Position yourself for growth in 2017—join us live at the Entrepreneur 360™ Conference in Long Beach, Calif. on Nov. 16. Secure Your Seat »
In writing the history of commerce, it will be noted that pizza and franchising were united with an enthusiasm equal to that displayed by the father of the bride--at a shotgun wedding. Consequently, the two concepts are inseparably joined and continue to spawn mutations that feed consumers' unquenchable desire for more dough.
Nowadays, the offspring of this union compete so aggressively for the pizza dollar that millions are spent just to convince Americans that one type of delivery box is better than the others. Discount pizza coupons flash through our hands and into the trash almost daily. In essence, reviewing the pizza industry is like watching the fat man at the egg-eating contest: Eventually, you have to ask "How could there be room for more?"
Apparently, there's room. Papa Murphy's International Inc., a Vancouver, Washington-based chain, has been exploiting a niche known as "take and bake," and has people literally lining up for their pizza. Papa Murphy's is the blend of two former West Coast competitors, Murphy's Pizza and Papa Aldo's. According to president Thomas Morell, the 1995 merger combined the marketing savvy of Papa Aldo's with the recipes of the smaller Murphy's Pizza chain. Now, Papa Murphy's Take N' Bake Pizza allows patrons to use those recipes by custom-ordering hand-made pizzas, put together assembly-line-style on oven-ready sheets so customers can bake them at home.
In this era of instant gratification, who would have thought a chain could survive by intentionally making it less convenient for people to eat pizza? But consider the benefits: piping hot pizza, with fresher ingredients, at a lower price for customers...lower overhead for you.
A good number of Papa Murphy's franchisees operate more than one location, a fact Papa Murphy's loves to point out. You might naturally infer that franchisees are so happy, they're willing to invest again. However, other possibilities are that the income derived from a single location isn't enough to happily support a family, or that multiple locations are necessary in order to generate a profit.
Frankly, in the case of Papa Murphy's, I can't tell which scenario is true because franchisees are incredibly tight-lipped when it comes to questions regarding profitability. Therefore, you'll have to be diligent in determining whether this concept makes financial sense for you. You should also be aware that the franchisor doesn't grant protected territories.
The chain now operates in 17 states and is currently seeking growth in Illinois, Indiana, Michigan and Ohio. Potential franchisees should have a net worth of $250,000, with approximately half of that amount held in liquid assets.
With 450 franchised locations, Papa Murphy's barely makes a blip on the radar of chains like Domino's; however, growth has been accelerating, with almost 90 percent expansion from the 240 locations in operation three years ago. The estimated cost to open a 1,200- to 1,500-square-foot store in a strip center ranges from $145,000 to $180,000, according to Item 7 of the company's UFOC. The royalty is 5 percent of your weekly gross revenue, and the advertising contribution averages 6 percent when you combine your local and national contributions. The chain has negotiated national food purchases for its franchisees and derives no income from those transactions.
Todd D. Maddocks is a franchise attorney and small-business consultant. You can reach him at aTMaddocks@aol.com
Papa Murphy's International Inc., (360) 260-7272, http://www.papamurphys.com