Pizza pie, as it turns out, is every bit as American as apple pie. Americans eat more than 30 million slices of pizza per year, and each geographic region in the U.S. has its own approach to making the pies.
With these incredible facts in mind, many people dream of opening a pizza shop. Often, the desire to run their own pizza business starts with a franchise opportunity.
Pizza is an optimal food service option for franchising. What gives this ubiquitous food a boost in the franchise world? The secret can be found in pizza’s popularity and its simplicity.
Read on to learn more about what makes pizza a great franchise investment and see our selections for the top five pizza franchises of 2022.
Launching a pizza franchise offers flexibility and reliable returns. Pizza is both straightforward and infinitely customizable, which cuts down on the amount of inventory, preparation, and menu options needed for success. Here are some reasons investors and owner-operators have for starting a pizza franchise.
Simple and versatile product: From vegan and gluten-free options to exotic combinations and high-quality ingredients, pizza offers something for everyone. Every pizza is recognizable yet unique, making it perfect for a streamlined food service experience.
Widely enjoyed food category: Pizza is an immensely popular food globally and the second most popular in the U.S. (behind Chinese food). This level of enthusiasm means there is plenty of room for restaurants to deliver. Though the product is largely the same, locations can differentiate with service, add-ons, unique toppings, and presentation.
Low-headcount model: You can run a pick-up location with a small staff: a clerk for orders and check-out, kitchen workers for pizza and cold food prep, a back-room employee washing dishes and sanitizing surfaces, and a delivery driver for orders.
Easily scalable operations: Once you’ve successfully launched and staffed a pizza restaurant, scaling to multiple locations is easy. The ingredients, systems, packaging, and advertising are easily expanded to a larger network of units. Multi-unit owners may even take advantage of economies of scale when ordering ingredients and supplies.
Every franchise is different, so it’s essential to conduct thorough due diligence into opportunities. Have a knowledgeable franchise attorney or broker-advisor review the franchise disclosure documents (FDDs) to evaluate the franchise’s strength. In general, look for a few common indicators of a successful franchise brand:
Look for a franchise partner with a long track record of success, including mature sales systems and processes. Franchisors should be able to offer access to the systems, guidance, suppliers, and marketing to make opening a franchise location more user-friendly than launching a stand-alone business.
Because pizza enjoys such massive popularity, there are plenty of opportunities to expand into multiple locations. Look for a brand partner with healthy territory options. This will allow you to scale your business to multiple locations as you experience success with your primary store.
Although food service has the reputation of working on slim profit margins, the same is not necessarily true of a pizza restaurant franchise. Conduct due diligence on your chosen franchise brand. You should see a strong track record of new store openings, gross sales growth, and high median profit with the right opportunity.
Dominos is one of the most recognizable and enduring pizza franchises in the United States. With thousands of locations in the U.S. and abroad, Domino’s offers a combination of strong brand recognition, distinctive taste and presentation, and high-quality marketing and advertising. Most recently, the brand has redesigned its location experience, adopting a “Pizza Theatre” location layout that allows customers to see the preparation and packaging of food. The company also leverages technology to increase the speed and comfort of the customer experience. The app features an active order tracking system, live check-in for curbside pickup, and a loyalty points system that allows customers to earn food rewards.
Investment: $145k to $583K
Median gross sales: $1,177,696
Sales growth: 10.4%
Unit growth: 6.8%
Pizza Hut markets itself as “the most loved pizza brand in the world.” Based on its performance and location numbers, we tend to agree. This food service mainstay was established in 1958, and has since grown to be the largest pizza company in the world. Pizza Hut is a member of the Yum! Brands parent company along with Taco Bell, KFC, and The Habit Burger Grill.
Pizza Hut also differentiates itself through its literacy impact efforts, helping over 100 million people unlock the power of reading. For many Millennial and Gen X consumers, Pizza Hut is most closely associated with its BOOK IT! reading rewards program. Like its main competitor (Domino’s), Pizza Hut offers a distinct flavor profile and a well-crafted menu of products. It has a global presence with locations in more than 100 countries and plenty of room to grow despite its impressive number of units. Pizza Hut appeared in the top 10 on the Franchise 500 for 2020.
Investment: $367k to $2M
Median gross sales: $906,911
Sales growth: Not available
Unit growth: Not available
With its authentic flavors and high-quality ingredients, this Ohio-based pizzeria has won over diners and is one of America’s fastest-growing pizza brands. Founded in 1978, Marco’s fresh dough is made from scratch daily and its sauce is an original recipe created by founder, Pat Giammarco. There is an extensive training program for franchisees, offering personal development and preparation skills to ensure each franchise meets the brand’s high standards. A small but mighty brand with a devoted following, Marco’s appeared in the top 100 of the Franchise 500 for 2021 despite having just over a thousand locations.
Investment: $242,142 – $633,109
Median gross sales: $918,047
Sales growth: 18.5%
Total Locations: 1,103
Unit growth: 5.6%
This fast-casual restaurant takes a streamlined approach to personalization by allowing customers to choose toppings via an assembly line. Each pizza is then made to order using the company’s proprietary light and crispy crust (courtesy of a 24-hour fermentation process for the dough). This company features an easy, fun way to get your meal and focuses on sustainability and eco-friendly packaging.
Investment: $624,400 to $1,106,500
Median gross sales: $1,166,924.00
Sales growth: 20%
Total Locations: 353
Unit growth: 3.5%
This is a franchise whose success was in the making for more than 100 years. The Rosati family began opening restaurants in 1890, expanding their network in the 1900s and building the roots of what would become the modern-day Rosati’s Pizza franchise. The first Rosati’s Pizza opened in a Chicago suburb in 1964 and in 2006, the Rosati family moved into franchising. Since then, the brand has grown to nearly 200 locations nationwide.
Investment: $143k to $1.2M
Median gross sales: $932,293
Sales growth: 4.2%
Total Locations: 124
Unit growth: 8.5%
Want to dig deeper and learn more about running a franchise or the business expectations for a location? Get in touch with FranShares. We select the most promising franchise options for our portfolio of franchise partners, allowing everyday investors to get into franchising (with pizza restaurants and other tried-and-true industries) for as little as $500.
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(1) Portfolio IRR projections are calculated using all cash flows, including the initial investment of $25,000,000 of offering proceeds, annual earnings before interest, depreciation and amortization (“EBITDA”), less estimated corporate taxes, and the sale of the entire portfolio at the end of the fifth year at 5x EBITDA.
(2) Cash Yield projections are calculated as the arithmetic mean (average) of five years of annual cash flows (including EBITDA, less estimated corporate taxes) divided by the initial investment of $25,000,000 of offering proceeds.
(3) Equity IRR projections are calculated using the initial investment of $25,000,000 of offering proceeds and the sale of the entire portfolio at the end of the fifth year at 5x EBITDA.