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Search Results for: Z Pizza

Smart Money Buys Dominos Franchisee In Japan

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.

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High-End Fast Casual

I’ve been noticing a new crop of high-end fast casual franchise concepts that are the size and atmosphere of a traditional sit down restaurant, but orders are taken at the walk-up counter.  Ingredient in Kansas City comes to mind.  They follow the recent trend of hearth oven baked pizza, homemade pastas, salads and sandwiches. Vapiano is also an interesting urban-only concept started in Germany and now here in the USA. It is a very modern, high-end Italian fast casual concept.  The chefs are stationed around the dining room, and customers walk up to the chefs who prepare their order right there.  A customer’s food and drink totals are tracked using a chip card similar to one you’d see on cruise boats.  As the customer leaves the card is scanned and the customer pays. It sounds a bit like a modern cafeteria but the architecture is sleek and hip.  The average check ranges from $14.50 to $22, depending on whether it’s lunch or dinner, claims the owner.

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Bad Co-branding Franchise Example

My previous post highlight the not-so-obvious hurdles of co-branding.  The omnipotent FuwaFuwaUsagi sent in photos of Brown’s Chicken attempts at co-branding.  See his Brown’s Chicken photos below. Brown’s Chicken is trying to do the Chicago street food theme plus mexican.  It offers everything from pasta, ice cream, pizza, fried chicken, sausages, pasta, mexican, italian beef, and hot dogs.  The problem is not necessarily the menu, but the execution, presentation and customer experience.  It looks utterly silly to have so many brands in one cheap-looking tiny store.  Offering multiple unknown brands under one roof requires significant investment in the seating, presentation and overall customer experience. I’ve only seen one successful Chicago street food restaurant and it is Portillo’s / Barnelli’s combination.  When you enter one of the premium stores you feel as though you have entered an old-fashioned carnival era.  It is plain fun and food is quite good. The below photos provide a great illustration of what to do and what not to do – stuffing too many confusing brands under one roof. WRONG WAY TO CO-BRAND: RIGHT WAY TO CO-BRAND:  

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How Franchisors Communicate with Franchisees

The franchisor’s job of communicating with franchisees is not as easy as you might think.  Some franchisees simply shy away from anything technology, some barely speak english, and some franchisees expect regular courtesy phone calls. Fast Casual has an insightful article on how some brands communicate. To communicate news and information, brands like Qdoba, FOCUS and Salad Creations use newsletters, representative committees that will communicate back to the franchisees, and technology tools such as intranets, online videos, webinars (voice-over presentations viewed from the franchisees’ computer)

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Pulling 401(k) Cash to Fund a Franchise

There has been a lot of talk lately, from Joel Libava’s Franchise King blog to recent MSNBC article, looking at whether 401(k) retirements savings should be used to fund a new franchise.  Many franchisors for obvious reasons like this idea, such as Westshore Pizza & Cheesesteaks who focuses their sales pitch as a great 401(k) investment.Use 401(k) money to buy a franchise?  My legal and financial opinion is almost always a NO!  It is too risky to gamble your needed retirement funds in a franchise.  If you need to tap your 401(k) to buy a franchise, you cannot afford to buy a franchise.  If your entire retirement life is already FULLY funded and you have plenty of cash, then use your excess cash for the franchise opportunity. Professional investors always take a little cash off the table, and your 401(k) is what you took off the table.   Keep it there, don’t risk it away.  You could easily lose ALL your money in a franchise, but you couldn’t lose all your money in a 401(k) even if you tried.  Additionally, a single unit franchise will almost certainly not make enough money to payout and match a six-figure retirement account in less than a decade. Tax and Match Advantages – Big DifferenceIs 401(k) a good investment in the first place?  YES!  Since your 401(k) investments are done with pre-tax income, you are saving about 30% more than you would have with after-tax income.  Plus, an employer match will nearly double the money that goies into your 401(k) than if you just invested the income from your final paycheck.  Upon retirement, you can control the 401(k) withdrawals to minize income taxes.  Even if the employer is not matching, the certainty of pre-tax investing is powerful because it is taken out automatically, but once the paycheck hits your bank it …

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Going Green May Loose You Green

Source Chris Toman’s plan to go green could have put him in the red. The owner of a local pizza franchise plans to apply for LEED certification for his 2,600-square-foot restaurant space on the back burner because it was going to cost too much. Toman said he would have to pay between $30,000 and $40,000 to become certified by the U.S. Green Building Council under its Leadership in Energy and Environmental Design program, which awards points to structures that are energy efficient and otherwise good for the environment. $40,000 for a small restaurant to get green certified is proportionally a huge expense., plus the cost of the alternative materials such as insulation made of old jeans and coke bottles for a countertop. Would that $40,000 be more profitably spent on advertising? While going green can sometimes attract additional customers in certain markets, the increase in price compared to the market will divert others to your competitors. Toman is opening a Pizza Fusion franchise, which requires all of its restaurants to be built to LEED standards, as part of its self-described mission to “Save the Earth one Pizza at a Time.” Not only are the buildings green, the chain delivers pizzas in hybrid vehicles. The cost of going green for Pizza Fusions in other markets is less than half of what Toman was told he’d have to pay here. Much of the cost goes to consulting companies that develop energy-efficiency plans for buildings seeking certification. These firms also make sure the buildings ultimately perform the way they were designed and file reams of paperwork required on all projects regardless of their size. “It seems like they’re overcharging,” he said. “I’m trying to do the right thing, but someone’s taking advantage of it and charging high rates.”

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Domino’s Subs

As if the sub sandwich category wasn’t crowded enough, Domino’s Pizza is adding sub sandwiches to its menu and delivery service.  The $4.99 oven-baked sub sandwiches will include classic favorites like Philly Cheese Steak and Chicken Bacon Ranch. The move comes five months after Pizza Hut began delivering baked pasta dishes as well as pizzas. And it will be a wake-up call for sub shops Subway and Quiznos, which find themselves competing with pizza chains. For the pizza giants, the message is clear: If pizza sales aren’t growing in a sour economy, maybe something else will. Besides the hot subs and baked pasta, some pizza chains also deliver chicken wings. “It’s an attempt by the pizza players to try to get back into being a growth industry,” says Ron Paul, president of Technomic, a restaurant research firm. “They’ve all lost their mojo.” They also are further conflating a fast-food world that’s grown jumbled. McDonald’s (MCD), Burger King (BKC) and Wendy’s sell salads and chicken. Subway and Dunkin’ Donuts have tried pizza. Arby’s, once roast-beef-only, now makes a killing on Market Fresh deli sandwiches and sells toasted subs. Domino’s U.S. same-store sales fell 5.4% in the second quarter after a 5.2% decline in the first quarter. Brandon says the move should boost Domino’s lunch business and expects lots of calls from groups of office workers. (The minimum delivery order is $8 to $10, depending on location, and delivery fees are $1 to $2.) Rivals are unimpressed. Pizza Hut delivers hot sandwiches regionally but is focused on growing its national pasta delivery sales, says Brian Niccol, marketing chief. Tony Pace, marketing chief of the Subway Franchisee Advertising Fund Trust, says, “Domino’s is watching our success and wondering how to get a piece of the action.” Half of Quiznos’ locations deliver, and …

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News: Buffalo Wild Wings, Denny’s, Baskin-Robbins, Bennigan’s, Donatos

Buffalo Wild Wing’s own restaurants in the second quarter rose 8.3%, and franchises rose 4.5%.  Again, the corporate owned restaurant see double the same-store gains as the franchise.Same-store sales alone can be deceiving because it doesn’t tell the whole picture. Were higher same-store sales a result of additional customers, expensive marketing blitz or promotions, new menu items or new pricing? Denny’s performance has been mediocre for the 2nd Quarter of 2008. Same-store sales decreased 0.7% at company units and decreased 3.7% at franchised units. Company restaurant operating margin increased by 0.9 percentage points to 12.5% of sales  Do you live in Cincinnati? If so, Baskin-Robbins wants to open 30 stores in the surrounding counties.  The Bennigan’s bankruptcy came as no surprise. There are about 150 company-owned Bennigan’s restaurants, compared with 138 franchise locations.Bennigan’s franchisees are unaffected, only the corporate-owned locations are shutting down today. The bankrupcty filings also do not include the Metromedia-owned Ponderosa Steakhouse and Bonanza Steakhouse restaurants.  One of the best deals in franchising was made when Jim Grote sold Donato’s to McDonald’s and then bought it back for a rumored $50 million, a 1/3 of what he sold it to McDonald’s for just four years prior. Now, Donato’s has remade itself with a new look and expanded menu. [I love their pizza, bias alert] However, I am skeptical of management now that his daughter has taken over running the company. Is the best person to manage this company just happen to the be the daughter of the owner?   

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Performance of Franchisees’ Loans

Below is the Small Business Administration’s annual compilation of performance data on thousands of franchisee loans it has guaranteed covering loans made from October 1, 2000, to September 30, 2007. A “failed loan” below is when the SBA must step in and pay back a loan that it has guaranteed. However, does failure rate of a loan equal the number of failed franchises? No, because the chart below only captures the worst of the worst, when someone completely abandons their debt obligations. Definitions are tricky and can mask the true data. Franchisees who sell their units and pay off or transfer their loan or franchisees losing money are not caputred. But, the value in the report card can be a vague checklist for avoiding high-failing franchises. Hat Tip: WSJ REPORT CARD Class Leaders Franchiser Failure Rate Failed loans Total loans Comfort Inn 0% 0 158 Primrose 0 0 110 Edible Arrangements 0 0 104 Massage Envy 0 0 61 Holiday Inn Express 1 1 157 Culver’s Frozen Custard 1 1 150 Hampton Inn 1 1 88 Bruster’s Real Ice Cream 1 1 84 Little Caesars Pizza 1 1 72 Fastsigns 1 1 71 Super 8 Motel 2 8 363 Best Western 2 3 156 Choice Hotels International 2 3 144 Rita’s Water Ice 2 2 103 Arco 2 2 85 Zaxby’s 2 2 81 Anytime Fitness 2 1 65 Econo Lodge 3 4 119 Goddard 3 3 109 Subway 4 84 1,974 Dunkin’ Donuts 4 17 410 Sport Clips 4 8 191 Cartridge World Stores 4 5 112 Travelodge 4 4 91 IHOP 4 3 67 Class Trailers Franchiser Failure Rate Failed loans Total loans All Tune and Lube 48% 37 77 Philly Connection 48 30 63 Cottman Transmission 46 75 163 Blimpie Subs & Salads 37 58 158 …

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Meal Prep Trending Down

Julie Moran Aletrio from New York’s LowHud.com did a great job in her article on the meal prep trend in New York’s Lower Hudson Valley. Thanks for quoting me in the article. Here are a few highlights: From a Let’s Dish franchisee: “This concept is meant to help a busy person, but people found themselves so busy that they didn’t know how to incorporate this into their lives,” Hunerson said. Closings nationwide: By the end of last year, there were 1,353 meal-prep stores in the United States, according to the Easy Meal Prep Association. Although the idea spread quickly, the failures followed with 264 meal-prep stores closing last year and another 200 expected to fail this year. Industry consultant Bert Vermeulen, who founded the association in 2005, said the idea was too new to support the number of stores that opened. “This is a concept where the stores got ahead of the market. The majority of the target market is not aware of this concept and why it works,” he said. New concepts: Rolling out a new concept requires a deep commitment in marketing from the franchiser, Vermeulen said, something that Let’s Dish and others didn’t provide. “Many of the franchisers thought it was easier than it was. They sold franchises without thinking through the marketing program they were going to run,” he said. Vermeulen pointed to Pappa Murphy’s Pizza, which has more than 1,000 stores, as a franchiser that did it right. “If you remember 10 years ago, there was something militarily called the Powell Doctrine, which meant going in with overwhelming force. Pappa Murphy’s wouldn’t go into a particular metro area unless they went in big so they could establish awareness of their concept. Their concept is pizzas you pick up uncooked that you cook at home. …

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Online Ordering

Most of my friends order food online whenever possible, especially pizza like Domino’s and Papa John’s.  Online ordering is making up 20% this Papa John’s franchisee’s sales: In fact, Chesley estimated, about 20 percent of her store’s sales arrive via the Internet.Customers can insert exactly what they want and it saves on labor costs since the staff doesn’t have to spend as much time on the telephone taking orders, Chesley said. “We do great with online ordering.” Potential franchisees should make sure you are free to engage an online ordering network such as Order Network, CityWaiter, eHungry, Kudzu Interactive, or GrubHub.

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Charitable Goals of Franchisees

I found this article interesting about a group of Boston Pizza franchsiees and their fundraising goals. Even if the franchisees do not have the funds to make significant contributions to charities, organizing or participating in charity events by providing products and services is usually an efficient deductible expense that can be more effective that advertising. The Enrights’ restaurants have raised more than $600,000 for the Boston Pizza Foundation since 1999 through various fundraising initiatives and partnerships with local businesses. In the past two years alone, their 10 restaurants across Winnipeg have raised more than $300,000 for the BP Foundation through its Valentine’s Day promotion. … Richard and Kim Enright and their franchisee partners have also developed a $100,000 scholarship endowment fund for the University of Manitoba’s Faculty of Education. Their Garden City location’s “Celebrity Server Night” featuring the Winnipeg Blue Bombers, Winnipeg Goldeyes, Team Canada athletes and entertainers, raised more than $5,000 for the Seven Oaks General Hospital Foundation.

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Delivery Management

I should have guessed but was pleasantly surprised that an entrepreneur produced a GPS enhanced software  that managed a crew of delivery drivers and integrates with several POS.  A 21-unit Pizza Hut franchisee just purchased a system.

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Little Caesars Veterans benefits

U.S. Veteran and Little Caesars franchisee Patricia Evans celebrates the opening for her new Little Caesars Pizza Restaurant in Valdosta, Georgia. Evans is the fifth veteran to open a store under the Little Caesars Veterans Program which offers honorably discharged, service-disabled veterans who qualify as Little Caesars franchisees a benefit of up to $68,000. Honorably discharged, non-service-disabled veterans who qualify as Little Caesars franchisees are eligible for a benefit of $10,000. http://news.yahoo.com/nphotos/slideshow/photo//080130/480/60cbb1da1d1f490eb8e41cb12271e710/

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Dealing with Local Government Planning Boards

Getting permits and approvals from local boards can be tedious and overly political.  I used to work at a real estate development company that hired “expediters” to get local planning approvals pushed through.  A Farmington, NY Dunkin Donuts franchisee is finding out the hard way what a pain this process can be. By Billie Owens, staff writer at the Daily Messenger Now that the old Pizza Hut building on Route 332 has been razed, it’s going to stay like that for awhile. A Dunkin’ Donuts is planned for the site, but on Thursday code enforcement officer Floyd Kofahl put the brakes on the project. He slapped a stop-work order on franchisee David Francisco of Canandaigua because the project differs vastly from what the permit allows. The property is owned by Farmington Realty LLC. Francisco disputes the notion that the project differs a lot from what his permit allows. He said the only sticking point is a glass wall that he wants to put in instead of a regular one. The permit allows renovation of the existing building to accommodate a bakery to make doughnuts and sell them. Not all Dunkin’ Donuts franchises have a bakery; most of them have the baked goods delivered from a Dunkin’ Donuts that does operate a bakery. A bakery for doughnuts and one for pizza, as in the case of the building’s former occupant, is the same under state law. For that reason, Francisco’s plans did not require review by the Planning Board unless more than 1,000 feet were to be added to the building. But last week, Kofahl said, Francisco informed him it would not have a bakery. Francisco disputes this claim, too, saying he and corporate officials will make the bakery decision jointly over the next two weeks.

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PR Through Surveys

Clever. Pay for a survey about Super Bowl eating habits, get free publicity, get your brand associated with “healthy” and “Super Bowl”. SUBWAY Restaurants, which has long been committed to promoting “better-for-you” meal options among both children and adults, conducted an Omnibus survey of more than 1,000 Americans regarding their Game Day snack consumption habits and learned they overeat the most during the Big Game (27%)–trailing only Thanksgiving (85%) and Christmas (61%). More than half surveyed (59%) admitted to overeating during the Big Game and reported gorging themselves on nachos, fried chicken, chicken wings, pizza and other generic “junk food.” Methodology: An Omnibus survey conducted a telephone survey on behalf of SUBWAY(R) Restaurants of a nationally representative probability sample of households; 1,090 interviews were completed among adults ages 18+ (53 percent female, 47 percent male). Interviewing took place January 7-9, 2008.

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