Has anyone seen the price of Little Caesar’s Pepperoni Hot and Ready pizzas go up with the increase in the price of wholesale food prices? If so how much and in what market. Thanks-
The three LCs in my market all still offer the $5 Hot and Ready.
The two franchisees i know are still doing really well, I don’t see them raising their prices anytime soon. Their royalty fee was bumped up 3% more for the national advertising, but their sales increase as a company is up around 15% so the franchisees aren’t really complaining. Advertising was renewed and will continue for 2013.
$5.55 where i am
How do they make any money at that price? Are they counting on sales of drinks or other pizza types to make up for this? I don’t understand how this model makes money, but obviously it does.
I think volume and lower qualtiy (for example fewer pepperoni and less cheese) is the answer to your question.
I do business with a few Little Caesar’s owners and from what I can tell they do quite well…
They also have very low labor cost because they have no drivers and their cooks prep pizza all day and load them in the cooler. They don’t need a large staff to handle the rush, just enough folks to wait on customers and load/unload the oven. No stretching dough, saucing or cheesing and only occasional topping. It is a much more efficient utilization of your labor dollars.
Tiny footprints, so occupational costs are likely a good bit lower than we suspect.
In my area a hot & ready is 6.49 right now
It is like a pizza factory, but they don’t skip any steps. They make the dough each morning, they prep the sauce, and they have to physically sheet out and make 300 pizzas a day, twice that in busier stores. Each pizza gets 8 ounces of cheese and 30 pep. They pay roughly .20 over block price for cheese and it comes shredded.
When I ran a Caesars, we would occasionally have 1k hours on some Fridays. That’s a lot of 5.00 pizzas… it would be foolish to think you can sustain that type of business with only a couple of people working. The service would be atrocious. So they do save on labor, but that’s by having a GM that must work like a dog all day long and having very good employees and being well prepared to know when you will get busy. The Caesars I ran usually had two on counter, one cutting and boxing and taking care of breadsticks/cheese breads, and two people making pizzas… as well as someone constantly sheeting out pizzas. The turnover on pizzas during dinner would be so quick, even with 140 pans, we’d have to put some in the cooler to cool them before we could use them to sheet out again. Actually some of the warm pans were preferred to help with proofing. On slower nights we could 3-man it, but it wasn’t fun.
So total volume and efficiency is how they make the money. Low cost of goods (although aside from Cheese, you can find similarly priced items and sometimes lower, even higher quality… from your food vendor). Add-on items are important, breadsticks average 60-70 bags a day. Dip cups, cheese breads, $8 specialties which they’ve been pushing of late. Lets not forget Caesars skims 9% off the top… so everyone is still making money. It’s interesting to see what happens with the cheese crunch, obviously Caesars discourages it’s franchisees to raise costs, and publish lengthy reports about the harm of doing so… but others are still doing it (5.55, 5.99). I think the majority are still charging $5.
I still think I will feel the cheese crunch more than any chain.