Little Caesars Pizza Franchise Startup Cost, Revenue and Profit Margin
Little Caesars Franchise is one of the biggest restaurant brands in the United States. This pizza chain is only behind Pizza Hut and Domino’s Pizza as the third largest pizza franchise chain in the United States.
However, this success was not achieved overnight as the company has had to overcome a variety of challenges and difficulties to get to where it is today.
Our focus is to provide as much information as we can about Little Caesars Franchise.
Is Little Caesars Pizza a Franchise?
If you want a restaurant franchise with a domestic as well as international spread, then Little Caesars is one you should be interested in. With over 5 decades in existence, this restaurant franchise has grown to cover the United States, as well as spread globally.
Today, it has presence in Canada, the Middle East, Asia, Latin America, Australia and the Caribbean. Let’s discuss a little about its history, shall we?
Brief History of Little Caesars Franchise
A little history lesson is important for prospective Little Caesars franchisees. This is because you get to appreciate a business better when you learn about how it all started. You also get learn of its recorded success. These add some level of confidence or otherwise in the business. Little Caesars was founded by Mike and Marian Ilitch in May 8, 1959. Its first location (which is still open to this day) was located at Garden City, Michigan.
It was originally named “Little Caesar’s Pizza Treat.” Since then, the company has expanded by opening more outlets across several cities in the United States and beyond. Its first franchise was sold in 1962. This growth and business strategy led to it having restaurants in all the 50 states within the US in 1987.
Little Caesars Franchise Today
A lot of transition has occurred since the company was founded in 1959. While growing into an international brand, some of its products consist of Crazy Bread, Pizza and Chicken Wings. David Scrivano is its president and Ilitch Holdings is its parent company. Little Caesars global headquarters is located at 2211 Woodward Avenue, Detroit, Michigan, United States.
Its growth has been phenomenal. In 2017, the company had over 5,462 outlets worldwide. Innovation has been part of its growth strategy. One of its several innovative products was “Hot-N-Ready” pepperoni pizza it introduced in 2004. The success that greeted this made it a permanent feature on its menu. It sells for $5. The preference for take-outs has made the company gradually focus more on this type of service.
How Much Does Little Caesars Pizza Franchise Cost?
As a prospective franchisee, there are several financial requirements you need to qualify for. These include liquid assets which should not be less than the sum of $100,000. A minimum net-worth of $250,000 is also required.
These requirements are meant to ascertain your credit worthiness. There are varying carryout location sizes that influence cost.
Pizza shop startup costs of these carryout units range from $334,000 to $1,370,500 depending on the size. Larger units typically go for more and are free-standing buildings.
More Details on Estimated Investments
Little Caesars requires an initial franchise starting from a low of $15,000 to a high of $20,000. This depends on the size of the franchise you are interested in. Rent starts from $1,000 to $7,000. There are also leasehold improvements from $50,000 to $750,000. For grand opening advertising, an investment of $12,000 to $20,000 applies. Fixtures, equipments and signage costs $186,000 to $392,000. Others include;
Little Caesars Pizza Franchise Fee
- Three months additional funds $17,000 $47,000
- Permits and Licenses $1,0001 $20,000
- Insurance $500 $1,500
- Utility Expenses $1,000 $5,000
- Training Expenses $8,000 $11,000
- Start-up Inventory and Supplies $63,000 $154,000
There are several other fees incurred by franchisees. These include $3,000 to $10,000 Caesar Vision System Annual Support paid per annum for each installed restaurant. A mobile transactions fee is also one of the fees you are expected to incur. This is charged at $0.30 per transaction. A fee of $250/day is paid for liquidated damages which arise from failure to comply with post termination obligations.
A commercially reasonable management fee is charged by Little Caesars. For manual update or replacement fee, it is charged according to the franchisor’s then-current fee. Missed meeting fee does not have a specific amount. This varies according to several factors. Late fee is charged according to the franchisor’s then-current late fee.
Interest is either charged at 18% per annum or the maximum rate as permitted by law. There is also a $2,500 relocation fee and a private securities offering that starts at $25,000 including addition sums to cover the franchisor’s out-of-pocket costs to review materials if more than $25,000. If you have requested for a special marketing and operational assistance, this will come at a reasonable fee including expenses.
Indemnification varies with circumstances. There is a variation in Little Caesars transfer fee. This starts from $0 to $5,000 per outlet/restaurant. For franchisees who require additional training for an added number of employees, the fee incurred is not more than $250 per attendee. A 6% royalty of gross sales for each week or $100 for each one week period is paid by franchisees.
For the advertising fee, it is made up of 7% of gross sales as determined by the franchisor.
Little Caesars Franchise Non-Traditional Stores
If you are interested in owning its non-traditional store franchises, you will be presented with three options. These include the Classic Express, the Cashier Express and the Self-Serve Express variants. Each of these has specific features that may suit your needs. Let’s have a brief look at each of these;
- The Classic Express
Under the Classic Express Non-traditional stores, it has a size of 800 square feet. It also has a full menu and staff.
You are offered full franchise support and training. The training lasts a period of 6 weeks and is conducted in Detroit. There are several other features of the Classic Express stores that will be revealed to you in the FDD.
- The Cashier Express
The Cashier Express non-traditional store is 675 square feet in size. This has a limited menu as well as a separate register. It requires lower labour to run. There is an optional breakfast menu available. If you choose to operate this store type, you enjoy full support as well as training which is provided onsite.
- The Self-Serve Express
This is the third variant of the non-traditional Little Caesar stores. It is 475 square feet in size. It has a limited menu offering with self-service warming oven. This system uses the grab-and-go service concept. Customers are offered an optional breakfast menu. The franchisor offers full support and training. The training is provided on-site.
How to Open a Little Caesars Pizza Franchise
The application process from inception to when you open your new Little Caesars franchise store ranges from 4 months to a year. This involves several steps. These steps include the following;
- Submitting Application with Relevant Documents
This is the process of letting the franchisor know about your interest and intentions. While applying for this franchise opportunity, you need to attach all supporting documents with your application.
So what are these supporting documents? They typically include a cover letter, resume, the names and contact information of three professional references, a business plan, and a completed and signed confidential agreement.
Other relevant documents include a completed and signed application form, a financial forecast (the contents of this may include infrastructure, furnishings and equipment among others), revenue projections for the first three years and the financial structure among others.
- The Review Process
After submitting your application and all supporting documents, there is a period of review where the franchisor checks to see if your application meets the requirements. The time required for this process to be complete may vary.
This depends on several factors include the number of applications submitted to it by other applicants like yourself.
- Franchise Disclosure Document Issuance
You are only presented with a Franchise Disclosure Document (FDD) if your application is approved by Little Caesars franchise. This document is very important and gives you a peek into the performance, and operations of the franchisor.
More important to the franchisee is the franchising terms and conditions contained within this document. It is important to go through this document with the help of an attorney.
You need the help of an attorney to help you with interpretation of its contents. This is because most of its contents are legal in nature. This interpretation helps you identify areas which may not be quite favourable to you or conditions or terms of ownership which may be beneficial to you. Above everything, you have a better understanding of your working relationship with the franchisor.
The Franchise Disclosure Document (FDD) has sections that focus on franchise agreements, multi-unit agreements, loan documents, state addenda, general release, agents for service of process financial statements and other exhibits.
For every FDD, there are detailed information regarding the franchise system as a whole.
These will include the executive management team, history, franchise-related litigation and bankruptcy, financial performance, and unit growth and turnover. In addition to these, other contents of the FDD include the terms and conditions applicable to a franchisee and the operations of a unit, and finally the agreement which must be signed.
- Discovery Day Interview
The discovery day interview is a valuable experience that allows you have a more detailed understanding on how the Little Caesars franchise functions. This process allows you to meet and discuss with the executives and support staff of the franchise. The franchise license advisor contacts you and schedules this interview. The final impression you form about this franchise comes mainly from this step of the application process.
There are several group presentations and meetings between you (the prospective franchisee) and the franchisor.
You are likely to be taken on a tour of existing units as well as the opportunity to speak with multiple franchisees. While you make your findings and evaluation about the franchise, the franchisor also makes its findings about you. At this point, a prospective franchisee may be declined if he doesn’t fit the expected profile.
On the other hand, you may also find out that this may not be the right franchise for you as well. It is called an interview because you are evaluated based on the contents of your application. You are only offered the franchise opportunity only when you fit in with information provided in your application. After being chosen, you can then decide to accept or not.
- Results of the Discovery Day Interview
As mentioned earlier, the Discovery Day Interview is a time for you and the franchisor to learn more about the business as well as the franchisor learning more about you.
During the interview process, you should be in your best behaviour and attitude as this will form part of the selection criteria. Your application is finally approved or rejected after the discovery day interview.
- Real Estate Training and Site Selection
If your application eventually gets approved after the interview, you are then invited to attend a series of real estate training and site selection classes. The length of time varies from 20 to 100 days. This program is meant to provide maximum exposure to all Little Caesars franchisees on all information relating to site selection and building model for the franchise outlet(s).
- In-Store Training
Apart from the real estate training and site selection classes you will attend, you also attend an in-store training which is mandatory for all Little Caesars franchisees. While you are undergoing the training program, commencement of construction on the approved site is done. The construction of your outlet/unit is done according to the franchisor’s specifications. Before you are done with training, the site construction is almost complete.
These in-store trainings are aimed at providing you with on-the-job skills needed to efficiently run a Little Caesars franchise.
- The Grand Opening
After all has been done, the stage is now set for your Little Caesars franchise grand opening. This is the last stage in the application process. The franchisor provides support to enable you achieve success with opening and running your franchise.
As mentioned earlier, the entire application process can last anywhere from 4 months to a year depending on the circumstances on ground and the size of your franchise.
Terms of Agreement and Renewal
Little Caesars has a term length of 10 years. Therefore as a franchisee, you are allowed to hold this franchise for this length of time. Its term renewal is subject to contractual agreements contained within the FDD. The term renewal lasts a period of 10 years as well. This starts from the expiration of the initial term.
Little Caesars franchise offers no financial assistance to its franchisees. This covers all areas of its operations either directly or indirectly.
Obligations and Restrictions
Little Caesars requires that all its franchisees be personally involved in the daily running of their franchises. This requirement rules out the possibility of absentee ownership. If you are interested in holding multiple Little Caesars franchise units, you are required to personally supervise the daily operation of all of these restaurants.
However, if you decide not to reside within or around the area your Little Caesars franchise(s) are, then the franchisor will have to approve an on-site operator. This operator must have a minimum equity interest in the particular restaurant. This is a measure to ensure that there is dedication and commitment in managing the franchise.
As a franchisee, you are expected to maintain high standards
Why Choose Little Caesars?
For a business to still be successful since it begun franchising in 1962 shows that it is strong brand that knows exactly how to conduct its affairs. Since it commenced operations, number franchisees have benefitted from doing business with it. You too can become a part of this great brand by applying for a franchising opportunity. Some of the benefits of becoming a Little Caesars franchisee include the following;
- An International Brand
Little Caesars franchise commenced as a small restaurant at Garden City Michigan. Its growth strategy has since resulted in the expansion of the business to cover all 50 states within the United States. It took its expansion plans beyond the borders and is today a reputable global brand. This means that you can own a Little Caesars franchise in several countries and continents across the world.
These countries/continents include Australia, Asia, Latin America, the Caribbean, Canada, and the Middle East including the United States. The size and success achieved is an added incentive that assures you of the safety of your investments. All of its restaurant locations have consistently posted impressive profits. You too can benefit from its sound business model.
- The Chance to Own Multiple Units
This is a growth opportunity for all Little Caesars franchisees. As one of its franchisees, you are offered the chance to own multiple units. You do not have to worry on being able to cope. You are offered adequate training by Little Caesar to enable you properly manage or oversee the multiple business locations. The more Little Caesars franchise locations you own, the higher your profit margins.
- Dedicated Ongoing Training and Support
To ensure that only the best service is provided, Little Caesars offers dedicated ongoing training and support for all its franchisees. This process ensures that you are constantly updated with current trends in the industry. The support provided takes care of any challenges that may arise.
This significantly enhances the productivity of all its franchises, leading to a stronger and more successful brand.
- Veteran Incentives
Honorably discharged veterans benefit from Little Caesars incentives. This allows men and women who have served their country honorably own a business of their own with less difficulties. In helping them transition to civilian life, financial incentives are made available.
Upon showing proof of their identity, a reduced franchise fee is given. This covers several aspects of the business such as equipments, the first restaurant, administrative services and marketing.
The Future Looks Promising
The business model adopted by Little Caesars increases its chance of being a viable and strong business in the coming years. This company has focused on the most important drivers of growth. One of such is innovation. This innovation comes in many forms; part of which includes product development and marketing. With the creation of more value added services and enhanced customer satisfaction, the chances for growth is enormous.
For franchisees, it presents the opportunity of being part of something big. It encourages inputs into how best the business can be improved.
More Details about Training
The training program organized by the franchisor requires that one person (which is preferably the franchisee or principal acceptable to the franchisor) from each restaurant should be in attendance. However, the franchisor may deem it fit to request that all employees of a particular restaurant attend. This is subject to specific needs that may be considered necessary for such action by the franchisor.
During the training program, participants are presented with food safety certification. This is part of the 6 week training they get. This training is conducted at the franchisors headquarters as well as in company-owned restaurants in Detroit. There are two major types of training you will undergo- formal on-the-job training as well as class room instruction. There are certain trainings designated as “mandatory.” These are exactly that-mandatory for all participants.
The Little Caesars franchise has been discussed extensively in this article. This is targeted at prospective franchisees who want to become part of a successful brand with several years of success to show. Little Caesars franchise fits this description perfectly. As a franchisee, you are not only part of a success story, but one which has global spread.
Its over 5 decades of existence and consistent growth shows a franchise to be taken seriously. However, you need to be driven by a genuine passion to own this restaurant franchise. This singular characteristic alone will increase your chances of success.
Every other detail needed for the smooth takeoff of your Little Caesars franchise is presented to you in the Franchise Disclosure Document after your application.