I wanted everyones thought on this matter. I have an independent pizza shop in my small town of about 20k. My major business is take out with 10% delivery. Only other delivery pizza is dominos. I wanted to see if its a good idea on my part to open a papa johns. Would I be making a mistake and hurting my own business?
20K and only Dominos? I’d say yes; of course you understand you’d hurt your indie some, but it sounds like dine-in. Who’s to say you couldn’t dominate the segment with the indie and a PJ…
Go for it!
I think I disagree with pizza2007 on this one…at least for now. You are in a fairly small market. You said the only other pizza that delivers is Dominos. How many total pizza shops are there? How is your dine-in business doing? I know you only say that you do 10% delivery…,but why not instead of investing a lot of money in a new start up with a franchise contract attached… how about build on your exsisting business with some new marketing ideas… and try to take some of that delivery business away from the big “D” and help build a bigger name for you instead. Why not make your place the best it can be and then open up a second indie shop the next town over and so on… build your own chain. Financially and emotionally you might be getting into a lot of headaches that make both operations struggle and then you end up with zero successful operation in town and that would be bad. I would think long and hard and really sit back and talk to other people in town… get their feel for things… and not just asking…“hey, what do you think about another pizza option” because everyone says yes to a new restaurant… you need some good first hand advice from the business locals… not just empty stomachs. Good luck.
The Papa Johns franchise agreement probably precludes you from owning a competing business in the same market segment.
Of course Paul is on to something: you probably can’t have a competing business (dine-in vs. delivery? I dunno…) Pizza in general, probably right.
Awwwwww, the problem you may face is, do you dish your indie and go with PJ, or not???
The PJ marketing and brand will bring a lot of business.
Tough decision. Gregster: any comment?
error above. Both Paul and QcfMike have valid points.
The opportunity to slice a PJ franc in any region, to me, would be something to weigh very heavily!!
If you are going to open a chain store…open Little Ceasars…Their avg unit vaolumes now exceed either DOminos and Papajohns…
$5.00 HOt N Ready…is killing it…!
Owning a Little Ceasars is not about making Pizza its about making $$ in an economy which will never be what it used to be…
At the very least. wait until the $10 pizza wars are over. Sales are up (which franchise fees are based on) but profits are down (so I hear).
If you already know how to run a pizza shop profitably, why pay (franchise fees and marked up commissary costs forever) for that expertise from someone else? You have all the expertise you need right here on this forum for free to run a successful profitable delivery business.
I doubt that’s the case; from the knowledge I have they pay much less on awful lot of food that most indy’s can get.
I think that Greg is right on this one. It’s been awhile, but the last PJ’s invoice I saw had the franchisee paying more than what an indy with some negotiation skills would be getting charged for similar products.
ok - seems strange. Must be different markets. When I looked at franchise v indy costs in my area the franchise (DP) were waaaaaay lower.
It’s been over 13 years since I have seen a Dominos invoice but back then they were not getting any great pricing. Their cheese and toppings were very similar to the indy I worked at that purchased from Lisanti. Their dough balls were extremely expensive compared to the product cost involved in dough made in house. The one item I remember they were getting cheaper was boxes.
Are you sure you are not comparing “pizza cheese” to real mozzarella?
nah, it was meat products (beef, peperoni and meatballs) exactly the same spec, around 20% cheaper with the franchise.
Well duh… they contain 20% less real meat! This was an easy one to explain.
sure if you ignore the ‘exactly the same spec’ bit.
Awww… come on Wizzle Wassell can’t you take a joke?
Honestly, I think you will dividing yourself here and causing hardship on both businesses… and with a franchise you’ll have the burden of having to pay almost 10% in associated fees.
Franchises are struggling just like indies these days (atleast from my neck of the woods). They have a bit simpler operation, but if you’ve been in the business for years its a moot thing with high price tag. Their support is there but really, all it boils down to is consultations with no accountability. When times are rough they’ll advise you on basic things like rent reductions, keeping utility costs down etc… The only other “nice” thing they could possibly do for support is lower fees… which usually does not happen.
PJ’s has been pushing an aggressive development plan, and have some good introductory rates. If you are afraid of a PJ coming to town, then that might be a consideration… but then what about Pizza Hut? Little Caesars? Shakeys? You can’t buy them all
So with that I wouldn’t advise it. Higher fees, more dillution in your current business with no drive to compete (you’ll not do certain initiatives in the goal for ‘balance’) not to mention 20K people is NOT a lot of people. Median persons per house holds is 2.59 as of 2000 so thats a house count of 7,722. PJ’s will need to have 500-600 transactions per week at a minimum (and even then its probably still struggling). so your looking at 2000-2400 transactions a month which is a 25.9% - 31.1% of your house count. Due diligence is definitely needed.
Try talking to some Papa Johns owners in neighboring towns of similar demographics and see how they are doing. If they have around the same population and close to the same amount of competition, what better way to get a gauge on how well you could possibly do.