This article is based on its 2022 FDD.
Blaze Pizza is a California-based fast-casual dining restaurant chain that serves pizza. Elise and Rick Wetzel founded this chain in 2011. It follows the cooking steps Chipotle established to order pizzas for its customers. Blaze Pizza also adds drinks as per the interest of the customer. Their pizza is Fast Fire ‘d’ in open flames. The company was founded in Pasadena, California. Initially looking at enthusiastic sales of $1.8 million from the Irvine and $2.5 million from the Pasadena locations, the chain grew to 800 locations by 2022. It serves America, and Canada and has 10 locations in the Middle East too.
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How is Blaze Pizza Franchise Positioned in the Food and Beverage Industry?
The food industry has a significant share within regional economies and the U.S. economy. It employs human resources prominently and is a stable industry providing significant employment and labor income with around 13% of all U.S. manufacturing employment. The industry responds fast to the customers’ needs and has made significant innovations to satisfy the taste buds. The American consumer market figures over 320 million American consumers and has 5% of gross domestic product (GDP), 10% of total U.S. employment, and 10% of U.S. consumers’ disposable personal income (DPI). The sales of this market clock at around $1.4 trillion and around 10% of this figure is generated by the food and beverage industry alone. Traditional food and beverage industry franchise investments stand at around $466,000. With the fast delivery systems in place and drone technology being initiated to deliver food the food and beverage industry shows signs of expansion.
Blaze Pizza competes in the Pizza market against big brand companies such as Domino’s and Pizza Hut.
How Much is a Blaze Pizza Franchise?
The initial franchise fee to start a Blaze Pizza franchise is $30,000. You have to pay this upfront fee when opening a Blaze Pizza franchise.
Blaze Pizza Franchise Cost
The estimated total investment necessary to begin the operation of a Blaze Pizza Franchise ranges from $624,000 to $1,106,500 The following costs are part of the upfront costs included in the initial investment for a Blaze Pizza. Many of these are one-time fees that are needed to launch the franchise. Review the chart below to see how much it costs to buy a Blaze Pizza franchise in 2022.
| Category of Investment | Low Amount | High Amount | To Whom Paid |
|---|---|---|---|
| Initial Franchise Fee | $30,000 | $30,000 | Us |
| Architect/Engineer | $15,000 | $22,500 | Approved Suppliers |
| Permits and Liquor Licensing | $5,000 | $25,000 | Approved Suppliers and Government Agencies |
| Leasehold Improvements | $275,000 | $475,000 | Approved Suppliers |
| Furniture, Fixtures, Equipment and Décor | $185,000 | $300,000 | Approved Suppliers |
| Signage and Graphics | $20,000 | $34,500 | Approved Suppliers |
| Grand Opening Kit, Menu Boards | $4,900 | $5,500 | Approved Suppliers |
| Computer Equipment & Information/POS Systems | $22,000 | $35,000 | Us or Approved Suppliers |
| Uniforms, Initial Inventory and Smallware | $24,000 | $41,500 | Approved Suppliers |
| Opening Advertising | $10,000 | $30,000 | Approved Suppliers |
| Grand Openind Fee Pizzas | $0 | $6,000 | Approved Suppliers |
| Insurance Deposits | $500 | $5,000 | Insurance Carrier |
| First Month’s Rent/Security Deposit | $3,000 | $24,000 | Landlord |
| Initial Training Expenses | $5,000 | $7,500 | Approved Suppliers |
| Professional Fees | $5,000 | $15,000 | Your Financial and Legal Advisors |
| Additional Funds — 3 Months | $20,000 | $45,000 | Suppliers and Employees |
| TOTAL ESTIMATED INITIAL INVESTMENT | $624,400 | $1,106,500 |
Requirements
The liquidity required for a Blaze Pizza franchise is $300,000.
Ongoing Fees
Royalty: 5% of gross sales
Marketing Fee: 2% of gross sales
The industry royalty is around 5.3%, marketing expenses are around 2.25%, the stability of units is expected to be over 75%, the growth rate of the industry is more than 15% and the average investment to establish a new unit is $466K. Blaze Pizza fares well in terms of industry comparison as its royalty is 0.3% lesser than the industry royalty of 5.3% of gross sales. The marketing expenses, too, are 0.25% lower with just 2.00% of gross sales.
How much do Blaze Pizza franchise owners make?
2020 Blaze Pizza Median Franchise Sales: $959,422
| Initial investment (midpoint) | %Profit margin of median franchise sales | Estimated Profits | Time to recoup investments |
|---|---|---|---|
| $ 865,450 | 10% | $ 95,942 | 10.5 years |
| 15% | $ 143,913 | 8.5 years | |
| 20% | $ 191,884 | 6.5 years |
2021 Blaze Pizza Median Franchise Sales: $1,102,616
| Initial investment (midpoint) | %Profit margin of median franchise sales | Estimated Profits | Time to recoup investments |
|---|---|---|---|
| $ 965,450 | 10% | $ 110,261 | 10.25 years |
| 15% | $ 165,392 | 7.5 years | |
| 20% | $ 220,522 | 6 years |
Based on the median sales provided by Blaze Pizza’s franchise locations, at an average of a 15% profit margin it will take around 7.5 years to recoup the investment. This is longer than other franchise opportunities. You may not get a 15% profit margin which would elongate getting a return on your investment.
Many factors affect the sales, costs, and expenses of your Franchised Store. Such as the Franchised Store’s size, geographic location, menu mix, and competition in the marketplace. The presence of other Pizza stores, the extent of market penetration, and brand awareness that Blaze Pizza stores have attained in a given market. Also, the quality of management and service at the Franchised Store are major factors.
Is the Blaze Pizza Franchise Profit Worth the Franchise Cost?
To assign a valuation multiple for Blaze Pizza franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems where more transaction data is available.
When you go to sell a Blaze Pizza franchise based on the median multiple of .59 and median sales in 2021 of $1,102,616, it would sell for $650,543. This is lower than the midpoint investment of $865,450.
The more franchises you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators.
Blaze Pizza (Franchisor) Income Statement Key Insights:
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DEC 26, 2021; 27, 2020; AND DEC 29, 2019
COSTS AND EXPENSES:| 2021 | 2020 | 2019 | |
|---|---|---|---|
| REVENUES | |||
| Company store retail sales | $13,537,470 | $9,041,744 | $10,875,078 |
| Royalty revenue, franchise fees, and other Advertising fees and related income | 19,510,742 | $15,511,227 | $20,106,455 |
| Advertising fees and related income | 6,712,755 | $5,214,214 | $7,408,876 |
| Total revenues | 39,760,967 | $29,767,185 | $38,3900,409 |
| Company store operating costs | 14,359,207 | $10,827,682 | $10,659,564 |
| Advertising expenses | 6,612,300 | $5,374,729 | $7,408,876 |
| Selling, general, and administrative expenses | 20,492,656 | $16,483,946 | $17,114,716 |
| Total costs and expenses | 41,464,163 | $32,686,357 | $35,183,156 |
| (LOSS) INCOME FROM OPERATIONS | (1,703,196) | $(2,919,172) | $3,207,253 |
| OTHER INCOME — Income from equity method investment | 138,050 | $73,826 | $183,986 |
| NET (LOSS) INCOME | $(1,565,146) | $(2,845,346) | $3,391,239 |
Blaze Pizza has been a loss-making business for the franchisor during the Covid -19 period with losses of $2,845,346 in 2020 and $1,565,146 in 2021. Although the losses have been lower in 2021 as compared to 2020, the company could not come out of the red.
How many Blaze Pizza units have opened and closed?
| Outlet Type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2019 | 289 | 306 | +17 |
| 2020 | 306 | 296 | -10 | |
| 2021 | 296 | 301 | +5 | |
| Company-Owned | 2019 | 7 | 7 | 0 |
| 2020 | 7 | 13 | +6 | |
| 2021 | 13 | 13 | 0 | |
| Total Outlets | 2019 | 296 | 313 | +17 |
| 2020 | 313 | 309 | -4 | |
| 2021 | 309 | 314 | +5 |
Over the last three years, the company has marginally increased franchised outlets from 289 at the start of 2019 to 301 by the end of 2021. Company-owned outlets in 2019 were 7 and they have increased to 13 by the end of 2021. The company, in effect, increased its combined outlet base from 293 to 314. This is an indicator that there is a growing interest in the business of Blaze Pizza.
What are some competitors to Blaze Pizza?
- Marco’s Pizza franchise is an authentic Italian restaurant chain that serves chicken wings, pizza, cheesy bread, sandwiches, desserts, salads, and beverages. The Marco’s Pizza Italian chain was started by an Italian immigrant named Pasquale also known as “Pat” Giammarco in 1978. The first store opened in Oregon, Ohio on Starr Avenue. Pasquale was born in Sulmona, Italy but grew up in the U.S. in Michigan. He worked in his family’s pizzeria and his father even made the famous sauce that is in all of Marco’s Pizza locations.
The Co-CEO and president is Tony Libardi who has held these titles since January 2021. The other CEO is Stephen Seyferth who has held this position since December 2019. The Vice President and CFO are Jeffrey Rager from February 2019.
The financials seem positive and Marco’s Pizza franchise is not a failing business. From the data, your franchise will most likely stay in business and that’s one of the most important factors in owning a future business.
- Domino’s is an American multinational pizza and fast-food chain founded in 1960. It is currently led by President David Brandon and CEO Richard Allison. It is headquartered in Ann Arbor, MI. Domino’s has stores in 92 countries which number more than 18,300. It has over 1,200 stores in the United Kingdom, 1,500+ in India, and almost 6,600 in the US.
In 1960, Tom Monaghan and his brother, James, took over the operation of DomiNick’s, an existing location of a small pizza restaurant chain. James quit the business after some time to focus on his postman job and sold his half to his brother. By 1965, Tom had purchased two additional pizzerias for a total of three locations in the same county. Monaghan wanted the stores to share the same branding, but the original owner forbade him from using the DomiNick’s name. Monaghan officially renamed the business Domino’s Pizza, Inc. in 1965 when em employee suggested that would be a nice name for the chain.
Domino’s offers people the opportunity to be a part of a business that has good returns and isn’t likely to die soon. However, Domino’s has a strict requirement of having been with the company in a certain role or higher for a year which you need to fulfill in order to own a Domino’s franchise.
Be sure to talk to at least 3 to 5 other Domino’s franchise owners to get an idea of the business and what the experience of owning a franchise is like.
3. Papa John’s is a quick-service restaurant devoted primarily to the sale of pizza and other related food products. The majority of these restaurants are franchised, and operators of Papa John’s are considered independent contractors. It was originally founded in 1984 by Bam Inc., an Indiana corporation that operated a restaurant and tavern. In 1985, it was acquired by Schnatter & Ehringer Inc. In 1989, Schnatter & Ehringer Inc. changed their name to Papa John’s International, Inc., but is referred to as PJ Indiana in the FDD. By 1991, PJ Indiana was merged with Papa John’s, changing their corporate location from Indiana to Delaware. As a result of the merger, PJ Indiana ceased to exist.
The toll of the 2018 controversy has been significant on franchisees, according to one article published in 2019 by Restaurant Business. So, the pizza market is extremely competitive, with the determining factor for consumer loyalty being price. If franchisees are already struggling due to a low volume of sales, offering discounted prices to compete with other names in the industry could be even more damaging.
However, Papa John’s in 2019 instituted new management by naming Robert Lynch CEO and Jim Norberg Chief of Restaurant Operation. Its new management will need a couple of years to see if they can gain customer and franchisee loyalty back.
- Pizza Hut franchise opened its first store in Wichita, Kansas in 1958. After its founders, brothers Dan and Frank Carney, borrowed $600 from their mother to finance their pizza dreams. Because their restaurant’s sign only had room for eight letters, the Carney brothers decided to name their concept “Pizza Hut”. A restaurant concept that created food they proudly served and delivered at a fast pace. Franchising began one year later. By 1971 Pizza Hut became the No.1 pizza restaurant chain in the world in both sales and number of restaurants.
Investing in a Pizza Hut franchise is an interesting opportunity especially post COVID-19 pandemic. The entry investment of $367,000 is well suited for individuals looking to make their way into the QSR industry. The prospects for growth and success within the industry and the Pizza Hut brand itself, are extensive. Several markets continue to be available as they move forward with growing their presence across the country. If you have extensive management experience and plan to open 5 to 10+ Pizza Huts, it is worth evaluating as a franchise! Opening just one is hard to justify given the resale value and lengthy payback period.
Conclusion
Blaze Pizza offers people the opportunity to be a part of a business that has wide acceptance. The food and beverage industry has a perennial source of acceptance due to its demand, but what is more important is to look at how the competition in the region fares. Before the opening of a store, what is desired is to look at the customer base of the region and the presence of other stores.
While this may be the business for you, make sure to also check out other businesses offered on Vetted Biz and in the Food and Beverage Industry.
