In this exclusive Franchise Chatter FDD Talk post, you’ll learn the following:

Section I – Estimated initial investment (franchise costs) for a Donatos Pizza franchise, based on Item 7 of the company’s 2024 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a Donatos Pizza franchise, based on Items 5 and 6 of the company’s 2024 FDD

Section III – Number of franchised and company-owned Donatos Pizza outlets at the start of the year and the end of the year for 2021, 2022, and 2023, based on Item 20 of the company’s 2024 FDD

Section IV – News updates on the Donatos Pizza franchise opportunity

Section V – Presentation and analysis of Donatos Pizza’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2024 FDD, including information on the:

• 2023 and 2022 average, median, highest, and lowest net sales for the 163 company-owned and franchisee-owned (combined), 51 company-owned, and 112 franchisee-owned Donatos Pizza Restaurants that operated consistently throughout each of the 2022 fiscal year (from January 4, 2022 to January 2, 2023) and 2023 fiscal year (from January 3, 2023 through January 1, 2024) (collectively, the “Covered Restaurants”)

• 2023, 2022, 2021, 2020, 2019, and 2018 average net sales for the 144 company-owned and franchisee-owned (combined), 51 company-owned, and 93 franchisee-owned Covered Restaurants that operated consistently during such time period, wherever located

• 2023 average net sales, food costs, beverage costs, production supply costs, labor & delivery reimbursement costs, and gross profit margin for all 51 company-owned Covered Restaurants and all 20 franchisee-owned Covered Restaurants owned and operated by 317 Pizza during the 2023 fiscal year

• 2023 average cost of goods sold, labor costs, controllable costs, and EBITDA percentages for 100 franchisee-owned Covered Restaurants, divided into 4 tiers based upon their weekly average net sales ($10,001 to $15,000; $15,001 to $20,000; $20,001 to $25,000; and over $25,000)

Section VI – Key ratios, comparables, computations, and analyses for the Donatos Pizza franchise opportunity (exclusive content for Platinum subscribers)

Section I – Donatos Pizza Franchise Costs

• Initial Franchise Fee:  $30,000
• Security Deposit Under Lease:  $2,000 to $11,000
• One Month’s Lease Rent and Real Estate Expenses:  $2,000 to $11,000
• Leasehold Improvements/Construction:  $35,500 to $454,000
• Furniture, Fixtures, and Equipment:  $324,029 to $356,529
• Computer System:  $18,000 to $23,000
• TRIO Software License Fee:  $7,500
• Liquor License:  $0 to $10,000
• Opening Inventory and Supplies:  $15,000 to $20,000
• Grand Opening Marketing Program and Initial Marketing Expenses:  $25,000 to $30,000
• Training Expenses:  $1,000 to $15,000
• Miscellaneous Opening Costs:  $2,000 to $5,000
• Additional Funds for 3 Months:  $20,000 to $25,000
• Total Estimated Donatos Pizza Franchise Costs:  $482,029 to $998,029

Section II – Donatos Pizza’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Initial Franchise Fee:  $30,000
• Licensing Fee:  4% of Net Sales
• National Marketing Fund Contribution:  up to 4% (currently 0.75%) of Net Sales
• Cooperative Advertising:  typically between 1% and 4% of Net Sales (Advertising Cooperative members establish exact amount)

Section III – Number of Franchised and Company-Owned Donatos Pizza Outlets

Franchised

2021

• Outlets at the Start of the Year:  114
• Outlets at the End of the Year:  117
• Net Change:  +3

2022

• Outlets at the Start of the Year:  117
• Outlets at the End of the Year:  121
• Net Change:  +4

2023

• Outlets at the Start of the Year:  121
• Outlets at the End of the Year:  127
• Net Change:  +6

Company-Owned

2021

• Outlets at the Start of the Year:  54
• Outlets at the End of the Year:  52
• Net Change:  -2

2022

• Outlets at the Start of the Year:  52
• Outlets at the End of the Year:  52
• Net Change:  0

2023

• Outlets at the Start of the Year:  52
• Outlets at the End of the Year:  51
• Net Change:  -1

Section IV – News Updates on the Donatos Pizza Franchise

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Donatos Pizza Franchise (Item 19, 2024 FDD)

• As of January 1, 2024 (the end of Donatos’ 2023 fiscal year), there were 178 Donatos Pizza Restaurants open and operating. Of those, 3 restaurants are Non-Traditional Sites, 6 restaurants did not operate for all of 2023, because they first opened during the year. Additionally, of those 178 Donatos Pizza Restaurants, 1 was temporarily closed for remodel, and therefore were not operational for a full 12-month period in 2023.

• Part 1 of this financial performance representation covers certain Net Sales for the 163 company-owned and franchisee-owned Donatos Pizza Restaurants that operated consistently throughout each of the 2022 fiscal year (from January 4, 2022 to January 2, 2023) and the 2023 fiscal year (from January 3, 2023 to January 1, 2024) (collectively, the “Covered Restaurants”).

• The franchisor owns and operates 51 of the Covered Restaurants and franchisees operate the other 112 Covered Restaurants.

• Each chart in Part 1 below sets forth certain Net Sales of the Covered Restaurants operating for each fiscal year and compares the two fiscal years by providing a percentage increase or decrease.

• Part 2 of this financial performance representation covers certain costs and the average percentage of such costs of the Net Sales incurred by all 51 company-owned Covered Restaurants, and 20 franchise-owned Covered Restaurants owned and operated by 317 Pizza LLC (“317 Pizza”), during the 2023 fiscal year. As stated above, Donatos’ 2023 fiscal year began on January 3, 2023 and ended January 1, 2024 which is 51 operating weeks.

• Part 3 includes certain calculations of EBITDA as a percentage of Net Sales from 100 franchised-owned Covered
  Restaurants, divided into four tiers based upon their weekly average Net Sales ranging between (a) $10,001 to $15,000, (b) $15,001 to $20,000, (c) $20,001 to $25,000, and (d) over $25,000 during the 2023 fiscal year (from January 3, 2023 to January 1, 2024).

• Parts 1, 2, and 3 of this financial performance representation do not include results for kiosks or other outlets at Non-Traditional Sites selling products under the “Donatos” name that are not full-size Donatos Pizza Restaurants or which only offer a limited menu of Donatos items.

• This financial performance representation contains:

• (1) the actual average Net Sales (as defined below) for the Covered Restaurants during the period from January 3, 2023 through January 1, 2024, which is Donatos’ 2023 fiscal year, and during the period from January 4, 2022 through January 2, 2023, which is Donatos’ 2022 fiscal year (Part 1);

• (2) Food Costs, Beverage Costs, Production Supply Costs, and Labor Costs as a percentage of Net Sales, as Donatos defines each of those terms below, for all 51 company-owned Covered Restaurants, and the 20 franchise-owned Covered Restaurants owned and operated by 317 Pizza of which Donatos has a minority ownership and therefore access to their financial information, during Donatos’ 2023 fiscal year (Part 2); and

• (3) EBITDA (as defined below) of each franchisee-owned Covered Restaurants which each achieved total Net Sales between $1,000,000 and $1,400,000 during the 2023 fiscal year (Part 3).

Part 1 – Net Sales of Covered Restaurants

A. Net Sales of All Covered Restaurants (163 Units)

• 2023 High Net Sales:  $2,634,868
• 2022 High Net Sales:  $2,626,012
• % Increase Between Years:  0.34%

• 2023 Low Net Sales:  $436,518
• 2022 Low Net Sales:  $435,588
• % Increase Between Years:  0.21%

• 2023 Average Net Sales:  $1,239,495
• 2022 Average Net Sales:  $1,226,416
• % Increase Between Years:  1.07%

• 2023 Median Net Sales:  $1,159,772
• 2022 Median Net Sales:  $1,145,645
• % Increase Between Years:  1.23%

B. Net Sales of Company-Owned Covered Restaurants (51 Units)

• 2023 High Net Sales:  $2,634,868
• 2022 High Net Sales:  $2,626,012
• % Increase Between Years:  0.34%

• 2023 Low Net Sales:  $986,853
• 2022 Low Net Sales:  $1,035,972
• % Increase Between Years:  -4.74%

• 2023 Average Net Sales:  $1,610,806
• 2022 Average Net Sales:  $1,609,763
• % Increase Between Years:  0.06%

• 2023 Median Net Sales:  $1,574,378
• 2022 Median Net Sales:  $1,563,899
• % Increase Between Years:  0.67%

C. Net Sales of Franchisee-Owned Covered Restaurants (112 Units)

• 2023 High Net Sales:  $2,429,988
• 2022 High Net Sales:  $2,422,555
• % Increase Between Years:  0.31%

• 2023 Low Net Sales:  $436,518
• 2022 Low Net Sales:  $435,588
• % Increase Between Years:  0.21%

• 2023 Average Net Sales:  $1,070,416
• 2022 Average Net Sales:  $1,051,857
• % Increase Between Years:  1.76%

• 2023 Median Net Sales:  $1,012,379
• 2022 Median Net Sales:  $941,554
• % Increase Between Years:  7.52%

D. Net Sales History from 2018 to 2023

All Covered Restaurants

• 2023 Average Net Sales:  $1,291,705
• 2022 Average Net Sales:  $1,270,014
• 2021 Average Net Sales:  $1,307,905
• 2020 Average Net Sales:  $1,296,606
• 2019 Average Net Sales:  $1,147,998
• 2018 Average Net Sales:  $1,121,566
• % Increase/Decrease Over 5 Years:  15.17%

All Company-Owned Covered Restaurants

• 2023 Average Net Sales:  $1,610,806
• 2022 Average Net Sales:  $1,609,763
• 2021 Average Net Sales:  $1,667,812
• 2020 Average Net Sales:  $1,666,253
• 2019 Average Net Sales:  $1,512,810
• 2018 Average Net Sales:  $1,477,938
• % Increase/Decrease Over 5 Years:  8.99%

All Franchisee-Owned Covered Restaurants

• 2023 Average Net Sales:  $1,116,715
• 2022 Average Net Sales:  $1,083,699
• 2021 Average Net Sales:  $1,110,536
• 2020 Average Net Sales:  $1,093,896
• 2019 Average Net Sales:  $947,939
• 2018 Average Net Sales:  $926,136
• % Increase/Decrease Over 5 Years:  20.58%

Part 2 – Average Net Sales, Food Costs, Beverage Costs, Production Supply Costs, and Labor Costs for the 2023 Fiscal Year for All 51 Company-Owned Covered Restaurants and All 20 317 Pizza Covered Restaurants

A. Company-Owned Covered Restaurants

• Average Net Sales:  $1,610,806
• Average Food Costs as a Percentage of Net Sales:  23.9%
• Average Beverage Costs as a Percentage of Net Sales:  1.2%
• Average Production Supply Costs as a Percentage of Net Sales:  3.3%
• Average Labor & Delivery Reimbursement Costs as a Percentage of Net Sales:  27.5%
• Average Gross Profit Margin as a Percentage of Net Sales:  43.9%

B. 317 Pizza Owned Covered Restaurants

• Average Net Sales:  $848,917
• Average Food Costs as a Percentage of Net Sales:  25.3%
• Average Beverage Costs as a Percentage of Net Sales:  1.1%
• Average Production Supply Costs as a Percentage of Net Sales:  3.3%
• Average Labor & Delivery Reimbursement Costs as a Percentage of Net Sales:  29.8%
• Average Gross Profit Margin as a Percentage of Net Sales:  40.5%

• “Food Costs” reflect the amounts paid for all edible products, such as breading, sauces, and pizza, sandwich and salad toppings, but exclude Beverage Costs.

• “Beverage Costs” reflect the amounts paid for beverage products, such as beverage cans, 20 ounce beverage bottles, 2 liter beverage bottles, fountain drinks, and bottled water.

• “Production Supply Costs” reflect the amounts paid for paper products (such as boxes, plates, napkins, cups, straws, and disposable utensils) and CO2 used in the fountain drink dispenser.

• This figure does not cover all costs associated with operating a Donatos Pizza Restaurant, such as smallwares, kitchen equipment (including associated labor costs), and other supplies used to operate a Donatos Pizza Restaurant such as the costs for Operating Assets, office and janitorial supplies, and costs to obtain, maintain, and repair equipment.

• “Labor & Delivery Reimbursement Costs” reflect wages (including overtime) paid to the store level employees who are compensated on an hourly and salaried basis, including delivery drivers who use personal vehicles and are reimbursed a per delivery fee.

• This figure does not cover all employee-related costs associated with operating a Donatos Pizza Restaurant. For example, this figure does not include incentive compensation, benefits costs, vacation pay, and associated payroll taxes and other compensation for restaurant employees. This figure does not include any compensation payable to the franchisee. This figure also does not cover payroll processing fees, health insurance or workers’ compensation insurance premiums, uniforms, or meal, travel, and other expenses for employees.

• “Gross Profit” means the Net Sales minus the Food Costs, Beverage Costs, Production Supply Costs, and Labor & Delivery Reimbursement Costs.

• There are a number of other costs of sales, operating expenses, or other costs or expenses that Donatos Pizza Restaurants incur that are not covered in the Food Costs, Beverage Costs, Production Supply Costs, and Labor & Delivery Reimbursement Costs and that must be deducted from the Net Sales figures to obtain net income or profit.

Part 3 – Average Cost of Goods Sold, Labor Cost, Controllable Costs, and EBITDA as a Percentage of Net Sales During the 2023 Fiscal Year (January 3, 2023 to January 1, 2024) for 100 Franchisee-Owned Covered Restaurants

$10,001 to $15,000

• Cost of Goods Sold:  32.8%
• Labor Costs:  31.1%
• Controllable Costs:  36.5%
• EBITDA:  -0.3%

$15,001 to $20,000

• Cost of Goods Sold:  31.8%
• Labor Costs:  26.6%
• Controllable Costs:  32.9%
• EBITDA:  8.7%

$20,001 to $25,000

• Cost of Goods Sold:  32.3%
• Labor Costs:  26.4%
• Controllable Costs:  29.3%
• EBITDA:  12.1%

$25,000 +

• Cost of Goods Sold:  31.1%
• Labor Costs:  27.4%
• Controllable Costs:  25.6%
• EBITDA:  15.9%

• Cost of Goods Sold includes Food Costs, Beverage Costs, alcohol costs and expenses, Production Supply Costs.

• Labor Costs includes the Labor & Delivery Reimbursement Costs.

• Controllable Costs include costs and expenses direct operating expenses (uniforms, business insurance, towels, utensils, office supplies, security systems, small equipment, cleaning supplies, etc.); payroll related expenses (employee related benefits, workers compensation, employer taxes, non-cash awards, etc.); utilities (gas, electric, water, telecommunication utilities, and trash removal, etc.); administrative and general expenses (bank charges, credit card fees, recruiting fees, chargebacks, armored car fees, recruiting fees and training materials, professional fees, dues and subscriptions, background checks, freight-courier services, etc.); repairs and maintenance costs (HVAC, electrical and equipment repairs, snow removal and grounds maintenance, and premises upkeep maintenance, coolers and refrigeration repairs, window and awning cleaning, sign repairs, etc.); other delivery costs (insurance on delivery vehicles); Marketing costs (print marketing, coupon flyers, printing costs for marketing purposes, food donations, miscellaneous marketing costs, newspaper coupons, freestanding inserts, mailers, door bags, box toppers, menus, National Marketing Fees and local advertising cooperative contributions, etc.); occupancy fees and expenses (real estate taxes, state and local taxes, building/premises insurance, etc.); rent and additional rent charges, and License Fees paid to Donatos.

• EBITDA is equal to Net Sales minus the total sum of (i) Cost of Goods Sold plus (ii) Labor Costs, plus (iii) Controllable Costs.

Section VI – Donatos Pizza Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️