After operating expenses, the average Little Caesars franchise owner will bring in $50,000 to $200,000 each year. It’s tough to calculate a franchisee’s “typical income” since there are many factors that contribute net profits like location, marketing skills, customers service, and food waste. But I want to offer up a simple ball-park figure as an estimate.
On average, it will cost $360,000 all the way up to $1.6 million to open a Little Caesars location. Keep in if you plan to open the restaurant in a market with above average commercial real estate prices (I’m looking at your California), you could end up closer to the higher end of the investment scale.
Still, Little Caesars is able to keep startup cost low thanks to a stripped-down operating model that doesn’t require a large dining room with seating and can be operated out a tight retail space between 1,200 – 1,600 square feet in size. This is smaller footprint than competitive concepts require. You can also take our 8-minute franchise quiz to find out if Little Caesars is a good fit for your personality and experience.
- Financial Requirements and Fees
- How Much Profit Does Little Caesars Franchisees Make Per Year?
- Little Caesars SWOT Analysis
- Is Little Caesars Worth the Cost to Invest?
- The History of Little Caesars
Financial Requirements and Fees
Little Caesars has proven to be a wise investment in the pizza industry. For operators looking to make an impact with an uncomplicated business model, world-class service, and millions of loyal consumers make this a franchise worth evaluating.
Determined to break into the franchise business, but low on cash? Individuals can even team up with a partner to invest in a franchise and take advantage of combined net worth and liquidity. This is a model to consider if you’re low on funds, but eager to work inside the business on a day-to-day business. Believe it or not, there are plenty of investors out there that have an access of cash, but don’t want to spend their time working at a pizza shop. Food for thought.
The following are the expenses and fees corresponding with opening a new Little Caesars:
Type of Fee
|Startup Franchise Fee||$20,000 (normal fee); $15,000 in certain cases|
|Beginning Inventory and Supplies||$63,000||$154,000|
|Licenses and Permits||$1,000||$20,000|
|Grand Opening Promotions||$12,000||$20,000|
|Fixtures, Equipment and Signage||$186,000||$392,000|
|Additional Funds – 3 months||$17,000||$47,000|
|Projected Total Expenditures||$359,700||$1,686,000|
Let’s take a look at the startup costs associated with this pizza chain. Little Caesars provides franchisees with an established business plan to assist them in serving affordable pizza with a no-contact options.
|Total Investment||Starting at $360,000|
|Franchise fee||$20,000 (regular rate); $15,000 in certain cases|
Little Caesars’ franchise fee is normally at $20,000, but specific circumstances allow for a reduction to $15,000 if you qualify. A typical Little Caesar franchise requires a total investment of $359,700 (roughly $360,000) to $1,686,000 to get up and running. Franchisees must settle a weekly royalty of at least 6% of total sales for the week, or $100. Franchisees must contribute 7% of gross sales to the franchisor’s advertising budget in order to participate in national advertising. These fee covers the cost of national television, radio, online, direct mail, and even coupon marketing efforts.
Before investing in this concept make sure to request an updated Franchise Disclosure Document from the company. This is a report that must be provided to prospective franchisees so they understand the risks and potential of the business. Despite the fact that this section of the Franchise Disclosure Document, known as Item 19, is not mandated by law, it is uncommon for a well-established franchisor to withhold financial performance statistics from potential investors.
Related Reading: 63 New World Pizza Industry Statistics and Consumer Trends
One important thing to point out is the growth of Little Caesars’ franchise outlets throughout the United States appears to be mostly driven by company-owned locations rather than franchises. Moreover, 23 franchised units were discontinued in 2020 for various reasons, while 21 corporate-owned units were incorporated into the company. On closer examination of their FDD indicates that 15 of the newly launched company-owned locations were repurchased from franchisees.
While there may be a variety of explanations for this tendency, one possibility is that Little Caesars is diverting resources away from franchise development and focusing them instead on internal expansion. This is purely speculation, however.
How Much Profit Does Little Caesars Franchisees Make Per Year?
Company revenue/sales per year: For the fiscal year ending 2020, Little Caesars’ global sales were at $4,725,000,000 representing a 3.3% growth in total sales.
Number of units: Little Caesars has 5,361 units across the globe as of 2021. Most of these (4,211 units) of which are located in the United States, while 1,150 units operate internationally.
Average Gross Revenue Per Store: $4,725,000,000 (System-wide sales) ÷ 5,361 units = $881,365.
Industry Average Profit Margin: Clearly, the real profit margin will be determined by a variety of factors. A few years ago, it was estimated that the average profit margin of the pizzeria sector was at 8%, which meant that for every $10 pizza bought, you could only earn around 80 cents. Imagine if someone paid $25 for a pizza pie, only $2 was returned to the bank.
Inflation is at an all-time high right now. Since prices have risen, we may have to spend a little extra on pizza nowadays. It’s no wonder that selling beverages and drinks is where most restaurants make their serious cash. Because some pizza j