Papa John’s
Franchised Units: 2,200*
Franchise Fee: $25,000
Total Start-Up Costs: $113,823–$528,120 (traditional); $72,500–$376,623 (nontraditional)
Royalty: 5%
Renewal Fee: $4,000
Marketing Fee: 7%
Twenty-five years ago, Papa John’s was a former broom closet in a Jeffersonville, Indiana, pub; today, the company generates more than $2 billion in U.S. sales with AUV exceeding $750,000.
Few can match Papa John’s extensive—and clever—marketing push. From founder John Schnatter delivering pizzas and searching for his beloved Camaro to the “Better Ingredients. Better Pizza.” campaign, Papa John’s fashions itself as a pizzeria favoring quality over price, largely avoiding the discount wars of its competitors.
“‘Better Ingredients. Better Pizza’ is not a tagline, but lived throughout the brand,” Papa John’s spokeswoman Tish Muldoon says.
With competitive start-up costs, the international player has positioned itself for additional growth.
“[These are] the most attractive development incentive programs offered in recent years,” Muldoon says, adding that the company has low-cost build out, first-rate systems, and extensive corporate support.
Word on the Street: “The key to prosperity in the pizza segment is quality positioning, clear marketing, and a qualified franchise base,”
Allen says, noting that Papa John’s has all three.
*based on 2008 figures
Qdoba Mexican Grill
Franchised Units: 353
Franchise Fee: $30,000
Total Start-Up Costs: $454,000–$738,000
Royalty: 5%
Renewal Fee: Either 15% of then-current franchise fee or $5,000, whichever is greater
Marketing Fee: 2% local marketing and up to 2% national marketing
Since its 1995 opening as a single storefront in Denver, Qdoba’s ascent has been both swift and remarkable, as the company became the first fast-casual Mexican chain to open 500 outlets. In 2008, Qdoba earned an estimated $447 million in sales while AUV surpassed $1 million. Qdoba’s vice president of franchise development Todd Owen credits experienced and consistent leadership for the momentum.
Parent company Jack in the Box Inc. opened 56 Qdoba franchises in 2008 and is looking to accelerate the Mexican chain’s expansion in the coming years given the high cash-on-cash returns Qdoba generates. According to Owens, the high percentage of multiunit Qdoba operators showcases the company’s focus on a franchise system based on stability, integrity, and strength.
Word on the Street: “Qdoba’s advantage is relatively small space, inexpensive build-out cost, a simple menu, low inventory, and they are perceived as fresh,” says Paul Tran, director of franchise development for Fransmart, a U.S.-based franchise-development company. “Unlike drive-thru concepts, they don’t need to open stand-alone locations to do good volume. They can go in-line and their build-out costs can be less.”
