Private Pizza Shop Profits
In this FDD Talk 2015 post, you’ll learn the following:
Just enough to keep the lights on and to (literally) feed his family. An “ordinary” pizza shop owner in America is struggling today. I seriously considered buying a small pizza shop down the road from me a few months ago. How much money do you need to open a pizza place. Jump to Last Post 1-6 of 6 discussions (8 posts) 53. Abodabt posted 9 years ago. How much money do you need to open a pizza place. Reply report. Cagsil posted 9 years ago. How long do you plan on being open? Your food cost for a pizza shop should be no more than 28% of your sales volume.
- Section I – Background information on the Blaze Pizza franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Blaze Pizza franchise, based on Item 7 of the company’s 2015 FDD
- Section III – Presentation and analysis of Blaze Pizza’s financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:
- 2014 average gross sales for the 9 franchised and 1 company-owned Blaze Pizza Restaurants that had been in operation for at least 1 calendar year ending December 31, 2014
- 2014 average gross sales for the 2 Blaze Pizza Restaurants that were open for at least 2 years as of December 31, 2014, as well as their year-over-year growth from the first 12 months of operation to the second 12 months of operation
- 2014 total cost of food and beverages as a percentage of annual gross sales for the company-owned Restaurant
- 2014 total cost of hourly crew labor as a percentage of annual gross sales for the company-owned Restaurant
Section I – Background Information
Fast-Fire’d Custom Built Artisanal Pizzas – that’s the tag line of Blaze Pizza, a relative newcomer to the new fast-casual pizza segment. That segment in and of itself is also still relatively new. There are an estimated 73,000 pizza restaurants in the U.S., but only around 200 can be considered as fast casual.
In 2011, Rick Wetzel, a co-founder of Wetzel’s Pretzels, and his wife Elise were looking around for fast-casual pizza and were surprised to not find anything. In 2012, they decided to remedy this situation by starting Blaze Pizza.
They relied heavily on executive chef Bradford Kent to come up with the recipes. It became the first of the new fast-casual pizza chains to hit 50 locations at the end of 2014.
Similar to other down-the-line franchises (such as Chipotle for burritos and Subway for sandwiches), customers watch their pizza being assembled as they choose the toppings before it goes into the oven.
Based in Pasadena, California, and headed by president and COO Jim Mizes, here’s how this chain is blazing a new trail in the pizza segment:
The Many Choices We Make
Kent perfected an 11-inch thin crust from dough that is allowed to ferment a full 24 hours before it gets shaped into a pizza crust, which is what gives the pies their signature light-as-air crispness. Patrons then choose from among 7 cheeses, 8 proteins, 20 vegetables, and 3 sauces.
Rapid Rise (And I Don’t Mean the Dough)
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In addition to being the first fast-casual pizza chain to surpass the 50-location milestone, Blaze Pizza wants to keep that momentum burning as bright as its pizza ovens. The chain is hoping to not only open 70 restaurants in 2015, it claims to have commitments for 333 more through 2019.
Wetzel says his vision for Blaze is nothing short of making it the Starbucks of pizza. Of course, Starbucks has 12,000 locations in the U.S. (21,000 worldwide), so Blaze has a long ways to go. Shooting for 500 locations by 2020 is ambition enough for the time being.
Hot Stuff
Blaze Pizza’s oven dome temperature can reach upward of 900F, while the floor temperature typically ranges from 600F to 800F.
Private Pizza Shop Profits List
It’s skilled work — and each pizzasmith manning their ovens is specially trained in how to properly rotate pizzas through these different heat zones. They may make it look easy, but “fast-fire’d” crust takes a lot of know-how.
Eco-conscious Choices
Myob accountright premier rapidshare downloads. As the company’s FAQ page states: “…the restaurant has gone to great lengths to see that almost all of its packaging is made in the USA from post-consumer recycled and/or sustainable materials. Forks, knives, cups, lids – even those cute little containers that hold the salad dressing – were specifically chosen because they left a smaller footprint than most other available choices.”
Celebrity backing
Blaze has managed to attract a number of celebrities who not only enjoy the chain’s products, but have invested money into it, including NBA star LeBron James, the former first lady of California Maria Shriver, Boston Red Sox co-owner Tom Werner, and movie producer John Davis.
Section II – Estimated Costs
- Please click here for detailed estimates of Blaze Pizza franchise costs, based on Item 7 of the company’s 2015 FDD (updated).
Section III – Financial Performance Representations (Item 19, 2015 FDD) and Analysis
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Running a pizzeria is a potentially lucrative enterprise given the popularity of pizza in the United States and other parts of the world. According to the trade magazine Pizza Today, the pizza industry grossed between $40 and $44 billion worldwide in 2013, and sales continue to grow. The expected financial returns a pizzeria can generate depend on the size and location of the restaurant.
First Year Sales
For a pizzeria selling entrees at a mid-level price point in a large city, owners can expect to make over $600,000 in gross sales their first year. Of course, the location of the business within the city is critical to meeting or exceeding this figure. For instance, if a pizzeria is located in an affluent community in the suburbs of Los Angeles, then sales might be higher. Pizzerias with a lower price point in small, semi-rural areas may gross far less.
Earnings and Valuation
Earnings before interest, taxes, depreciation and amortization are an indicator of the operational stability and financial health of a pizzeria. EBITDA varies depending on the capital structure of a business and the amount of debt it maintains to run operations. According to the Restaurant Franchise Monitor, franchisee restaurants often sell with a multiple of five times EBITDA, which bodes well for franchise pizzeria operators looking to cash in on their hard work.
Profit Margin
The profit margin pizzerias generate is heavily influenced by the quality of the pizza they sell. In 2012, YCharts reported that Domino’s Pizza had a profit margin of approximately 7.47 percent while Papa John’s margin was 4.64 percent. Papa John’s uses more expensive ingredients compared to Domino's and touts that is sells higher quality pizza. Despite the high quality, Papa Johns does not have as favorable a margin as lower quality establishments. The margin for small pizzerias will vary given the costs of their ingredients and their marketing strategy.
Revenue Growth
Annual revenue growth of five to 10 percent is a common goal for new pizza restaurants. Growth projections are a function of the age of a restaurant and the dynamics of the community in which they operate. If there is a new franchise spreading across the U.S. and there is significant hype preceding a grand opening, revenue growth may be much higher. There will come a point when revenue growth has reached its capacity and owners will have to open up a new location to deal with the increase in consumer demand.
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Resources
About the Author
Joseph DeBenedetti is a financial writer with corporate accounting and quality assurance experience. He writes extensively online with an emphasis on current trends in finance. As a Quality Assurance Analyst, he honed his technical writing skills creating standard operating instructions for a consumer finance organization.
