is yet another example of the brand’s innovative spirit. Caulipower is thrilled to partner with Toppers as they deliver tasty, healthy, vegetable-forward options to customers nationwide.”

13.  The menu will also introduce a new cheese- and nut-free pesto base sauce that will appeal to vegans and nut-allergy sufferers alike. The new pesto sauce will be featured as the base ingredient in its new Pesto Margherita Topper offering, which includes roasted garlic, diced tomatoes, and either 100% Wisconsin mozzarella or dairy-free mozzarella cheese. Toppers will also offer two new vegan options: the Vegan Topper with homemade pizza sauce topped with garlic-roasted tomatoes, green olives, spinach, and dairy-free mozzarella; and Veganstix, a meat- and dairy-free version of its signature Topperstix.

14.  “We’re excited to introduce these new offerings that will appeal to even more customers in our communities,” added Malchow. “Our new cauliflower-based crust, nut-free pesto sauce and vegan offerings – including the introduction of Beyond Chicken Tenders – reflect our dedication to innovating and evolving in order to meet our customers’ needs.”

Company History

15.  Toppers Pizza was founded in 1991 by Scott Gittrich in Champaign, Illinois. While he was a student at the University of Illinois, Gittrich began working for Domino’s as a delivery driver. He worked his way up through the company and eventually became the director of operations for a group of Domino’s franchisees. After saving up for years, Gittrich decided to open his own pizza restaurant.

16.  The first Toppers was successful, but the restaurant closed after just a few years. However, Gittrich opened a second location in Whitewater, Wisconsin. This store became the flagship location of Toppers Pizza and Gittrich moved headquarters to Wisconsin.

17.  Over the next few years, Gittrich slowly grew Toppers in the region. In 2002, Gittrich began franchising the Toppers Pizza concept. Growth has been slow and steady and Toppers is primarily located in the Midwestern U.S.

Entrepreneur’s Franchise 500

18.  Toppers Pizza did not rank on Entrepreneur’s 2022 Franchise 500 list.

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Toppers Pizza Franchise (Item 19, 2022 FDD)

Part 1 – 2021 Average Gross Sales

• The following tables contain Gross Sales information for the fiscal year ended January 2, 2022, for all restaurants (both affiliate-owned and franchised) that were open as of January 2, 2022, and that had been open and operating for at least the full fiscal year.

• As of January 2, 2022, there were 70 Toppers Pizza restaurants open and operating, 66 of which operated during the entire 2021 fiscal year. Of those 70 Toppers Pizza restaurants, 44 were franchised and 26 were affiliate-owned.

• Two of the 44 franchised restaurants and two of the 26 affiliate-owned restaurants did not operate during the entire 2021 fiscal year, so those restaurants were excluded from the results that Toppers Pizza used to prepare the tables in Part 1.

• The 2021 fiscal year ran from December 28, 2020 to January 2, 2022.

• Four of the restaurants included in affiliate-owned restaurants were acquired from a franchisee in September 2021, but were managed and operated by the affiliate for three months prior to the acquisition.

A.  All Restaurants

Open at Least 13 Periods

• Number of Outlets in Data Set:  66
• Average Gross Sales:  $1,152,702
• Number That Met or Exceeded the Average:  28 (42%)
• Highest Gross Sales:  $2,148,744
• Lowest Gross Sales:  $592,794
• Median Gross Sales:  $1,099,007

Open at Least 26 Periods

• Number of Outlets in Data Set:  64
• Average Gross Sales:  $1,164,583
• Number That Met or Exceeded the Average:  25 (39%)
• Highest Gross Sales:  $2,148,744
• Lowest Gross Sales:  $592,794
• Median Gross Sales:  $1,102,051

Open at Least 39 Periods

• Number of Outlets in Data Set:  64
• Average Gross Sales:  $1,164,583
• Number That Met or Exceeded the Average:  25 (39%)
• Highest Gross Sales:  $2,148,744
• Lowest Gross Sales:  $592,794
• Median Gross Sales:  $1,102,051

Open at Least 52 Periods

• Number of Outlets in Data Set:  60
• Average Gross Sales:  $1,187,284
• Number That Met or Exceeded the Average:  26 (43%)
• Highest Gross Sales:  $2,148,744
• Lowest Gross Sales:  $592,794
• Median Gross Sales:  $1,116,396

Open at Least 65 Periods

• Number of Outlets in Data Set:  58
• Average Gross Sales:  $1,195,761
• Number That Met or Exceeded the Average:  25 (43%)
• Highest Gross Sales:  $2,148,744
• Lowest Gross Sales:  $592,794
• Median Gross Sales:  $1,116,396

B.  Affiliate-Owned Restaurants

Open at Least 13 Periods

• Number of Outlets in Data Set:  24
• Average Gross Sales:  $1,161,411
• Number That Met or Exceeded the Average:  10 (42%)
• Highest Gross Sales:  $2,000,727
• Lowest Gross Sales:  $742,765
• Median Gross Sales:  $1,089,988

Open at Least 26 Periods

• Number of Outlets in Data Set:  23
• Average Gross Sales:  $1,179,613
• Number That Met or Exceeded the Average:  9 (39%)
• Highest Gross Sales:  $2,000,727
• Lowest Gross Sales:  $794,821
• Median Gross Sales:  $1,098,954

Open at Least 39 Periods

• Number of Outlets in Data Set:  23
• Average Gross Sales:  $1,179,613
• Number That Met or Exceeded the Average:  9 (39%)
• Highest Gross Sales:  $2,000,727
• Lowest Gross Sales:  $794,821
• Median Gross Sales:  $1,098,954

Open at Least 52 Periods

• Number of Outlets in Data Set:  23
• Average Gross Sales:  $1,179,613
• Number That Met or Exceeded the Average:  9 (39%)
• Highest Gross Sales:  $2,000,727
• Lowest Gross Sales:  $794,821
• Median Gross Sales:  $1,098,954

Open at Least 65 Periods

• Number of Outlets in Data Set:  23
• Average Gross Sales:  $1,179,613
• Number That Met or Exceeded the Average:  9 (39%)
• Highest Gross Sales:  $2,000,727
• Lowest Gross Sales:  $794,821
• Median Gross Sales:  $1,098,954

C.  Franchised Restaurants

Open at Least 13 Periods

• Number of Outlets in Data Set:  42
• Average Gross Sales:  $1,147,726
• Number That Met or Exceeded the Average:  18 (43%)
• Highest Gross Sales:  $2,148,744
• Lowest Gross Sales:  $592,794
• Median Gross Sales:  $1,102,051

Open at Least 26 Periods

• Number of Outlets in Data Set:  41
• Average Gross Sales:  $1,156,122
• Number That Met or Exceeded the Average:  18 (44%)
• Highest Gross Sales:  $2,148,744
• Lowest Gross Sales:  $592,794
• Median Gross Sales:  $1,105,042

Open at Least 39 Periods

• Number of Outlets in Data Set:  41
• Average Gross Sales:  $1,156,122
• Number That Met or Exceeded the Average:  18 (44%)
• Highest Gross Sales:  $2,148,744
• Lowest Gross Sales:  $592,794
• Median Gross Sales:  $1,105,042

Open at Least 52 Periods

• Number of Outlets in Data Set:  37
• Average Gross Sales:  $1,192,053
• Number That Met or Exceeded the Average:  17 (46%)
• Highest Gross Sales:  $2,148,744
• Lowest Gross Sales:  $592,794
• Median Gross Sales:  $1,135,451

Open at Least 65 Periods

• Number of Outlets in Data Set:  35
• Average Gross Sales:  $1,206,373
• Number That Met or Exceeded the Average:  16 (46%)
• Highest Gross Sales:  $2,148,744
• Lowest Gross Sales:  $592,794
• Median Gross Sales:  $1,135,451

• Gross Sales are calculated in the same manner as you will calculate Gross Sales under the Franchise Agreement.

• “Gross Sales” means all sums or value received or receivable by you, directly or indirectly, in cash, exchange, or barter, from or in connection with the operation of your restaurant, excluding monies collected for taxes chargeable to customers by law.

• Gross Sales include revenues generated from the sale of food, beverages, and other goods and products (including vending machines, games, slot machines, automated teller machines, amusement rides, and telephones, which shall in any event be subject to Toppers Pizza’s prior written approval), and from the rendering of services of any kind or nature, at or from your restaurant, or under, or in any way connected with the use of the Marks, whether for cash, credit, or barter (the Gross Sales amount from any barter shall equal the fair market value of that barter).

• Toppers Pizza includes gift certificate, gift card, or similar program payments in Gross Sales when the gift certificate, gift card, other instrument, or applicable credit is redeemed.

• Gross Sales also include all insurance proceeds you receive for loss of business due to a casualty to or similar event at your restaurant.

• There shall be deducted from Gross Sales for purposes of said computation (but only to the extent that they have been included) the amount of all sales tax receipts or similar tax receipts which, by law, are chargeable to customers, if such taxes are separately stated when the customer is charged, and the amount of any reasonable, actual, and verifiable refunds, rebates, over-rings, and allowances given to customers in good faith.

• Approximately 75% of the Toppers Pizza restaurants shown in the tables in Part 1 above are located within the states of Minnesota and Wisconsin. Accordingly, the Gross Sales of these Toppers Pizza restaurants are impacted by the recognition and goodwill that Toppers Pizza restaurants benefit from within those states and the Midwest more broadly.

• Although the franchisor believes Toppers Pizza restaurants have consumer appeal that will extend well beyond the Midwest, the concept has had only limited operating history outside of its core market of the Midwest.

Part 2 – 2021 Profit and Loss

• The following tables contain profit and loss information for the fiscal year ended January 2, 2022, for 53 of the 66 (80%) Toppers Pizza restaurants that were open and in operation continuously during the entire 2021 fiscal year. Of those 53 Toppers Pizza restaurants, 33 were franchised and 20 were affiliate-owned.

• Toppers Pizza excluded from the results in this Part 2 the four affiliate-owned restaurants that were acquired from a franchisee in September 2021 as Toppers Pizza does not have all of the information from those restaurants for the period prior to acquisition.

• Also excluded from the results in this Part 2 are nine franchised restaurants that did not provide complete reports of their profit and loss information.

A.  All Restaurants

Gross Sales

• Average Gross Sales:  $1,185,269
• Number That Met or Exceeded the Average:  24 (45%)
• Highest Gross Sales:  $2,148,744
• Lowest Gross Sales:  $592,794
• Median Gross Sales:  $1,106,296

Cost of Goods Sold

• Average Cost of Goods Sold:  27.1%
• Number That Met or Exceeded the Average:  25 (47%)
• Highest Cost of Goods Sold:  31.8%
• Lowest Cost of Goods Sold:  23.0%
• Median Cost of Goods Sold:  27.4%

Cost of Labor

• Average Cost of Labor:  25.5%
• Number That Met or Exceeded the Average:  29 (55%)
• Highest Cost of Labor:  36.9%
• Lowest Cost of Labor:  19.6%
• Median Cost of Labor:  24.9%

EBITDA

• Average EBITDA:  $122,459
• Number That Met or Exceeded the Average:  24 (45%)
• Highest EBITDA:  $432,160
• Lowest EBITDA:  ($42,091)
• Median EBITDA:  $93,998

B.  Affiliate-Owned Restaurants

Gross Sales

• Average Gross Sales:  $1,173,477
• Number That Met or Exceeded the Average:  9 (45%)
• Highest Gross Sales:  $2,000,727
• Lowest Gross Sales:  $742,765
• Median Gross Sales:  $1,106,494

Cost of Goods Sold

• Average Cost of Goods Sold:  26.6%
• Number That Met or Exceeded the Average:  10 (50%)
• Highest Cost of Goods Sold:  28.9%
• Lowest Cost of Goods Sold:  23.0%
• Median Cost of Goods Sold:  26.5%

Cost of Labor

• Average Cost of Labor:  23.4%
• Number That Met or Exceeded the Average:  10 (50%)
• Highest Cost of Labor:  28.3%
• Lowest Cost of Labor:  19.6%
• Median Cost of Labor:  23.5%

EBITDA

• Average EBITDA:  $115,377
• Number That Met or Exceeded the Average:  9 (45%)
• Highest EBITDA:  $351,794
• Lowest EBITDA:  ($42,091)
• Median EBITDA:  $96,269

C.  Franchised Restaurants

Gross Sales

• Average Gross Sales:  $1,192,416
• Number That Met or Exceeded the Average:  16 (49%)
• Highest Gross Sales:  $2,148,744
• Lowest Gross Sales:  $592,794
• Median Gross Sales:  $1,106,296

Cost of Goods Sold

• Average Cost of Goods Sold:  27.7%
• Number That Met or Exceeded the Average:  12 (36%)
• Highest Cost of Goods Sold:  31.8%
• Lowest Cost of Goods Sold:  23.5%
• Median Cost of Goods Sold:  28.4%

Cost of Labor

• Average Cost of Labor:  27.8%
• Number That Met or Exceeded the Average:  17 (52%)
• Highest Cost of Labor:  36.9%
• Lowest Cost of Labor:  21.9%
• Median Cost of Labor:  27.0%

EBITDA

• Average EBITDA:  $126,756
• Number That Met or Exceeded the Average:  14 (42%)
• Highest EBITDA:  $432,160
• Lowest EBITDA:  ($16,170)
• Median EBITDA:  $93,998

• Cost of Goods Sold means the percentage of revenue spent on all food, paper, cardboard, and beverage products used in creating final food and beverage products for customers.

• Cost of Labor means the percent of revenue spent on employees’ actual wages and manager’s salary and does not include any labor taxes or benefits.

• EBITDA means earnings before interest, taxes, depreciation, and amortization.

Section VI – Toppers Pizza Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️