Pizza Patron Franchise Cost & Profit Opportunity Review

March 22, 2019


Ask anyone what their favorite pizza is and chances are they will answer with gusto. Americans love their pizza and they are passionate and loyal about their favorite brand. With so many different pizzerias in the country, it can be hard to pick a favorite, but, especially with local and regional favorites, there are usually some standouts.

 

Pizza Patron is a franchise chain that operates in California, Arizona, Texas, and Illinois. They typically can be found in neighborhoods that feature a heavily latino population. Their devotion to diversity and inclusion have made them incredibly popular in their areas and have taken them to incredible heights.

 

Pizza Patron is on a mission to add more franchised locations in Arizona, Illinois, and Texas. They are also looking to break into the market in Louisiana and Oklahoma. To achieve this, they will need to add a large number of new franchisees to their team and they are working hard to fill those spots.

 

Pizza Patron’s Past

 

Pizza Patron was founded in 1986 by Antonio Swad and Bernadette Fiaschetti.  This is the same food-service power duo who also founded the Wingstop chain.

 

In 2002, Pizza Patron began selling franchise licenses to further their expansion throughout the United States. They changed their slogan to revamp their image prior to the franchise sales, and focused on making their pizza the neighborhood favorite in all of their new locations. They had managed to do so prior to selling franchises, and were optimistic in their new franchisees’ abilities to make Pizza Patron a neighborhood staple in the upcoming locations.

 

In 2006, they added new menu items, such as their Patron Dippers and Fiesta Wings, as well as their “Lista” program, which is Spanish for ready immediately. They installed drive-through windows in many of their locations to make the most of the Lista pizza option and give customers the highest level of convenience. Pizza Patron credited these changes with their massive 34.55 percent increase in sales for the fourth quarter of the 2006 fiscal year.

 

In January 2007, Pizza Patron announced their “Pizza por Pesos” campaign, which allowed customers to pay for their orders with Mexican pesos. The campaigned received national media attention for the negative reviews and complaints that were hurled at the company. Since the campaign came at a time when the national debate on illegal immigration was heating up, it caused a lot of tension over the divisive issue.

 

The concept behind “Pizza por Pesos” was instituted to allow customers to pay for their pizzas with Mexican pesos. Because pesos are not generally accepted as American currency, protesters saw it as a political statement advocating for the acceptance of illegal immigrants in the United States. Some even went so far as to send death threats to the company’s headquarters in Dallas and the founders’ home in Sunnyvale, Texas.

 

Pizza Patron announced in May of 2007 that the campaign would become permanent, despite their original plan to only have the promotion last through the end of April.

 

Throughout their history that spans more than 30 years, Pizza Patron has managed to keep themselves current and relevant for the times. Though they are not the most recognizable pizza chain in the nation, they have a strong, loyal following, and a hunger for even greater growth.

 

Partnering with Pizza Patron

Pizza Patron is serious about their search for new franchisees. Because of this, they have made the process of getting in touch with them to begin the conversation even easier. In 2016, they unveiled their new, shortened inquiry form to allow interested parties to contact them and get the ball rolling much easier.

 

Once the inquiry form has been submitted, Pizza Patron will call the interested candidate to have a brief discussion about background, financial status, and goals, to see if a franchise relationship would be a good fit for both parties. If after the initial conversation both parties are still interested in the relationship, they will dive deeper into the intense application process leading to approval and eventual purchase of a franchise license.

 

Those candidates that pass all stages of the application process and are awarded a Pizza Patron franchise license will be required to pay the franchise license fee of $30,000. This fee will grant the franchisee the right to do business under the Pizza Patron name. With the license purchased, the new owner can begin their process of opening their location.

 

The cost to construct and open a Pizza Patron location is estimated to run between $273,000 and $420,000. The exact cost will depend on several factors, including geographic location of the restaurant, due to the varied price of materials and labor. It will also depend on whether or not the franchisee is able to locate and secure a restaurant space that has already been built. It is much cheaper to renovate a space to make it match the Pizza Patron style than it is to build a completely new restaurant from the ground up.

 

In addition to finding the restaurant space, the start up costs will include the hiring and training of staff, purchasing initial inventory, and enough cash to support the location through the first few months of operation. Many restaurants often experience a slow start and it will be important to have enough money to pay bills and staff through this time so that the restaurant can stay open, giving it a chance to flourish.

 

The ability to survive during the struggle of the first few months will set the franchised location up for continued success in the pizza game.

 

Pizza Patron’s Franchise Relationship

 

The relationship between franchisor and franchisee is an important one. Not only are the two parties in business together, but there is also an element of mentorship. The franchisor serves as a guide throughout the process, providing assistance and training all along the way. One of the biggest perks of buying a franchised business is the assistance from the franchisor. Stand alone businesses do not get that.

 

Specifically speaking of Pizza Patron, the kind of support they offer can be broken down into three categories: initial training, comprehensive advertising plans, and ongoing technology support.

 

The initial training is provided over a 10-day period at the Pizza Patron corporate headquarters in San Antonio, Texas. There, the new franchisee will participate in classroom-style trainings that will teach them the basics of running a Pizza Patron location. By learning the fundamentals first, it allows the franchisee to go into the agreement with a solid understanding of what to expect, and what will be expected from them.

 

The technology support is in place to ensure all software specific to Pizza Patron, as well as point of sale systems, stay operational as much as possible. Technical difficulties can bring a hard stop to business, so having the support of the franchisor to prevent or solve any problems can be crucial.

 

The advertising that Pizza Patron does as a franchisor benefits each of their locations. They provide ad templates for local advertising, and design and distribute national and regional marketing campaigns. For these efforts, they receive 3 percent of each franchised location’s total gross sales. Franchisees are required to pay this fee as part of their franchise agreement.

 

On top of the advertising fee, the franchisee will also be required to pay royalty fees to Pizza Patron. They charge 5 percent of gross sales as the cost of doing business under the franchisor’s name.

 

The Life of a Pizza Patron

One of the biggest questions franchisees have when exploring new investment opportunities is how much does this chain make? Knowing the total revenue of the entire chain, as well as how many locations are contributing to that total, can help them decide if there is enough potential for earning with that brand.

 

Pizza Patron was the 53rd highest-grossing pizza chain in the United States in 2017. Their 93 locations generated just under $48.5 million dollars that year. Assuming all things are equal, the average restaurant pulls in over $521,000 per year.

 

This number is important because when analyzed with estimated costs, it can determine how much in profits the average location will generate. Franchisees are looking for highly profitable chains, and if the numbers are right, it can make their decision to invest much easier.

 

Without knowing exactly how much each location will spend each year on staffing, product, building maintenance, and other costs associated with running a business, it’s impossible to say exactly what the profits will look like for a new franchisee. We do know that the target profit range for a successful business is around 20 percent. By applying that to the $521,000 average yearly sales revenue, it appears that a starting point for profit analysis would be around $100,000.

 

In order for these figures to hold any real weight, the franchisee must be able to get their location up to operating in at least the mid-range of Pizza Patron’s performance. They are not solid numbers, nor are they a guarantee, just simply a possible scenario, based on figures from past performance of the chain.

 

Speaking of performance, generated revenue is not the only way to measure success. For the chain as a whole, examining their location growth and turnover is also way good way to find indicators of the health of the franchise system.

 

Pizza Patron has seen some ups and downs over the past six years. They started 2012 with 95 franchised locations, as well as 9 corporate-owned locations. Over the next year, they would lose 15 franchised locations. They would remain steady through 2014, with a slow increase beginning in 2015, and growing consistently from there.

 

There have been reports that Pizza Patron used to have locations scattered in Colorado but that they withdrew their operations from that state. There are no reports of when this happened, but if it occured in 2012, it may be the reason for the sudden loss.

 

Since their reignition in 2015, Pizza Patron has continued to add new locations each year. They appear optimistic about the future, stating that there are approximately 40 additional units in the works at this time. There is no word yet on when the first of those locations will open.

 

With the promise of new locations, and an eagerness to attract even more franchisees, it appears Pizza Patron is ready to do some serious growing.

 

Picking Pizza Patron

 

Any franchisee that is considering the pizza restaurant industry knows that there are countless chains to choose from. Deciding on which to go with requires a careful examination of all the facts.

 

First and foremost, the franchisee must determine if the brand is even open to selling licenses in their area. For Pizza Patron, they are currently only open to franchising in a few states. That automatically excludes potential franchisees who are looking to open businesses outside of those areas.

 

If the franchisee’s chosen area is eligible for franchising, they must then examine if the industry itself is right for their goals. Pizza restaurants are extremely popular in this country, but they also require near constant supervision.

 

The franchisee must be willing to turn over control to their managers, or be a fairly regular part of the operation. With the food service industry being so competitive and unpredictable, it’s important that each restaurant have consistent, regular leadership. Pizza Patron does allow for absentee franchisees, so investors who are comfortable with that scenario may feel that it is a good fit. For franchisees who are looking to retain a lot of control but without having to be hands-on regularly, a different industry may better suited.

 

The cost of ownership and earning potential should also be considered, as the license will likely constitute a large portion of the franchisee’s income. Ensuring they are receiving an adequate return on investment is important because it will keep them interested in the company. Pizza Patron has respectable earning potential, especially for its lower investment cost. It could always be higher, but it’s not a bad investment, especially for those who have less start up capital to work with.

 

Pizza Patron is, overall, a viable franchise choice for anyone that fits their bill. They have good earning potential, are exhibiting positive growth patterns, and have a lower cost of ownership than many franchises. Franchisees that are interested in food service, especially pizza, and are able to operate a location within their geographical confines, would do well with a Pizza Patron location.

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