Pizza, which was once consumed only by the Italians, is now a popular food in the American household and they come in all types of flavors. If you are someone with an entrepreneurial mindset, this would be an interesting niche to get involved with.
But, what’s the best approach in the modern setting when starting a pizza business from scratch? Is it better to do franchise or to build your own brand? Let me share with you my perspective.
Opening a Franchise
We have all heard of Pizza Hut and Domino’s. These are the outlets that we see mushrooming especially in crowded places and the reason their business could grow so rapidly over the years is because of franchising.
In this business model, you are given a license to run a pizza shop using everything provided by the franchisor (the trademark company) in return for an agreed-upon fee.
The Pros
1) The good thing about working with these type of companies is the impact of using their brand name. It’s easily recognizable and doesn’t take long for customers to relate to the food and services.
2) The business solution is all set up for you to follow. From operation to marketing, everything has been laid out; all you need to do is to attend a series of on-site training and then put them into practice.
The Cons
1) The biggest disadvantage, however, would be the cost of investment. In order to obtain the license (permission to operate under the trademark), one is required to fork out about $25 to $35K.
This is followed by other initial start-up fee such as property rental, equipment, payroll and supplies which would cost between $100 to $500K.
Once in operation, you would be required to pay a royalty fee (a percentage of sales revenue), ranging from 5% to 12%, that must be paid to the franchisor on an ongoing basis.
2) To maintain the reputation of their brands, you can’t go around running the business the way you like it. In most cases, the business solution provided is fairly comprehensive and sufficient, but if you want to venture out of the box, there will be a lot of restrictions.
3) With such a hefty investment, it usually takes more than 5 years to break even.
So for me, a franchise model is great IF you have a pile of cash and don’t mind waiting for a long period to reap the profit. However, for the majority of us who don’t have that type of financial and time luxury, I wouldn’t recommend this route for starting a pizza business.
What About Using Your Own Brand?
Some 20 years ago, it would have been intimidating to go with your brand in any business industry, but with the internet, this barrier no longer exists. Now, whether you run a small pizza store or don’t own any shop at all, it’s not impossible to go big with a personal brand.
The reason for this is because the cost of entry for online businesses is extremely affordable. For start-up, you only need a domain name and a website hosting platform, both of which can be acquired for about $300 plus per year. That’s a stark difference if you compared to the franchising model of investment.
Once the website is up and running, you are basically in control of the marketing. For example, for a local pizzeria, one can set up an online menu/delivery system and post gallery photos to showcase their restaurants. You can also list the shop on Google to reach out to more local customers and invite them to write reviews about your shop.
In the listing below, we could see that Deanne’s, a small family run pizzeria in New York has better reviews (up to 4 stars) than Pizza Hut/Dominos within the same vicinity. That’s the advantage of being unique and implementing your own marketing strategies rather than following a rigid business solution like franchising.
Now, even if you are not a restaurant owner, there are still opportunities to make money from this niche using the skills and knowledge that you have on pizza. In the affiliate marketing model, you can earn commissions by referring customers to good quality products and services. In this case, we are looking at pizza making tools, books, courses and etc.
Most reputable online vendors/marketplaces such as Amazon, have affiliate programs that you can apply directly or via affiliate networks. Most would require a relevant website in place so make sure you get that one set up first.
Just to give you an idea how vast the opportunity is, here’s a list of product options that can be found in the Amazon marketplace under the Home and Kitchen department.
There are more than 1000 tools and equipment that you can promote within the pizza niche, and we haven’t even include the books section yet. The commission for kitchen utensils and physical books is 4.5%.
Another thing that might interest the readers is online courses that teach or help them improve in their pizza making skills. The Craftsy online classes, for example, is such resources that you could recommend.
Now you must be wondering, what’s the whole point writing about these physical and digital products? Well, people go online everyday searching for information whenever they want to learn or buy something new. Of course, you wouldn’t realize this if you are just browsing through the internet.
However, if you have access to a keyword research tool like Jaaxy, you can discover many potential phrases that are being searched online within this niche. Here are some that are related to the term ‘how to make pizza’.
See the values in the right hand column? Those are the numbers of people searching for these specific terms EVERY single month.
The analogy here is that, if there are people out there who want to learn ‘how to make pizza’, they will likely be needing tools and resources to make it happen. Integrating product reviews with this content will put you in a very strategic position to convert readers into buyers.
That’s essentially how you will profit as an affiliate marketer.
What I also like about this business model is that it’s very flexible in nature. As the owner of the website, you can leverage from product trends/keywords, and create interesting content that people actually want to read.
You are not stuck in a rigid system, there is no inventory management and if one product becomes obsolete, you can always choose to promote another. I believe this type of model will offer more opportunity for a business to evolve and to adapt to changes within the pizza industry.
Thinking Outside of The Box
As you can see, starting a pizza business from scratch doesn’t have to be very expensive. If you have good access to the internet and a large dose of passion, the basic tools are already in place. The rest of the plan is all about finding targeted keywords, create massive content and build a loyal audience base from online traffic.
I hope this business model comparison has been helpful and you now know which route is the most suitable to reach your entrepreneurial goals. If you want to get a good foundation for an online business, please visit Wealthy Affiliate for more in-depth training and resources.
Have any questions or thoughts about this post? Feel free to leave them in the comment area below and I’ll get back to you.
You may also be interested in;
How to Monetize From a Recipe Blog
I like the fact that franchising an existing pizza company makes a big help in increasing your revenues right away because of its established brand that people can trust. As we know, it takes some time before the masses accept a product or a service and this comes with a build up of good testimonials and experience before gaining good popularity; knowing that you’re tied up with the brand that established its good reputation and taste with the audience will make things easier for you since you don’t have to make extreme efforts to make the brand known to the public.
If I were to start a pizza business, it will be better to invest in franchising one of the famous brands in the market so it will be an instant click. But first, I have to be sure to look for available opportunities for franchise before putting myself out there.
Hi Cathy,
You took a very interesting concept, comparing running a franchise brand pizza place from scratch versus an individual starting his/her own brand.
It was interesting to note the one big con you brought up with running a franchise (Pizza Hut/Domino’s) is that there would be a huge initial investment required. In addition to that, the very long time span before any profits would be seen.
With the advent of the Internet, as long as a person has marketing skills and a bit of creativity, it would be more than possible for a person to achieve financial success starting his/her own pizza brand.
If the individual can find a location that has little competition coming from the “Name” brand pizza store, added in with sound marketing strategies and ability to consistently create a recipe for pizza that would appeal to the tastes of consumers; it could mean $$$ coming into the business.
A very interesting article, especially as I do love pizza!
Oh my. Pizza is easily my favorite food. The thought of starting a pizza business has never really crossed my mind, but now I’m very interested! The costing part seems rather inconvenient (I don’t exactly have that much lying around for to start up), but it seems like it may become a dream of mine to open one up someday!
I also love how you incorporate affiliate marketing into your strategy, that’s genius! Great advice in this article.
It sure is expensive to buy a pizza franchise. I like what you said about thinking outside the box and how if you do not have a franchise, you have the freedom to do what you think will work.
There is still a world of opportunity out there without having to buy a cookie cutter business/franchise.
In the past, I did consider saving some money to buy a franchise so that I can quit my day job. But after much consideration, I have to agree with you.
I need to save up and fork out huge amount of money and yet, there are so many restrictions to follow. It really doesn’t allow me to think outside of the box. Maybe this is a good opportunity for those who really have a ton of money in the bank.
On the flip side, I like to build a business that allows me to become more creative and take on different challenges. I am a member at Wealthy Affiliate and really enjoy what’s been taught so far. Currently, I am working on a few niche websites. Highly recommended for those who want to become a webpreneur.
Fantastic idea of combining a traditional business model (pizzeria) with modern marketing method (online). I’m a pizza fan and usually calls for Dominos once a month. Never thought the cost of entry is actually half a million and that it will take years to break even! That’s insane!
Anyway, I’m loving this business idea of yours. Bookmarking this site in case something strike a chord with me in the future.