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Regional Pizza

Stuart Field

Marco’s Pizza franchisee Stuart Field said the concept is ideal for hands-on operators with a passion for good pizza.

Winner: Marco’s Pizza

Finalists: Donatos Pizza, Hungry Howie’s Pizza, Toppers Pizza

Everyone loves pizza, which is why the pizza category of franchising is one of the largest by almost any measure.

And there are a lot of great brands beyond the “big three” that get so much attention. In fact, there are a dizzying number of hyper local, regional and even national players looking to grow. Sorting them out can be quite a slog since for most consumers, pizza is pretty much a commodity these days. That's why for 'zees, it’s all about the franchise metrics.

The results were pretty close, but in our research Marco’s Pizza came out slightly ahead of the group for a few reasons.

Going through the franchise disclosure document, the first item is the investment range. At $269,000 to $762,000, Marco’s falls right into the range of the competition. It does slip slightly higher at the upper end because the concept has a flexible footprint to accommodate for additional seating.

The company is also flexible when it comes to real estate, which doesn’t show up in the investment range but can be a considerable benefit for franchisees taking over another pizza brand’s real estate.

“I was able to purchase a location that was another brand and convert that to Marco’s. So my initial investment was significantly less than whatever was in the FDD, a lot of the equipment was the same, the build out was done,” said Stuart Field, a franchisee with three locations in the Nashville area.

Another major factor for potential franchisees is the average unit volume. Marco’s reports about $682,000 as a sales average, which is at the lower end among the competitive set. That can be a deal-breaker for some operators who want to build a major franchise system, but for the right hands-on pizza man or woman, it can be a workable enterprise.  

“I think a one- or two-unit guy with a good store and being in the store, they could get a six-figure income no problem,” said Marco’s franchisee Eric Bueter, who has nine locations in northern Ohio.

But, he said, when adding locations, it can be harder to make everything work at a lower earnings before interest, taxes, depreciation and amortization (EBITDA) volume.

Marcos Pizza

“When you start adding those multiple locations you need infrastructure for that, and supervisors aren’t cheap,” said Bueter. “So your EBITDA profit is probably going to go down.”

For Bueter, it works because he pays his employees well and gives them an ownership mentality to keep them focused on following the playbook when he’s not around. But, even with a middle layer of leadership staff, he said he’s in the stores every day.

“I think that’s the biggest thing, if you’re in your stores and you’re making sure your numbers are right, you’re probably going to be fairly successful,” said Bueter.

Bueter said instead of more locations, he’s continually enhancing the locations he has, even buying the real estate to shed costs and insulate the business from macroeconomic shifts.

Field said he doesn’t plan on pushing to the next level with more units, saying he’s quite happy with the income at three stores.

“I think it depends on the individual; I’m very hands on. My upbringing was making the pizza and the dough and cleaning the store. I think three is a good number. When you get to that four to five you probably need to look at that second person,” said Field.

What got both franchisees into Marco’s in the first place was the pizza. Field said it was what got him off the fence when he was between two brands. “The quality of the product is just so strong and it really sets itself apart. A lot of the other brands are viewed as a commodity by the consumer,” said Field. “My other possible brand just didn’t have the quality of the product or, No. 2, the expansion opportunities.”

Bueter said the mostly scratch kitchen is rare for the segment, especially at the sub-$20 price point where Marco’s plays.

“I’m a big believer in the product. Whether it’s making the dough fresh or cutting the veggies and making the sauce. We’re probably one of the few chains that are doing that still,” said Bueter. “It’s more labor-intensive, but it makes for a much better product.”

Another key factor in this project and in any franchise decision is the support from the franchisor. Marco’s has an extensive six-week training program, which is pretty standard. Field said he was quite happy with the support

“When I got close to opening, there were resources to help with construction and design to find contractors and architects. Then when I was opening, they sent a couple people out to put on the finishing touches and help me train my crew and help me with that first week and periodic visits after that,” said Field. “It was good, I felt supported and if nobody was physically there it was a phone call away.”

In the mix with support is simple concept scale, another benefit of Marco’s compared with other direct competitors outside the big three. The brand is closing in on 1,000 units, which means more economies of scale and efforts such as a systemwide move to a single POS to enable better technology and more sophisticated marketing.

ApplePie Capital

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