Bain Capital employs some of the smartest financial and strategic professionals in the USA.  Bain Capital originally funded Dominos Pizza back in the late 1990’s and reaped a hefty profit when it went public in 2004.  Now, Bain Capital is jumping back in with Dominos by acquiring the Japanese master franchisee, who delivers pizzas that often cost over $40 in Japan.  With Bain’s history in Dominos, I would bet that this is a smart investment.

Pizza chain sales are down:

• Pappa Johns: -5.7%
• Pizza Hut: -12.9%
• Dominos: -6.5%
• Sbarro: -6% domestic, -13% internationally (taking into account increase in US dollar)

Sbarro’s attributes a drop in sales to a drop in mall traffic.
What is up?  Frozen pizza sales.

Frozen pizza sales rocketed to $4.4 billion in America last year from $3.1 billion in 2000, the Minneapolis Star Tribune reported this week, citing market research by Datamonitor Inc.  Sales of private-label brands (produced by chains such as Walmart, Jewel, Dominick’s and Target) have risen more than 20 percent in the past year.  Clearly, cost and an acceptable level of quality is at play here.

In related news, Kraft Foods Inc., maker of DiGiorno, Tombstone and Jack’s, said it selling their brands to Nestle so it can fund an acquisition of Cadbury.

I’m a local Chicagoan so Potbelly’s Sandwich Works news is interesting to me.  As you’ve probably heard, Potbelly is now franchising their potbelly stove themed restaurant.  Their web site lists the total cost to open between $500k-$750k with a heavy $40k franchise fee.

I predicted this early in 2009 after I noticed job posting listing franchising experience and a little snooping.

A previous insider comment to a blog post on Potbelly has always stuck in my head which makes me pause about the opportunity.  I’m pretty sure I know the person who wrote the comment:

Potbelly is another stab in the dark venture that suffers from ridiculous logistical design, high labor costs, exorbitant pricey locations, and excessive buildout costs.  Is there any wonder thay GREw so much.  did you expect them to just sit on the 100,000,000 raised by Starbuck’s Maveron Group.  funny, potbelly has turned one quarterly profit in about 6 years and had three presidents in three years.  The lines which everyone seems to think are the sign of success are a sign of basic incompetency and presume people will continue to buy into hype for a three day old bun baked by Turano (same as the other great success story Quizno’s ) and generic low quality meat that’s run through a conveyor oven which can’t be delivered or catered without serious degradation in quality.  other than the expensive logo vanity packaging someone and the illusion of quality based on 500,000 of faux antiques, please explain what is original or significant quality.  the sandwiches are the smallest, the most expensive per ounce, and the worst produced in terms of speed and efficiency than any I have ever seen and the lines aren’t looking too long these days.  Nothing angers me more than a hot concept  and has never managed to turn a profit.  Think Cosi, Planet Hollywood, etc.  that’s why the restaurant business gets a bad rap.  Anyone with a brain could say hmmm lowest check average, slowest production line, highest rent, most labor and they don’t make money?  Duh!