Papa John’s has over the years established itself to become of the most popular fast food franchises for customers and franchise owners alike. The world’s #4 pizza franchise, Papa John’s appeal lies behind its low startup costs, worldwide reach, and a name you can take to the bank. Unlike most pizza franchises, Papa John’s has proven to thrive in both rural and urban locations, as well as all regions of the country. So, what can you expect to make from a Papa John’s franchise?
Papa John’s Franchise
● Papa John’s was founded in 1984 and has been offering franchise opportunities since 1986.
● You can start a Papa John’s franchise with an initial investment of as low as $300K
● Liquidity Requirements: Papa John’s calls for at least $70K in liquid assets
● Net-worth Requirements: $250K (for 1 unit, and $1 million for up to 10 units)
● Franchise Fees: As low as $25K plus royalty fee of 5 percent of monthly net sales (also payable monthly)
● Advertising/Marketing Fee: 8 percent of monthly sales
Why invest in a Papa John’s Franchise?
There are myriads of perks that come with being a franchisee/owner of a Papa John’s franchise. For starters, it is fairly simple and easy to buy into a Papa John’s franchise, especially when you look at other pizza franchises like Domino’s Pizza. The initial investment requirement of as little as $300K for a 1,200 square-foot store is quite reasonable. The net-worth of as low as $250K is also plausible. On your part, the 5% royalty fee that can be renewed after every decade is something to call home about.
When it comes to talking hard numbers, Papa John’s does deliver high ROI even if you are an absentee franchisee. Their training opportunities mean that you can learn a great deal of knowledge and gain insights that can help you as an owner. Whether you want to be an absentee owner or a hands-on franchisee, ongoing training offered by Papa John’s can come in especially handy.
Another area Papa John’s excel is customer service. In fact, it was recognized by American Customer Satisfaction Index as the No.1 pizza brand when it comes to customer satisfaction. The only drawback that might put you off is the obligatory 8% marketing and advertising budget.
What Does a Papa John’s Franchise Make?
The franchise dictates all the financial info you might want to know within their franchise agreement document (FDD) which is released annually. According to a recent FDD, you can pull in an average of $781, 202 in revenue from your Papa John’s franchise. A company owned location brings in a slightly higher average of $966,460 in annual revenue.
Costs of Operation (Expenses) of a Papa John’s Franchise
While they don’t officially release cost break-down for franchise locations, you can still estimate these using figures for company locations. According to recent stats, the average costs associated with running a Papa John’s location are:
● $284,000 on food costs (or nearly a third of revenue)
● $194,000 on labor and labor-related costs (a fifth of the revenue)
● $89,000 on marketing and advertising (approximately 9 percent of the revenue)
● $45,000 on mileage (about 5 percent of revenue)
● $44,000 on location manager costs
● $22,000 on store deals and bonuses
● $44,000 on tech, supplies, uniforms and other miscellaneous items
● $34,000 on location maintenance, lease, and rent
From that, you can easily determine that the cost of operating a franchise is approximately $824,500. That means that pre-tax profit is around $142,000, which spells approximately 14 percent of the total annual revenue.
Papa John’s Franchise – After-Tax Profit
For franchisees, there are a few adjustments you might want to put into consideration. For starters, some franchise stores do experience lower sales due to poor location, insufficient advertising or inadequate sitting. Also, a franchisee has to pay the mandatory 5 percent of net sales towards royalty fee as well as put in at least 8 percent of the profit towards advertising and marketing. All things considered, a Papa John’s franchise can expect to make around $66K to $67K annually.
Of course, you can make more from a Papa John’s franchise if you put in more effort and time, as well as delegate more money towards advertisements and marketing.