For all aspiring owners of a pizza restaurant, we have analyzed how much the Little Caesars franchise costs. Also, according to actual available financial data, we estimate how much Little Caesar’s franchise owner can expect to make in salary/profit per year!
Key Takeaways:
- The launch of the new Little Caesars franchise demand capital between $378,700 and $1,695,500
- This franchisor charges an Initial Fee of $20,000; only the Veterans and EMS members have the right to certain discounts.
- The franchisees of this restaurant pay in total 13% of all sales for costs associated with franchisor royalties.
- On average, Little Ceaser’s franchises make $1,000,000 in gross sales per year per location with 7% of the profit margin.
- Little Caesar’s franchise owner can expect to make approximately $70,000 in salary per year.
How Much Does The Little Caesars Franchise Cost
The total investment cost to launch the new Little Caesars franchise is between $378,700 and $1,695,500, including initial fees, rental fees, and all other expenses before opening day.
Will a cost be on the lower or higher end of this above estimation depends primarily on the size of the restaurant, that is, the type of location the investor chooses to open!
Available types of franchises are :
- Traditional Locations:1,200 to 1,600 square feet standalone building with the carryout-only option, sometimes with a drive-thru window.
- Non-Traditional Locations:400 to 800 square feet outlets operating in arenas, stadiums, shopping malls, etc.
- LC Express Locations:outlets connected to or operating within a gas station or convenience store.
- Food Truck:available only to franchisees who already run unmovable locations because the truck must be “attached.” to the existing restaurant.
Investors who opt to start a Little Caesars restaurant in a non-traditional location can expect that the total investment cost will not pass $0.5M. Those who opt for a traditional location can expect an initial cost between $1M and $1.6M.
Table of initial costs:
- Initial Franchise Fee:$20,000
- Rent:$1,500 to $7,000 – one month leasing price
- Real Estate Leasehold Improvements:$50,000 to $1,000,000
- Fixtures, Equipment, and Signage:$200,000 to $400,000
- Grand Opening Advertising Fee:$12,000 to $20,000
- Training Expenses:$12,000 to $16,500
- Initial Inventory and Supplies:$63,000 to $154,000
- Insurance:$1,200 to $2,000
- Utility Expenses:$1,000 to $9,000
- State Licenses and Permits:$1,000 to $20,000
- Additional Funds:$17,000 to $47,000 working capital 3 first months
- ESTIMATED TOTAL INVESTMENT COST: $378,700 to $1,695,500
The cost of leasehold improvements for an 800-square-foot Restaurant usually ranges from $50,000 to $150,000. Also, the lower end of the estimated cost range for fixtures, equipment, and signage is related to developing an 800-square-foot Restaurant.
Options To Fund Little Caesars Initial Investment Cost
Little Caesars, as a corporation, doesn’t offer direct financing/loan options for covering initial investment costs. So investors will need to search for third-party funding sources.
Little Caesars Franchise Fees
One-Time Fees
Initial Fee
The standard cost of Little Caesar’s initial fee is $20,000. The $5,000 must be paid by deposit within 30 days after the franchisor approves the franchisee, and the rest is spent when the franchise agreement is closed.
This outlay is a one-time fee which means after the investor pays it, there will not be ongoing costs related to this expense!
Who Have Right to Initial Fee Discount
Honorably discharged U.S. military Veterans, members of the police, fire, and Emergency Medical Technicians have the right to reduce the initial fee by $5,000, which means they will pay it $15,000.
Also, this group of investors receives a discount of $5,000 on the equipment package and a $5,000 reduced price of the initial food supplies cost.
Combat-disabled veterans and Gold Star families don’t pay the Little Caesars franchise Initial Fee cost and get a special discount of $10,000 on the equipment package and initial food supplies cost ( total value of $40,000)!
Grand Opening Advertising Fee
In the category of one-time fees, we must put and Grand Opening Fee, which costs between $12,000 and $20,000.
This amount of money must be spent on local advertising by the new franchise owner 30 days before the restaurant’s opening and 30 days after the start.
Ongoing Fees
Franchisor Royalties
The Little Caesars franchise owner will pay in total 13% of its restaurant’s gross sales for the costs associated with the royalties that the franchisor charges every month.
The franchisor royalties are:
- Royalty Fee, which is 6% of all gross restaurant sales
- Advertising Fee, which is 7% of all gross restaurant sales
All potential investors must know that this will be one of the highest operating costs for their franchised business! Thefranchisor charges its royalties every monthduring the whole duration of the franchise agreement.
Rent Fee
Usually, the Little Caesar’s Traditional Restaurant locations operate in the space of 1,200 to 1,600 square feet; franchisees pay between $1,500 and $7,000 per month for landlord-associated expenses.
Non-Traditional Restaurants operate in smaller spaces, and the monthly rent for an 800-square-foot Restaurant is usually between $1,000 to $4,000 per month.
Investors who purchase real property can expect their initial cost to be much higher. However, that can be beneficial in the long run because the rent for this type of franchise is one of the highestoperating costs the owner needs to bear.
Digital Transactions Fee
Franchisees need to pay a digital transaction fee for orders received through the website and mobile ordering systems; this fee is $0.31 per order per customer.
How Much Is Little Caesars Franchise Profit
When we combine all Little Ceasers locations (company owned +franchised), this corporation has generated sales of $4,230,000,000 (4.23 billion) in 2021.
In 2021, onlyDomino’s Pizza, with sales worth approximately 8.64 billion U.S. dollars, made higher sales volume in the pizza restaurant industry than this franchising brand has.
Average gross revenue per year per restaurant
On average, Little Ceaser’s franchises make approximately $1,000,000 in gross sales per year per location, which means that the new franchise owner can expect that his location will have a high amount of sales per year.
Little Caesars Franchise Profit Margin
Little Caesar’s franchise owners can expect to make a profit margin of 7% of all the restaurant’s sales throughout the year.
When we know that franchisor royalties will cost 13% ofgross revenue, and when we add rent + payroll expenses, and other operating costs, 7% of profit margin is a pretty objective estimation.
How Much is Little Caesars Franchise Owner’s Salary
Little Caesar’s franchise owner, who operates a restaurant with average gross sales(1M), can expect to make approximately $70,000 of salary per year.
Although the $70K per year seems as low, investors must be aware that this is more than, on average, franchise owners in the food sector make.
How We Estimate Little Caesars Franchise Owner Salary Per Year
In theirFranchise Disclosure Document, this franchisor doesn’t reveal financial data regarding the average gross sales and profit per location, so we do our own research based on the already available data.
According to Statista, Little Caesars generated sales of approximately4.23 billion U.S. dollarswitha total of 4,181 restaurants in the United States in 2021.
The formula for calculating Little Caesar’s average gross revenue:
- $4,230,000,000(4.23 billion) : 4,181(number of restaurants)
- = $1,011,719
The formula for calculating Little Caesars franchise owner salary:
- 7%(profit margin) of $1,011,719(average gross revenue)
- = 0.07 × $1,011,719
- = $70,820 (expected salary)
How To Start Little Caesars Food Truck
The Little Caesars Food Truck franchise is available only to existing franchisees because this franchisor demands that the truck must be “attached” to one of the franchisee’s current Restaurants.
So currently, there is no option to start only a mobile franchise under this brand trademark!
Existing franchisees who get approved must pay a fee of $7,500 and sign a standardFranchise Agreementalong with a Food Truck Addendum. Also, their mobile franchise has the right to operate within a certain miles radius from their restaurant location.
Requirements to Own Little Caesars Franchise
Capital Requirement
The franchise applicant needs to have a Net Worth of $350,000 and must own a Liquid Asset of $150,000 if they want to be approved as a new franchisee of this pizza brand.
Owner’s Participation Requirement
To be approved as a new owner, the investor must be able to devote her full-time on-site management and operation of the restaurant. However, it doesn’t mean that launching more than one franchised location is impossible.
An investor who opts to develop more than one restaurant must appoint a manager for each location and supervise that manager on an ongoing basis!
Supplies Purchase Requirement
Every franchised location must purchase products, ingredients, equipment, supplies, and materials that are used and sold by the restaurant from the franchisor directly.
This franchisor has formed Blue Line Foodservice Distribution, Inc, a business entity that deals only with providing all kinds of supplies. All franchisees are required to use the services and products of this company.
Spousal Liability Requirement
The investors/franchisees’ spouse must sign a guarantee document that makes them liable for the owner’s financial obligations under the franchise agreement.
It means that franchisees and their spouse’s marital and personal assets, including houses, could be lost if the franchised business falls, so investors must be cautious when determining if this franchising concept is the right choice for them!
Little Caesars Franchisee Training
Only Little Caesars franchise owners must attend the initial franchise training. After that, the franchisees train employees of their restaurants according to the franchisor’s requirements.
The training is consisted of:
- Discovery Day Interview = 6 hours
- Real estate/architectural/equipment training = 12 hour
- In-store training = 50 hrs per week X 5 WEEKS
How Much Is Little Caesars Franchise Agreement Duration
The Little Caesars franchise agreement for traditional and non-traditional locations has a length of 10 years, and the term for a Food Truck is five years.
After the first contract expires, the franchisees have the right to renew the agreement for additional ten years without any fee!
Are All Little Caesars Franchises
At the end of 2021, this brand had 3,601 franchised restaurants and 580 corporate-own locations in the United States. So, 84% of all Little Caesars restaurants are managed and owned by franchisees.
How Current Little Caesars Employees Can Start Their Franchise
This franchisor offers an investment program, the so-called” Colleague Franchise Program,” under which employees can create an ownership group among themselves and acquire an existing restaurant.
The current employees need to form an ownership group (limited liability company) with an equal ownership interest in that company. After that, they must sign a franchise agreement and appoint an operations manager to supervise on-site work.
Is it Profitable to Own Little Caesars Restaurant
An investor who launches the new Little Caesars franchise can’t expect to become a millionaire. However, the salary of $70,000 is one of the highest that owners in the food industry have, so we can conclude that it is profitable to own these franchises.
However, this company is in slight decline when we see closed and opened restaurants per year, so potential investors must be aware of that.
Little Caesars franchised restaurants number by the year:
- 2019: 3,653 = -47
- 2020: 3,627 = -26
- 2021: 3,601 = -26
We can see from this data that this company is closing some of its locations. However, the sales generated in the U.S has grown in the last year to 4.23 billion, which is the highest in its history.
This brand started to grow in sales because they lowered the prices of their products which means that the profit margin that franchise owners can expect is not high.
Who Owns Little Caesars
Little Caesar Enterprises, Inc., is the owner of this brand, and Trademarks are owned by their affiliate, LC Trademarks, Inc.
The CEO of Little Caesar Enterprises Inc. is David Scrivano, and theirDirector, Treasurer, and Corporate Secretary is Malina (Marian) Bayoff Ilitch, who has been in the company since 1962.
Summary
We have summarized all data that can help potential investors to choose if this franchising opportunity is a good fit for them.
The food industry is highly competitive, which is reflected in lower margins, so new franchisees will need to make a high gross revenue to extract more profit from their business.
