The Little Caesars franchise is a self-service pizzeria that sells pizza, chicken wings, “crazy bread,” and other food-related products. The franchisor offers both individual franchise units and a “territory reservation agreement.” This is when a single investor can reserve an entire land area to develop multiple Little Caesars restaurant franchises.
Little Caesars is based in Detroit, Michigan. It was founded in 1959 as a single-family restaurant and sold its first franchise in 1962. Little Caesars is the third fastest-growing pizza restaurant chain in the United States, behind competitors Pizza Hut and Domino’s. The company was founded by Mike Ilitch and his wife Marian Illitch, and is currently owned by Ilitch Holdings Inc.
This article provides information on Little Caesars franchised units in the United States. At the end of 2020, there were a total of 4,211 outlets, with 3,629 franchise-owned units and the remaining 582 company-owned.
Little Caesars charges $20,000 for the regular upfront fee but allows $15,000 in certain circumstances.
The total investment required to start operating a standard Little Caesars franchise is $359,700 to $1,686,000.
Initial franchise fee: $20,000
Opening inventory: $63,000 – $154,000
First month’s rent: $1,500 – $7,000.
Insurance: $1,200 – $2,000
Additional funds (3 months): $17,000 – $47,000
Fixtures, equipment, and signage: $186,000 – $392,000
Property improvements: $50,000 – $1,000,000
Grand opening advertising: $12,000 – $20,000
Formation expenses: $12,000 – $16,500
Utility expenses: $1,000 – $7,500
Licenses and permits: $1,000 – $20,000
Little Caesars opening advertising fee can range from $12,000 – $20,000. The local advertising fee is up to 7% of gross sales, which is at the franchisor’s discretion.
According to its FDD, Little Caesars does not provide any “representation of the franchisee’s future financial performance or the past financial performance of owned or franchised outlets.” The only financial information Little Caesars provides is if an investor purchases an existing store. Even then, Little Caesars will only provide information for that specific establishment.
Little Caesars does not provide an income statement in its FDD. This is in keeping with their policy of withholding pertinent financial information until an investor actually purchases their franchise.
The following figures are taken from the most recent fiscal year (2020). While there was a decrease in franchised units, there was also an increase in company-owned outlets. This could mean a number of things, but one possible explanation is that Little Caesars has a practice of “seizing” or repurchasing franchisee outlets that are struggling.
Franchised outlets at the beginning of the year (2020): 3,652
Franchised outlets at the end of the year (2020): 3,629
Net change: -23
Company-owned outlets at the beginning of the year (2020): 561
Company-owned points of sale at the end of the year (2020): 582
Net change: +21
Total points of sale at beginning of the year (2020): 4,213
Total points of sale at the end of the year (2020): 4,211
Net change: -2
In turn, they compete with other fast food chains in the Food and Beverage sector, such as Mcdonald’s, Burger King, and Wendy’s. In addition, franchisees must compete with other Little Caesars franchisees in the area.
One aspect to consider before investing in a Little Caesars franchise is the lack of financial information provided upfront. Although this aspect of the Franchise Disclosure Document (referred to as Item 19) is not required by law, it is unusual for a reputable franchisor to exclude financial performance information from prospective investors.
Although Little Caesars is a well-established pizza brand in the industry, there are many other franchises of the same product that could be worth your investment. Be sure to check out the other businesses offered on Visa Franchise and in the Food and Beverage industry.