Franchise For Pizza Delivery: As The Biggest Market Players Develop Their Networks In Russia

In the last couple of years in Russia, more and more network pizzerias began to develop under the franchise model. In 2015, the franchise launched young brands – Syktyvkar “Dodo Pizza” and the Moscow Pizza Pomodoro. Until this largest chain of pizza delivery guy in Russia was with the American roots — Papa Johns, Dominos Pizza and Sbarro. While Dominos Pizza opened only a private point, and the franchise began to sell in Russia not so long ago — in 2014.

Explorer vc.ru explore how five companies are developing their networks and that is offered to potential partners. Initially, American pizzeria was founded in 80-ies of the entrepreneur John Chatteron. Now have a network of about 4,700 establishments in 36 countries around the world. In Russia, she has about 15 years under the management of OOO “4”.

In Moscow and Moscow region from Papa Johns more than 55 points, in other cities – 45. In 2012, the parent company has recognized Russia as a market No. 1 in average revenue and sales growth. According to “SPARK-Interfax”, the companys revenue in 2015 amounted to almost 2 billion rubles, and profit before tax of $ 42 million. Point in Moscow and Moscow region belong to the network itself, and the regions are working on the franchise, that is 45 Papa Johns franchisee in different cities of Russia. In 2016 in the regions opened on 13 partner restaurants Papa Johns.

To franchise this company, you need to pay lump-sum (entrance) fee of maximum 1.1 million (17.5 million dollars). Royalty monthly fee with revenue – 6.5%. If the partner wants to obtain an exclusive right on network development in the region, it needs to pay extra 7 thousand dollars for every point. Along with the brand franchisees get the original recipe, the contracts with suppliers at fixed prices, cash ON. Papa Johns also advises its partners on construction and repair of facilities, personnel selection, management and promotion of the restaurant.

Training the head office team involved in the launch point. In turn, Papa Johns is requirements of partners. If it is an Express restaurant, the area should be 75-100 square meters, but the citys restaurant — 120 square meters. Electrical power should be from 60 kilowatts. Investment in the launch of pizzerias Papa Johns franchise will amount to 10-15 million rubles, and the payback period is estimated to be at least 36 months.

Pizza chain Dominos Pizza also originated in the U.S., but before that Papa Johns is in the 60-ies of the last century, and now the company has more than 13 thousand branches in 80 countries. In Russia, the network launched a franchise recently – in the spring of 2016. Now from Dominos Pizza about 70 outlets in Russia, mainly in Moscow and Moscow region, but only five franchisees.

For 2017 Dominos Pizza plans to open 50 new outlets, including an affiliate. Revenue, which is developing in Russia under the management of “Pizza restaurants” in 2015 amounted to 720 million rubles, operating profit it is at that time not yet published. Lump-sum payment Dominos Pizza ranges from 1.5 to 2 million rubles, royalty – 7%. Partners pay advertising charges – 4% of revenue.

The company has quite stringent requirements. High permeability, a separate entrance with a visible façade, window display and sign, Parking availability or Parking within 20 metres of the entrance, ranging from 80 to 200 square meters, ceiling height of three meters, the electricity power from 70 kW. The amount of investments for its partners Dominos Pizza estimated at 11-15 million rubles, with promises that they will pay up to 40% of investments, and in two years will return them.

The company provides partners with a consultant who assists in all phases of discovery, preparation of personnel in the first year of operation, assistance with search and equipment and also with marketing, procurement and Analytics. Mini Pizza Pomodoro is owned by the Russian company “Food Retail”, founded in 2014. First, “Food Retail” has opened five own pizza in a take away format in Moscow, and in 2015 launched the franchise. Now the company has 36 franchised objects.

From August 2016, the program works across Russia. The revenue of “Food Retail” in 2015 amounted to 12 million rubles, and profit before tax of about 400 thousand. Pizza Pomodoro specializiruetsya on a mini-pizza from 6 to 30 square meters in shopping centers and supermarkets. The company has three franchise package.

For 150, 300 and 450 thousand rubles, and the royalties amount to 3%. Franchisees get advice on searching, planning and design of the premises, formulation, marketing support, control and management processes at the facility. All employees of the partner can pass free training on cooking and work standards in the kitchen. Each franchisee has a personal Manager to consult.

Unlike most franchises, Pizza Pomodoro very low requirements for premises – the area of six square meters, electric power from nine kilowatts. Investment in the launch of a mini pizza will be from 800 thousand to 1.5 million rubles. The payback period is estimated at six months to a year. The display network pizza in Russia – “Dodo Pizza”.

All thanks to its Creator Fyodor Ovchinnikov and his blog “the power of the mind”, which he created back in the time when he launched the eponymous bookstore in his native Syktyvkar. This business entrepreneur has failed to earn anything, in addition to thousands of blog readers. Ovchinnikov wrote in it about all aspects of business, including about their mistakes. In 2011 when the entrepreneur has opened in Syktyvkar the first “Dodo Pizza”, he went on to describe all the internal processes in a blog, which later became an effective tool for attracting franchisees.

Another feature of company in addition to financial openness – their own information system Dodo IS. Interestingly, the “Dodo Pizza” positioning itself not only as a restaurant, how much does a it business. Blog very little is said about preparation and the taste of the pizza, but really describes in detail the information system and the processes that are carried out through it.

Dodo IS allows managers pizzerias to track all stages of passing of the order from receipt to delivery to the courier, the statistics for any business settings, the number of employees working in the moment, and much more. When customers order delivery through a single mobile app, website or call center, the order automatically arrives on tablets, installed nearest to the customers kitchen. “Pizza-maker” notes on a tablet every action, so the client can remotely monitor the process. One of the marketing moves “Dodo Pizza” rule “60 minutes or the pizza is free”, which is written by the representatives of the company, performed “without conditions or asterisks”.

“Dodo Pizza” there are points of three types. Delivery, pizzeria with room for guests and pizza Express in the food court. The entry fee for the franchise is 413 thousand rubles, royalties of 5% and VAT of the monthly earnings. In the first year the percentage of less — 3.5% and VAT. The franchise includes access to information system IS Dodo, the call centre and website where customers can make and pay for an online order, as well as referral system of loyalty, which with the Dodo IS able to attract new customers online.

In addition, franchisees receive contracts with suppliers on fixed terms and conditions, marketing support head office and a single online database of all production standards. In exchange, the franchisee must provide all business information to your point, which is then placed on the online sites “Dodo Pizza”. To purchase a franchise, potential partners must first undergo a three-week free training at a special center in Syktyvkar.

During this time, they get acquainted with all stages of pizza production and restaurant management. Training and monthly practice to start must also pass at least three employees of the franchisee. Another condition of the “Dodo Pizza” — partner must first open a pizzeria in the city with a population of 500 thousand people, in order to test its effectiveness. So many entrepreneurs are now launching points “Dodo Pizza” in the suburbs, and then to go to the capital market.

The requirement for the room – from 60 to 250 square meters. And another condition is to support “rating quality” at a high level. It is based on inspections of mystery shoppers, which organizes itself the parent company. If the average “quality rating” of a partner in the last 12 months is below 75%, the franchise agreement is terminated.

The cost of running business with all costs range from 3 to 12 million rubles depending on the selected format. The profitability of business from 10 to 25% return — on-year. The yield pizzerias is 17-20% of turnover. “Dodo Pizza” started a franchise in 2015.

For two years the company has sold 586 franchises, of which 165 have already started, 84 are under construction, design or search space, and the 337 signed a contract and paid a lump-sum payment. In 2016, the revenue from all the pizzerias network “Dodo Pizza” made of 2.89 billion rubles. Revenue management company from royalties and lump-sum contributions — 214 million rubles. This brought the company 46 million profit before tax.

However, the company continues to attract external funding through crowd investing. At the moment, “Dodo Pizza” invested 150 private investors, amounted to 106 million. Now the company plans to become an international network. “Dodo Pizza” already runs the pizzeria in the United States and China and plans to open in the last full-fledged office, and by 2020 to reach IPO.

Another well-known international pizza chain was discussed in last year no less than “Dodo Pizza”, but unlike the latter, in a negative way. In Russia the development of a network of pizzerias “Sbarro” since 1997, was engaged in holding “G. M. R. Planet of hospitality”, which also includes the restaurant “Elki-Palki”, “Oriental Bazaar”, Viaggio and “Little Japan”, YamKee noodle house and cafe “Catasto”. In 2015, Sbarro had half the revenue of the holding company.

After adopting a grocery sanctions in 2014, the costs of restaurants “Sbarro” has increased significantly because the points required to purchase products from foreign suppliers, approved by the U.S. office of Sbarro Inc. Spending on food has almost doubled, but to raise prices because of high competition, the restaurants could only 10-12%. The average check fell by 20-30% because of the crisis, and in the end the company decided to save on staff salaries.

In December 2015 in different cities of Russia began protests and strikes of employees of Sbarro. Special attention was drawn also because the summer of that year the owner of the company Merab Elashvili was purchased for sons wedding exhibition complex “Manege”. In the summer of 2016 Elashvili recognized that the company at the end of 2015 had their employees 15 million rubles, and by the middle of 2016 – 2 million she promised to pay back by the fall. According to “SPARK-Interfax” the companys profit before tax in 2015 fell by 3.3 million rubles to 1.7 million.

In July 2016, it became known that “G. M. R. Planet of hospitality” terminates the contract with Sbarro Inc. And plans to open on the place owned pizza restaurants other restaurants in its network. The company was unable to agree on a raw materials. The Russian partner was trying to get permission to buy food in Russia, but Sbarro Inc.

No concessions. In October there appeared information that the Russian company wants to create their own pizza chain Cheesatta, and the American Sbarro stated that it found new franchisees for development in Russia. But aggregators franchise partner still says “G. M. R. Planet of hospitality”.

A summary table with information about franchise companies referred to in the material. With representatives of the Russian network “Sbarro” could not be reached.

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