Little Caesar’s low prices and convenience has made it a favorite and successful pizza chain across the states. Their famous mascot chanting “Pizza! Pizza!” may have you wanting to own your own franchise. With over 5,000 franchise units since 1962, this pizza chain has been able to grow for decades even through challenging economic time periods and numerous recessions.
How much will it cost to start a Little Caesars Franchise? The total cost to open a Little Caesars is $360,000. This estimates includes the $20,000 franchise fee required to get started.
You’ll need liquid capital of $100,000 and a net worth of $250,000 to qualify. Simply put, liquid capital is the amount of money you need on hand to enter an agreement with the franchise. Other names include fluid capital, liquid assets, etc. If you have an asset that is easily convertible to cash like mutual funds or money in a savings account, this is a widely accepted form of liquid capital.
As for net worth, this is the total value of all your assets minus any type of debt. Assets can include investments, property like a home, savings accounts and cash. Use the navigation below find the information you need about the pros and cons of this franchise business. We also dig deeper into the financial requirements and fees for your initial investment. As you’ll learn, this opportunity isn’t right for everyone.
- Financial Requirements and Fees
- Average Sales/ Revenue per Year
- Franchise Facts
- How Much Profit Does a Little Caesars Franchisee Make Per Year?
- Advantages of Little Caesars
- Challenges of Little Caesars
- Is Little Caesars Franchise Right for You?
Financial Requirements and Fees
Compared to other opportunities in fast food, Little Caesars has a relatively low initial total investment. You will need to have: a liquid capital of $100,000, a net worth of $250,000, and pay the initial franchise fee of $20,000.
There are other expenses you will have to look into for an accurate initial total investment, but according to Little Caesar’s website, they estimate the cost to start at $360,000. Here’s a clear breakdown of the costs for requirements. This is only a base amount that does not account for any additional fees you may need.
|Fees/ Expenses||Dollar Amount|
|Initial Franchise Fee||$20,000|
|Initial Total Investment||~ $360,000 – $1,686,000|
Little Caesars also offers programs to cut some costs too. In 2006, they started the Veterans Program to assist honorably discharged veterans and gold star families financial incentives to start up their own franchise. Some of the benefits included are: a franchise fee discount, an equipment and supply discount, financing assistance, and advertising and publicity support.
They also have a First Responders Program that is also eligible for the same benefits as the Veterans Program like the discount of the franchise fee. For those that are eligible, the company offers great assistance for those who may need it.
You may be wondering why there is such a variation on the initial total investment, but many factors come into play. For example, location can drive up the price of real estate if you were to build it in a busy city rather than a small town. Here is a chart that breaks down that initial investment and the variable expenses you might incur.
|Additional funds for 3 months||~ $17,000 to $47,000|
|Fixtures, equipment, and signage||~ $186,000 to $392,000|
|Grand opening advertising||~ $12,000 to $20,000|
|Initial franchise fee||~ $20,000 (can be reduced with discounts through programs)|
|Leasehold improvements||~ $50,00 to $1,000,000|
|Licenses and permits||~ $1,000 to $20,000|
|Rent||~ $1,500 to $7,000|
|Start up inventory and supplies||~ $63,000 – $154,000|
|Training expenses||~ $12,000 to $16,500|
|Utility expenses||~ $1,000 to $7,500|
|Estimate Total||~ $360,000 to $1,686,000|
As you may have noticed, there’s a wide range of costs when it comes to each expense. Traditionally, you would want a location that fits the following criteria:
- Store size between 1,400 to 1,600 square feet
- Adequate parking for customers
- A drive-thru window wherever possible
- Space for inline or free standing.
- Alongside busy streets and densely populated area.
There are also other non-traditional models that are smaller (around 460 to 1,399 square feet). These are best suited for convenience stores, airports, or college towns.
Besides the initial cost, there are other fees to consideration before opening a store. To give you an idea of what opening one would entail, here is a list of ongoing fees to consider before opening a franchise.
|Advertising fee||7% of gross sales, as determined by the franchisor|
|Caesar vision system annual support fee||$2,210|
|Mobile transaction fees||~ $0.30 per transaction|
|Royalty||6% of gross sales per week or $100 per week (whichever is greater)|
|Security and technology fee||~ $0.02 per transaction|
|Transfer fee||~ $0 to $5,000 per restaurant|
Again, these fees listed in the chart above are not part of the cost of the initial total investment. These are just some of the several fees that are paid or are expected once you own the franchise. The numbers may look intimidating and something you’ll want to take into consideration.
Average Sales/ Revenue per Year
This is probably the question you were waiting to be answered. What are the average sales and how profitable is running a franchise? It is broken down into 3 important pieces: systemwide annual sales/ revenue, average annual sales per unit, and the average franchisee profit.
Systemwide Annual Sales/ Revenue
Systemwide, Little Caesars generates $4.4 billion in total sales according to recent numbers. In the United States, the 2019 numbers were about $3.81 billion. They keep their prices low, menu items limited, and only allow pick-up options. This has allowed the stores to expand while keeping costs low.
The company also collaborates with online ordering apps for delivery. This chain also did well at the start of the Covid-19 pandemic and expects to continue its growth. In 2019, the brand opened its first stores in Barbados, Spain, and India.
Average Annual Sales per Unit
In 2018, Little Caesars finished the year with an average of $874,000 in annual sales per unit. This is just sales and not profit. The profit would include the subtracted cost that went into running the brand like fees and rent.
You are probably curious to know how profit from Little Caesars compares to other franchises. We will answer the average profit of franchises, the average of Little Caesars’s profit, and why gross sales on it’s own is not an effective way to choose whether a franchise is worth starting.
Average Franchisee Profit
The average Little Caesars franchisee will make $50,000 – $200,000 per year after expenses. Determining an average income for franchisee is difficult because there are many unique factors that attribute to this success. The most successful franchise are owners who can drive traffic to their stores while controlling food waste and hourly wages.
Little Caesars, in terms of initial cost is reasonable compared to similar concepts. For example, it could cost more than $2 million to open a Pizza Hut franchise on the high end. Like other franchise opportunities, the expense of prime real estate is the difficult part from a funding perspective. We recommend asking for input from corporate about the best potential locations to open a Little Caesars. The company will have recommendations for regions they believe have the most potential based on research.
Related Reading: How Much Does it Really Cost to Open a Chick-fil-A?
In fact, there can be a wide range of profit between several units of one franchise. We will cover these factors in a bit, but first, let’s review some key facts about this pizza franchise.
- Year founded – 1959 by Mike Ilitch and Marian Bayoff
- Year it began franchising – 1962
- Franchise units – 5,509 units, 6,000 worldwide
- An estimated 90% of the Little Caesars locations are franchised
- About 10% of Little Caesars locations are owned by corporate
- They operate franchises in locations outside the U.S. like: Asia, Canada, Latin America, and the Caribbean
How Much Profit Does a Little Caesars Franchisee Make Per Year?
A Little Caesars franchisee can make and estimate EBITDAR (earnings before interest, taxes, depreciation, amortization, and rent costs) of 17% with the profits being about $127,500 before rent or taxes. This can come out about $90,000 after including rent.
You will need to reflect on your own lifestyle and goals to determine if this is an appealing income for you.
Advantages of Little Caesars
Though starting a franchise is a big investment in time and money, there are distinct advantages when you franchise with Little Caesars. Here are a couple of reasons you may want to open a Little Caesars.
The first reason is that the numbers are visible and they list many resources on their website. It’s easy as an investor to find what you need. They outline their franchisee requirements, articulate the benefits programs, and tell you where they are looking to expand all on their website. You can find a list of contacts for the people who can assist you with franchise opportunities and they also offer a list of franchise finance lenders.
The second reason is the sheer fact that they are the 3rd largest pizza chain in the world. This place can almost market itself and they have a loyal following of customers. There are a tremendous amount of locations because they are a bit more flexible in terms of where they can be located. They are well known for their pick-up orders and do not always need drive-thrus, hence the flexibility. They are already established and well known making it less work for you to open a successful franchise.
Lastly, there are many opportunities to receive assistance when opening the franchise. On their website, you can easily find their discovery days and see the programs you qualify for. If you qualify for their programs and are a first-time franchise owner, you will find that many of the costs are cut and will feel supported with all the following benefits.
Finally, Little Caesars has proven it can thrive despite economic challenges and even global pandemics. As it turns out, pizza was the ideal food to purchase during stay-at-home orders. The pizza chain is also the perfect business to operate during recessions due to the low prices. From an operational standpoint, the business couldn’t be simpler.
Challenges of Little Caesars
Now of course every franchise has its challenges and Little Caesars is no exception. Here is a list of a few challenges you can expect when trying to open a franchise.
One, the fact that Little Caesars has so many locations may actually be a challenge as there is competition within itself. Not only will you be competing with other fast-food chains and restaurants, but you will also compete with the neighboring Little Caesars. Good marketing and location selection are crucial for a store to succeed.
Related Reading: How Much Will It Cost to Open a Pizza Hut?
The other challenge is just dealing with all the fees that come with owning a franchise. As mentioned earlier, there was a list of fees to account for once you open your own store, but that list did not capture all the costs you would may need to account for. Hiring staff, replacing equipment, and advertising can be difficult enough, but all the extra fees can wipe out profits.
Is Little Caesars Right for You?
Little Caesars is good for someone who genuinely loves pizza, has experience working in food services (quick-service pizza restaurants are preferred), and someone who is ready to manage a quick-paced and high-volume restaurant.
Related Reading: What’s the Real Cost to Open a Dunkin’ Donuts Franchise?
The pace Little Caesars demands can be a lot to handle. Since they offer Hot-n-Ready options that should be always readily available, staff need to be quick on their feet. There is significant help along the way, but one should be ready to face the challenges that come with a big brand.
If you are goal-oriented, customer service-oriented, and like working in a fast setting, then this franchise might just be for you. One thing to note is that this is a relatively safe investment that banks would fund (franchises are easier to fund than your own business) with a lower initial investment cost. Always be sure to consider all aspects before making the decision to purchase a franchise.