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Little Caesars
One of the largest pizza chains in the world, Little Caesars is well known for its HOT-N-READY model, which lets customers walk in and pick up their pizzas with little to no wait times. Little Caesars is the 3rd largest pizza chain in the world with over 60+ years of experience, has over 3,000+ stores in 27 countries, and their model of quick and affordable pizzas has gained a significant following. Over 80% of Little Caesar restaurants are franchises and the brand is actively looking at expansions. If you are passionate about pizza or just looking for a proven franchise model, a Little Caesars franchise could be the right fit for you. That said, Little Caesars’ high personal net worth and personal guarantee requirements for its franchisees are worth considering before making a decision. We are going to take a look at what franchising with Little Caesars looks like. Let’s get started.
Facts & figures
History of the company
Mike and Marian Ilitch opened the first Little Caesars in 1959 in Garden City, Michigan as a small store named Little Caesars Pizza Treat. Soon after, in 1962, Little Caesars started offering franchises and has since grown to become the third-largest pizza chain in the US with stores across every state.
The pizza chain began offering its "Hot-N-Ready" menu item, which is a large pizza sold for $5, in 2005. This new feature was a major success, which led the item to become a permanent fixture on the menu.
Headquartered in Michigan, the company and its supplier subsidiaries are privately owned by the Ilitchs.
Is a Little Caesars franchise right for you?
Little Caesars can be an attractive proposition for many investors looking to add a fast-growing pizza franchise to their portfolio. However, the franchise has high investment and net worth requirements along with the need for personal guarantees, which can pose some issues for risk-averse investors.
We have outlined the pros and cons of owning a Little Caesars franchise below to help you decide whether it is the right investment.
Pros and cons of owning a Little Caesars franchise
Pros
- With over 5,000+ stores worldwide, Little Caesars is a globally recognized brand with significant customer awareness and a built-in audience for its pizzas.
- Little Caesars’ low-priced fast food, such as its signature $5 pizza, has attracted a large customer following.
- Little Caesars offers new franchisees comprehensive training and support, including a mandatory six-week training program before opening the franchise and other ongoing training.
- Little Caesars offers territory protection agreements for a fee, ensuring you can reserve your planned territories and prevent future competition.
- Little Caesars provides significant discounts on the initial franchise fee and other startup costs for veterans and first responders.
- The franchise is transferable for a fee of $7,500, letting franchisees sell or transfer it to someone else in the future.
- Little Caesars prioritizes scalability, making sure that you can buy and operate multiple outlets at the same time.
Cons
- Little Caesars requires candidates to have a net worth of $400,000 (with $200,000 of it in liquid assets) to qualify as a prospective franchisee.
- Little Caesars expects a minimum investment of $393,000 to $1,718,700, a considerably high start-up cost.
- While the semi-absentee model, where the franchise owner is not involved in the day-to-day operations on a full-time basis, does give you more freedom than the operator model, it still requires you to have some level of commitment to the business.
- You and your spouse must sign a personal guarantee, taking on financial liability for the franchise outlets, that risks your personal and marital assets.
- Franchisees must contribute 7% of their weekly sales toward advertising in addition to the royalty fees of 6% of their sales to advertising.
What makes Little Caesars a good investment?
When you’re one of the fastest-growing carryout pizza chains in America, you’re obviously doing something right. Or, in the case of Little Caesars, they’re doing many things right. The company isn’t even thinking of resting on its laurels, however. Instead, it’s actively working toward even more growth, by targeting communities across the country through an aggressive multi-unit franchisee growth strategy. These communities are poised for growth and provide excellent opportunities for franchise developers who want to be associated with a leading national brand and a simple business model.
“As we implement our strategic plan focused on bringing in experienced restaurant operators to add new franchise units into previously untapped markets, we anticipate that consumers and franchise developers alike will be eager to connect with Little Caesars Pizza’s globally recognized brand name,” said Ed Ader, director of franchise development for Little Caesars.
In addition to in-line shopping centers and strip mall locations, the expansion plan also includes opportunities for franchise locations to open in non-traditional franchise venues—unique settings like convenience stores, college campuses, and military bases, just to name a few.
The beauty of this model is that Little Caesars Pizza will work closely with its franchisees to develop locations with customized architectural and build-out plans. That design flexibility makes it an attractive fit for all kinds of venues.
Brand Equity
Year after year, for more than a decade, Little Caesars Pizza has experienced significant sales increases and store growth. The company is planning for the continuation of this trend with this franchise expansion program, and an unwavering focus on providing high quality products with great value for a low price.
In fact, Little Caesars Pizza has been named “Best Value in America” for ten straight years, and the brand appeals to consumers on several levels.
“Little Caesars Pizza takes pride in its ability to connect with consumers on what matters most to them,” added Ader. “Whether it’s our HOT-N-READY® pizza or famed Crazy Bread®, our loyal and growing fan base is looking for a great value, and we consistently deliver on our promise to do just that.”
The brand equity built throughout the past six decades, along with the proven Little Caesars Pizza business model and ongoing franchisee support, are driving the company’s growth. Couple that with the brand’s high quality, affordable products that are ready when customers are, and you’ve got a recipe for remarkable consumer convenience and value.
Failure Rate
Little Caesars has a failure rate of 6% in three years, which is considerably lower than most other QSR restaurant franchises.
Little Caesars franchisee minimum requirements
The minimum financial requirement to open a Little Caesars is $400,000 net worth, out of which $200,000 should be liquid assets. You can open a Little Caesars anywhere in the US, though there are more opportunities in some states than in others, according to the company’s website. You can view the map based on the prospective opportunities by state here.
How does the Little Caesars franchise model work?
Little Caesars follows the standard franchise model in the Quick Service Restaurants industry, where the franchisor licenses the brand name and business model to a franchisee. The franchisee must bear the initial startup costs, including pre-opening purchases from Blue Line, a subsidiary of Little Caesars, the site preparation, and the grand opening of the restaurant.
Some of the notable features that stand out in Little Caesar’s operations are:
Territory Reservation Agreement
Something that might interest prospective franchisees is that Little Caesars offers select franchisees the opportunity to reserve a territory by signing a territory reservation agreement for a fee.
Under the agreement, Little Caesars will reserve a potential territory for you to develop under a schedule. The territory reservation fee is $5,000 per restaurant, in addition to the costs of development.
Custom Caesar Vision System
Little Caesars requires franchisees to use their custom restaurant management system, Caesar Vision, for all Little Caesars’ restaurants and charges an annual support fee for its use. It contains an integrated point-of-sale, a kitchen dashboard, a digital menu board, and a mobile and web system, ensuring franchisees can manage their restaurants with ease.
Now that you understand how Little Caesars works, it's time to take a look at the various opportunities offered by the company.
What are the franchise opportunities offered by Little Caesars?
Little Caesars offers three different types of franchise opportunities to prospective candidates based on their experience and situation.
Traditional carryout-only restaurant
Carryout-only restaurants are Little Caesar's traditional model and they sometimes feature a drive-thru window. Unless franchisees get prior permission from Little Caesar’s in writing, delivery is not permitted. The carryout-only restaurants can be a good fit for investors looking for a straightforward fast-food franchise model. The traditional restaurants can take several different forms:
Freestanding - A freestanding restaurant can have an area that ranges from 1,400 - 1,800 square feet and they are usually equipped to serve a full menu. They feature a drive-through window and parking.
Inline - These are restaurants located within or at the end cap of buildings. They are typically 1200-1400 square feet in size, serve a full menu and feature drive-through windows when possible.
License Program
In addition to franchising, Little Caesars has developed a license program to operate outlets in captive venues. These are categorized into two, based on square footage of space needed for the outlet.
Nontraditional Express: At only 400 - 600 square feet, Expresses are smaller footprint restaurants located inside gas stations and convenience stores. They serve a modified menu and typically have 1-2 employees.
Captive venues targeted:
- Food courts
- Gas stations
- Retail and convenience stores
- Shopping malls and department stores
- Sports stadiums and sports complexes
- Theaters
- Airports, train stations, public transit stations, and cruise ship ports
- Amusement parks and arcades
- Arenas
- Bowling centers
- Convention centers and conference centers
- Factories
- Festivals and fairs
- Government buildings
- Hospitals
- Hotels and casinos
- Native American reservations
- Office complexes
- Schools and colleges
- Turnpikes and military bases
These agreements are offered under significantly different terms to experienced food service operators selected by the parent company. For franchisors experienced in the food service industry, the license program can be a very lucrative opportunity.
Food Trucks
Food trucks are only available to existing franchisees as the truck is attached to a franchisee’s particular restaurant. The parent company will specify an area of location where the food truck should operate and will set the menu. It should be noted that the company doesn’t give exclusive territorial rights to food trucks, franchisees might face competition from existing Little Caesar outlets in the area or other food trucks.
How much does a Little Caesars cost?
The total costs of opening a Little Caesars pizza restaurant franchise can range between $393,000 to $1,718,700, inclusive of the $20,000 franchise fee. The costs for opening a Little Caesars can be categorized into start-up costs, ongoing costs, and additional costs.
Little Caesars Start-up costs
Here’s a breakdown of all the initial costs of starting a Little Caesars:
| Cost | Minimum | Maximum |
Initial franchise fee | $20,000 | $20,000 |
Grand opening | $15,000 | $20,000 |
| Rent | $1,500 | $7,000 |
Leasehold Improvements | $50,000 | $1,000,000 |
Fixtures, Equipment, and Signage | $212,000 | $424,000 |
Training Expenses | $12,000 | $16,500 |
Start-up Inventory and Supplies | $63,000 | $154,000 |
Insurance | $500 | $1,200 |
Utility Expenses | $1,000 | $9,000 |
Licenses and Permits | $1,000 | $20,000 |
Additional Funds | $17,000 | $47,000 |
Ongoing costs
Your ongoing costs with Little Caesar would repeat on a planned schedule. For example, royalties are to be paid weekly while Learning Management System fees will be paid in semi-annual installments. Here are some ongoing costs you might face with Little Caesars:
- Royalty fees: The greater of 6% of gross sales or $100
- Advertising fees: 7% of gross sales
- Blue Line purchases: Varies
- Caesar Vision system annual support fee: $3,500 per year per restaurant
- Digital transactions fee: Up to $0.40 per transaction
- Security and technology fee: Up to $0.06 per credit or debit transaction
- Delivery fees: Varies depending on website
- Learning Management System fee: $260 per year per Restaurant
- H3: Additional fees
- Lastly, Little Caesars might charge you extra fees depending on your specific situation, as detailed in the franchise agreement. These fees could include:
- Onsite Caesar Vision support: $1,500 per day per technician, plus travel expenses
- Audit by franchisor: Costs of audit (travel, lodging, wage expenses, and accounting and legal costs)
- Additional trainees: Not more than $500 per attendee for initial training of additional employees
- Transfer Fee: Varies from $0 to $5,000 per restaurant
- Renewal Fee: $5,000
- Interest 18% per year or the maximum rate permitted by law
- Insufficient Funds Fee Up to $50 per occurrence
Little Caesars requires a big upfront investment and some significant recurring fees, creating a higher financial barrier to entry. Understanding the split of costs as well as their scheduled payments can help you better plan your finances.
Discounts
Little Caesars provides multiple discounts to veterans, first responders, and gold star families. Franchise fees charged can vary widely due to the discounts given by Little Caesars to veterans, disabled veterans, and first responders.
Veteran and first responder discounts
For veterans and first responders, Little Caesars offers the following discounts:
- $5,000 initial franchise fee discount
- $5,000 equipment discount
- $5,000 discount on the first food order
- $1,000 Pepsi credit
- Free grand opening Marketing kit
Disabled veteran and Gold Star family discounts
For disabled veterans and Gold Star family members, Little Caesars offers the following discounts:
- $20,000 initial franchise fee discount
- $10,000 equipment discount
- $7,000 discount on first food Order
- Free grand opening marketing kit
- A donation of $10,000 in the franchisee’s name to a veteran organization of choice
How much does a Little Caesars owner make in a year?
Little Caesars doesn’t disclose the average sales of an outlet but the franchise chain, as a whole, made over $4.4 billion in revenue. We estimate the average unit volume per store to be around $1 million, considering its number of outlets. Depending on the outlet's performance, the owner can make around $100,000 in profit after accounting for overhead and royalties.
However, keep in mind that these are estimated figures. The only way you can find accurate figures is by reaching out to existing franchisees with similar market conditions and asking them about their experiences.
How does the Little Caesars franchise process work?
Once you’ve determined that Little Caesars is the right franchise for you, here’s how you can kickstart the process of getting your own.
1. Fill out your application
The first step is to fill out the application on Little Caesar’s website. You’d need to provide your personal and financial details, proving that you have a net worth above $400,000. You may have to provide some documentation such as proof of funds and financial statements.
2. Complete the initial interview
Once Little Caesar processes your application, you may be called for an interview. Here, you’d discuss your background, fit, and capabilities to run the franchise.
3. Sign the franchise agreement
If Little Caesars approves you for a restaurant franchise, you will have the opportunity to sign a franchise agreement with them.
They will share the franchise agreement and a Franchise Disclosure Document (FDD) at least 14 days before the signing date for your review. The agreement would form the basis of your relationship with Little Caesars, and the FDD the terms and conditions of joining the franchise. Ensure you’ve clearly understood all the terms of the agreement. We recommend that you seek a franchise attorney to help you with this step of the process.
Some of the elements to keep in mind when reviewing Little Caesar’s documents are:
Personal guarantee: Little Caesars stipulates that you and your spouse should sign a personal guarantee, making you financially liable for the franchise. Ensure you’ve understood all the terms and conditions before signing it.
Fees: Little Caesars has multiple additional fees for its systems, transactions, and supply chain, so clearly understanding the amount due and their payment schedules can help you stay on top of your finances.
Little Caesars doesn’t authorize its franchisees to disclose financial information. However, the company provides the relevant financial disclosures if you are purchasing an existing franchise.
A note on the Franchise Disclosure Document (FDD)
An FDD is a legal document with key information about the specific franchise, giving you a starting point for in-depth research. It has 23 items in it and with any franchise, this should be your starting point of research. Check out our Ultimate Franchising Guide to learn more about FDDs.
Attend a multi-week training
Before opening your store, Little Caesars requires you to attend an 8-week training program to prepare its franchisees for the realities of running a Little Caesars restaurant. The training will be split into the following categories:
In-store training: The in-store training covers aspects such as franchising, management simulations, and shift training. The franchisees will also complete a workbook on the Operational Resource Guide (ORG), which consists of the technical expertise of food preparation for a Little Caesars restaurant.
Business training: The business training will help the franchisee understand the legal, financial, and human resource aspects of running a franchise outlet.
Franchise development workshops: Prospective franchisees must attend multiple workshops covering leadership, team building, food management, and more.
Begin site construction
Once your training is complete, you can begin the construction of your restaurant. Little Caesars will approve of your site selection and provide you with the guidelines for the construction of the premises. The franchisee is responsible for all aspects of the construction process, from hiring contractors to zoning clearances and you must comply with all state and federal laws regarding the process.
Open your restaurant
Finally, you can open your Little Caesars restaurant with a grand opening. Little Caesars requires you to spend at least $15,000 on the grand opening. Keep in mind that under the franchise agreement, the restaurant is to open to the public no later than 9 months from the date of signing.
With its global brand recognition, semi-absentee model, and plenty of franchise support, Little Caesars can be an attractive opportunity for individuals looking to add a fast-food franchise to their portfolio. However, if you are concerned about the personal guarantee and high ongoing fees, some other franchises could be a better fit.
What are some alternatives to Little Caesars?
While Little Caesars is a fast-growing franchise with a lucrative business model, it also requires its franchisees to have a significant net worth and high-risk appetite. If you are looking for a fast food franchise at a more affordable price point, some of the following could appeal to you.
Papa John’s
Known for its fresh ingredients and signature pizzas, Papa John’s is a celebrated pizza chain with thousands of locations around the world. Papa John’s initial investment can range from $188,615 to $975,415 and they charge a royalty fee of 5% of gross sales with an additional 8% towards national advertising.
Subway
Subway is one of the most well-known brands for sandwiches and wraps, and coincidentally, is one of the cheapest franchise brands you can buy into. With an initial investment ranging from 200,000 to 500,000, Subway charges a royalty fee of 8% with a contribution of 4.5% toward national advertising.
Domino's Pizza
Another Michigan-based fast food franchise, Domino’s Pizza is world-renowned for its selection of pizzas, sides, and desserts. The initial investment for a Domino’s Pizza franchise outlet can range anywhere from $107,450 to $682,500 and they charge a royalty rate of 5% with an additional 3% going toward advertising.
Partnering with the right franchisor in the highly competitive QSR industry can significantly improve your chances of success. With Little Caesars or any other franchise, make sure you’ve assessed the profitability, demand for the brand as well as the cost before making a decision. Good luck!
FAQ
Does Little Caesars offer veteran discounts?
Yes, Little Caesars offers significant discounts for veterans, first responders, and gold star families. These range between $5,000 - $20,000 for the franchise fee, and many other discounts for different categories. Refer to ‘Veteran and first responder’ and ‘Disabled veteran and Gold Star family discounts’ sections for more details.
What are the types of franchise opportunities that Little Caesars offers?
Little Caesars offers a traditional carryout-only restaurant, a license program for captive venues, and food trucks attached to specific restaurants.
How long does it take to open a Little Caesars franchise?
The franchise agreement states that the franchisee should open the restaurant latest by 9 months after signing the agreement. Depending on factors such as real estate and site construction, opening a Little Caesars restaurant can take anywhere between 30 days to 270 days.
How much does it cost to start a Little Caesars franchise?
The total costs of opening a Little Caesars pizza restaurant franchise can range from anywhere between $393,000 to $1,718,700, inclusive of the $20,000 franchise fee.
Does Little Caesars support its franchisees?
Yes. Little Caesars offers comprehensive 8-week training pre-opening and further supports its franchisees all year around via business consultations and operational support. Franchisees also benefit from national advertising campaigns, in-house troubleshooting for systems, and other services.
Is Little Caesars profitable?
Yes, Little Caesars made $4.4 billion in revenue in 2023 and an average franchisee can expect to make around $100,000 in profit.
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FAQs
- National fast casual pizza retail restaurant franchise
- Offers a variety of pizza styles as well as side dishes
- In-store sales of pizza and other menu items
- Payment for deliveries and catered events
- Sales of brand merchandise
- Someone with knowledge or experience in food service
- People who love pizza
- Franchisees who seek a high-volume restaurant
- Open and oversee operation of a fast-casual pizza restaurant
- Hire food and management personnel as necessary
