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Search Results for: Z Pizza

Mexican Pesos OK For Dallas Franchise

About 60 percent of Pizza Patrón customers and 45 percent of the franchisees are Latino. As a convenience to its mostly Latino customer base who often have have leftover pesos from Mexico, Pizza Patron will accept foreign currency in exchange for pizza. On an unrelated note, did you know that Patron tequila (which I love almost as much as Casa Noble) also co-founded Paul Mitchell, the haircare products company?

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Franchise Links This Week

1) Are You Franchisee Material? We asked franchisors what they want in franchisees, and 4 qualities rose to the top. 2) 2007 Franchise of the Year? (Entrepreneur Mag) #1: Subway #2: Dunkin’ Donuts #3: Jackson Hewitt Tax Service #4: 7-Eleven #5: The UPS Store/Mail Boxes Etc. #6: Domino’s Pizza #7: Jiffy Lube #8: Sonic Drive In Restaurants #9: McDonald’s #10: Papa John’s I’d personally choose in the following order: McDonald’s, 7-Eleven, Papa John’s, Dunkin’ Donuts, Domino’s Pizza. 3) Great comments from a few franchisees and people in the industry. You can listen to the segment with Real Player too. 4) Franchisee rebuffs new product offerings and promotions from Taco Bell. Some notable actions taken by Dalham since the opening of his franchise in 1990: • Refused to expand his menu beyond the basic, non-premium offerings such as the “Taco.” • Used plain white Styrofoam soda cups until the corporation forced him to use branded paper cups during an audit in 1999. • Furnished dining room with squeeze bottles of hot sauce to avoid purchasing branded sauce packets. • Failed to update logo – currently displays the red, green, yellow, and purple logo phased out in the 1990s. • Did not hang promotional posters featuring the talking Chihuahua when the campaign was introduced in 1997. • During the “Head for the Border” campaign, posted a banner that read “Americans Even Do Tacos Better.” Due to franchise regulations, Dalham was forced to adopt certain conformities, such as the display of the words “Taco Bell” on his backlit menu and identifying his restaurant as a Taco Bell in the local yellow pages.

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Miscellaneous Links

Pharmacy franchise industry snapshot Sponsoring little league baseball teams can be a cost-efficient marketing strategy Take-n-bake pizza (Papa Murphy focused) An MRI franchisee that I know did not have this kind of success with his recruiting business (he recently closed it down when he couldn’t take the cash drain anymore). Aaron Rents same-store sales up 6.9% GNC – Again, company owned store have higher sales than franchised stores – sales growth of 11.7% for company-owned stores and 7.0% for franchise. Some franchises have higher franchisee sales rates, such as Denny’s where company unit same-store sales increased 4.2% and franchised unit same-store sales increased 4.7%, and Panera where September same-store sales grew 5.2 percent in company-owned stores and 6.2 percent in franchise-operated stores Independent businesses may freely copy a franchisee’s best ideas: Seafood restaurant owner – “We’ve had a decent to-go business, but nowhere to put the to-go orders,” Chase said. “It was a 30-minute to two-hour wait in the summer. It was hard to get a space to sit.” As she pondered solutions, she called Outback Steakhouse, who took her order, asked for details on her car and told her to park in a specialized location. Once she did, a camera notified wait staff to walk out with her order and take her money. It was effortless. Inspiration struck the seafood restaurant owner, and it smelled like beef. “I sat there and laughed,” she said. “I thought, ‘This is my answer. What am I thinking?’ So it just went from there, and we fine-tuned it from there.” Instituting the same to-go program as the 915-restaurant chain, Adams unknotted the bar’s tangled crowd flow. Take-out orders swelled from a few dozen to 130-170 orders during season.

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Common Areas of Dispute

Interesting article in the Dallas Morning News highlighting common “disagreement” points between franchisees/franchisors. This week, Pizza Inn Inc. said it is being sued by former franchisees who say the company, based in The Colony, “intentionally and negligently misrepresented development and operation costs.” Subway parent Doctor’s Associates Inc. faces two lawsuits filed this summer stemming in part from a fight for control of the brand’s advertising dollars…. Chris Bray, a franchisee of the Denver-based Quiznos brand, complained of what he views as a lack of communication between franchisees and headquarters…. Most [of Quiznos’ disclosed litigation in the UFOC] involve claims the franchisees say were made about exclusive territories or the inability to get their outlets open within the required time. Hat Tip: Paul Steinberg in the forum

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Eating in the Car

I’m embarassed to admit that I’m a fan of drive-thrus, and I’ve perfected eating while driving with my knees since I drove to high school. When you think of drive-thru, however, you normally don’t think of healthy meals, unless you want to go low-carb and just slop down the burger meat. QSR mag released a survery of consumer preferences related to drive through. Here are some highlights: 56% eat quick-serve food at least once each week, while 39% use the drive-thru at least once a week. Another 25% said they use the drive-thru once or twice per month. 63% of consumers we surveyed agreed or strongly agreed with the statement, “I want food that is easy to consume in a car.” And 15% said, “I only shop at restaurants with a drive-thru.” 57% said an acceptable wait time was no more than five minutes….23% indicated they would wait up to ten minutes, while 11% said they would wait for one or two minutes. 46% indicated that their food choices differ when they are ordering at a drive-thru, compared to when eating inside the restaurant The survery makes a good case to favor restaurant franchises with drive-thrus, especially when 39% of the people surveyed eat at the drive-thru weekly. This always puzzled me – why isn’t their more drive-thru pizza by the slice restaurants? Sbarro’s drive thru, perhaps?

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Chicken Wings

A franchisee explaining why his wing joint is doing well: “Everybody loves wings,” he said. “I think of the attributes that contributed to our success is the clean environment, good food, 14 different sauces, sports environment and casual atmosphere. I think a while back that what had a lot to do with it was the Atkins Diet. Chicken is very healthy.” And another explanation: He said wing-based eateries have thrived in the U.S. restaurant market because they provide an affordable product and operate at low cost. “Obviously, it has a lot to do with the bottom line,” Wilkerson said. “They’re able to serve at a place with a small dining room and serve carry-out. They keep the menus limited, keep costs way down with little overhead and don’t have lots of waste like some restaurants do.” Said Nicoloff: “It’s easy to inventory. You don’t have to have the equipment or time to train someone. It’s pretty simple to run.” ….”We have a full range of menu items other than chicken,” Tieber said, “but it’s 30 percent of our business.” “I really don’t know how the wings took off,” Weisbrodt said. “It just seemed like one day we were doing some here and there, and now we’re doing them like you wouldn’t believe. Today, we can’t keep enough.” … “I think it’s reasonably priced meal,” he said. “Wings are good. They’re meaty. They can get just about any flavor. They come up with some original flavors. Our customers mix our flavors, and we have almost 60 different flavors right now. You can get in about any flavor. If you don’t like wings, we have many other things like hamburgers, hotdogs, pizza, sirloin steak sandwiches and fish, like walleye and cod.” Smith has also noticed increased competition, especially from the larger …

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Online Ordering Systems

I frequently use online ordering for food delivery purchases, and so do many other people I know. I know my purchases are signifcantly more than it would be if walked in and I order online from restaurants I wouldn’t otherwise visit. Regardless of my positive personal experience with online ordering, it is a cheap way to increase sales and introduce your product to new customers. I would favor a restaurant franchisor who offers an online ordering system. Take this recent example from Pizza Pan: Pizza Pan launched eOrderManager, a new software package that lets customers place food orders online. The ordering system, which was created by Cleveland-based O-Web Technologies, is designed specifically for the quick-service and casual dine-in restaurant industry. Without yet promoting the online ordering option in-store, Pizza Pan has already attracted 327 new members within the first month. The average online ticket is $22.32, which is significantly more than the average in-store check. The system runs off the franchisor’s Web site, yet it was designed for individual franchise owners. “Our online ordering system increases order accuracy and improves productivity by keeping our employees off the phone,” said Mike DeGirolamo, director of franchise development and a franchisee. Pizza Pan currently uses eOrderManager in 15 of its 96 locations and plans to expand online ordering to the majority of its locations by the end of the year.

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Same-store sales roundup

Texas Roadhouse: Sales at restaurants open at least a year increased 1.2 percent at company restaurants and 0.5 percent at franchise restaurants during the quarter. Panera: The company said that during the second quarter, systemwide same-store sales, for stores open at least one year, grew 3.2 percent: 3.7 percent in company-owned locations and 3 percent in franchise operated units. Same store revenues (revenues earned in Company-operated stores open for the entirety of both periods) in the Aaron’s Sales & Lease Ownership division increased 9.1% during the second quarter of 2006 compared to the second quarter of 2005. Same store revenues also increased 6.0% for Aaron’s Sales & Lease Ownership stores open over two years at the end of June 2006. IHOP: Year-over-year same-store sales growth was a respectable 3.1% for the quarter, driven by increased traffic. Promotions such as the Cinn-A-Stack definitely appear to be working for IHOP, and the company has three more planned for the year, including the current funnel cake-related campaign. Dominos: The same-store sales slide was made up of a 3.2 percent decline at U.S. company-owned stores and 5.2 percent drop at franchised stores. According to a regulatory filing, domestic comps rose 6.9 percent in the same period last year. International second-quarter comps rose 5.7 percent compared to an increase of 7.8 percent last year. The increase marks the fiftieth-consecutive quarter Domino’s has enjoyed international comps growth. Overall revenue for the period declined 5.5 percent, a decline that Domino’s attributed to lower domestic distribution revenues tied to lower food prices and volumes at domestic franchise stores. Lone Star Steakhouse: The company’s sales at the same stores fell .3 percent and the average check decreased 3.1 percent, while the number of customers increased 2.8 percent. The company has closed 33 underperforming Lone Star restaurants in the …

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Unique Strategy to Franchising

I enjoyed reading about Unique Pizza & Subs’ franchising strategy of converting a local mom-and-pop pizza shop in each town within 100 miles of a company-owned store. In theory, I imagine this can work quite well for the franchisor with the right sales team.

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The Friday Franchise Five: I’d Wouldn’t Buy These

I came across a few franchsies that I would not want to own: Snack-In-The-Box: UK based firm that delivers candy to the workplace (difficult to work and sell) Nick-N-Willy (founded by former Quiznos exec)/Take-and-Bake: this take-and-bake pizza idea where cusotmer get the raw dough with toppings didn’t catch on 10 years ago, and won’t catch on despite some short-term success driven by PR and unique gourmet toppings. Gourmet pizza that is already baked is where I’d make my bet if I had to enter the pizza business. The Dinner Station/Meal Assembly (check out the nice store pics): The industry is already seeing a high number of closures; I’d do this perhaps without a franchise MRI/recruiting franchise: I knew several smart people that tried to make the MRI recruiting franchise work, but had a very tough time generating any placements, and placements from MRI corporate contracts were nil (operating profits and same store sales were down from last year) It’s Just Lunch: Some locations have been turning over several times each year, with franchisees literally giving them away to escape the cash drain.

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2006 First Quarter – Yummy Same Store Sales Increase

Yum! Brands (KFC, Taco Bell, Pizza Hut) U.S. blended system-same-store sales increased 5%. Colony-based Pizza Inn pizza chain reported a 1.1% increase in same-store sales, or sales at stores open at least a year, during the first quarter 2006. For the 13 weeks ended March 28, 2006, sales for Panera‘s franchised and company-owned stores rose 9.1% and 8.9%, respectively. Systemwide bakery-café sales increased 9 percent for the 13 weeks ended March 28. Aaron Rents reports 13.7% increase in same store revenues. Brooke Franchise ( distributes insurance, financial and funeral services through a network of more than 560 franchise locations) saw same-store sales decrease about 2.5% for the year that ended Feb. 28, 2006 compared with the prior year. March retails sales growth for the Jean Coutu Group (PJC) Inc. rose 3.5% in Canada, 1.7% in the USA. PJC is the fourth largest drugstore chain in North America and the second largest in both the eastern United States and Canada. The Company and its combined network of 2,173 corporate and franchised drugstores (under the banners of Brooks and Eckerd Pharmacy, PJC Jean Coutu, PJC Clinique and PJC Sante Beaute) employ more than 60,000 people. Tim Hortons first quarter same-store sales increased 8.7% at restaurants in Canada and 9.8% in the United States. Wendy’s same-store sales decreased 4.8% at U.S. company stores and 5.2% at U.S. franchised restaurants. Baja Fresh Mexican Grill’s system same-store sales declined 3.6% to 3.8%. Sonic‘s 1st Q 2006 same-store sales growth of 4.7%, slightly above Sonic’s annual target long-term target range of 2% to 4% growth Sales are climbing at Mr. Jim’s Pizza following the launch of Mr. Jim’s new product, Nacho Stix, and the debut of a new branding and advertising campaign. Same-store sales increased for the first two periods of 2006, including a same-store …

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Delivery-only Restaurants

A participant in the discussion forum brought up a good point whether a “delivery only” local restaurant business was an especially good business model. Steak-Out was the franchise mentioned, which delivers char-broiled steak and chicken dinners, salads, sandwiches….you get the idea. Why do you get the idea? Because the food is similar to the restaurants we all know – Applebee’s, TGI Friday’s, and Chili’s. The difference is Steak-Out is delivery or pickup only, and the others are sit-down AND are starting to contract out delivery to local entrepreneurs. Having a dinning room exposes your menu to more people. In turn, more people will be familiar with your menu and more likely to think about using you for delivering business lunches or family dinners. The more you are exposed to a product, the more likely your to think of it when the time for the service comes. It’s partly a numbers game, and I’d rather have my customers experience my product in person in my controlled atmosphere then exposing them to my product on a piece of paper, coupon or flyer. I’m not saying delivery only business are a bad idea, I just wouldn’t want to take the risk when my competitors out-of-the-box are going to be exposed to exponentially more customers. That raises my marketing costs. Pizza is the only food that has carved out room for delivery-only stores. Papa John’s is going from delivery only to delivery + sit down. A 75-unit Subway franchisee group in South Florida bought the telephone number 888-SUB-TO-GO. Orders are processed via the store’s POS system and then delivered by Subway employees. Can a delivery-only subshop startup and compete with that? I doubt it, and I wouldn’t want to risk my capital trying. If you are buying a restaurant, you should consider what …

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Papa John’s New Restaurant Strategy

Papa Johns is building “restaurant” style stores. Good idea. I still don’t understand why there are virtually no drive thru by-the-slice pizza franchises. There are plenty by-the-slice franchises in malls, but not stand-alones with drive thrus.

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Transfer fee benchmarks

So, you bought a franchise and it’s been successful for a few years and now you want to sell it.  The franchisor reserves some influence and financial discouragement.  The two biggest considerations given to the franchisor are: Right of first refusal – the franchisor can match your highest legitimate offer and buy your franchise Transfer fee – a fee you must pay to the franchisor for the privilege of transferring your licensing rights and obligations to another party Sample Transfer fees: FOOD: Pizza Factory: $12,000 Quizno’s: $5,000 Dominic’s of New York: $1,000 + 6% of sales price Submarina: $1,000 Cheeburger Cheeburger: $12,250 Pizza Patron: $5,000 The Dugout: $5,000 Arby’s: $13,500 Doc Green’s Gourmet Salad: negotiated at time of sale Jerq’zine:  $10,000 Original Hamburger Stand: $250 Sub Station II: $5,000 Steak-Out: $18,750 Fazoli’s: Reaonable attorney, accounting, training and other related costs OTHER: Bartercard: 10% of sales price Herman’s World of Sports: $12,500 Sears Carpet and Upholstery: $3,000 – $6,000 (depends on market size) Stone Mountain Carpet Mill Outlet: $2,500 Screenz:  $5,000 Tax Centers of America: $1,000 Sports Clips: $25,000 Fantastic Sams: $20,000 or 10% of sales price (whichever is greater) Hair Cuttery: $5,000 ($0 if franchisee for 5+ years) Fastframe: 5-10% of purchase price  

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Papa John’s franchisees average $705K in annual sales?

According to this 10-Q filed with the SEC by Papa John’s, average franchised store sales are 705k annually. Papa John’s franchisees did increase sales 3.9% last quarter (Jan-March) compared to the same quarter last year. Average weekly sales of franchised units: $13,563 ($705,276 annually) Average weekly sales of company-owned: $15,075 ($783,900 annually) * Why are the company owned stores outperforming franchisees by 11.15%? The 10-Q speaks of one franchisee who sold his 19 restaurants with total annual revenues approximating $12.0 million ($631,578 per store) to a 3rd party. The restaurant sales were lower than the average by 11% or $70K, enough to obtain a loan writeoff from Papa John’s. This isn’t good: Domestic commissary sales increased 6.7% to $100.9 million for the first quarter of 2005, from $94.5 million in the comparable period, primarily due to higher cheese prices that were partially offset by lower volumes resulting from decreased restaurant transactions. and this: the first quarter 2004 operating margin was negatively impacted by the increased sales of lower margin promotional products and this: One group of 4 franchisees owning 33 franchises generated a $25,000 loss on $5.2 million of revenue, $4.6 million in operating expenses and other expenses (including G&A, depreciation and interest) totaling $600,000. Papa John’s also provided them with a large loan. I do love their garlic dipping sauce for the crust that is included with each pizza! Update 6-18-2005: Thanks to “Accountant” who in the comments pointed out my miscalculations. The post has been updated, including the title. Update 6-19-2005: Thanks to “Ken King” who in the comments pointed out another miscalculation on my part. The post has been updated.

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Royalty and Advertising fees of sandwich franchises

I pulled together some numbers of required royalty and advertising fees for sandwich franchises: Required Royalty and Advertising Fees for Sub & Sandwich Franchises Subway 12.5 % Quiznos 11 % Mr. Hero 10.5% Blimpies 10% Jersey Mike’s 10% Philly Connection 10% Togo’s Eatery 10% Zero’s Subs 10% Firehouse Subs 9% Jerry’s Subs and Pizza 9% Burger King 8.5% Charley’s Grilled Subs 8.25% Capt. Subs 8% Cousin Subs 8% Hungry Howie’s Pizza and SUbs 8% Subs Plus 8% Great Outdoors Subs 7% Lenny’s Sub Shops 7% Moe’s Italian Sandwiches 7% Nathan’s Famous 7% Pickerman’s Soup & Sandwiches 7% Port of Subs 6.5% Sub Station II 6% Baldinos Giant Jersey Subs 5% An 8% difference in the fees for a franchise with $500,000 in sales is $40,000. Many would die to have that extra $40,000 to hire a qualified manager, enabling the franchisee be more of an absetnee owner. Lower doesn’t necessarily mean better. I would want required pooling of local (maybe regional) funds for collective advertising and promotions.

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