Pizza Ranch Franchise Costs $2.5M (+ 2023 AUV & Profits)

Another popular pizza franchise in the US, Pizza Ranch now has 210 restaurants across 14 states in the US. If you were to run a Pizza Ranch franchise, you would make $1,518,000 on average in sales per year, not bad for a pizza franchise!

The problem might be its cost: you would have to invest on average $2,475,000 to open a new Pizza Ranch franchise, much higher than the industry average ($1.6 million as per our analysis).

So you may wonder if this is a good investment. This is what we’re looking at in this article by looking at the latest Franchise Disclosure Document of Pizza Ranch. Let’s find out!

Key stats

Franchise fee	$30,000
Royalty fee	4.00%
Marketing fee	3.00%
Investment (mid-point)	$2,475,000
Average sales	$1,518,000
Sales to investment ratio	6.0x
Payback period	[franchise_value_investment_payback]
Minimum net worth	$1,000,000
Minimum liquid capital	$297,000

About Pizza Ranch

Pizza Ranch is an American fast-casual food restaurant chain mostly found in the Midwest.

It was founded in 1985 by Adrie Groeneweg and Lawrence Vander Esch in Hull, Iowa.

The chain offers a wide selection of pizza, chicken, salads, Buffalo wings, and desserts. In addition, it is known for its buffet-style menu.

Headquartered in Orange City, Iowa, Pizza Ranch began franchising in 1984 under Pizza Ranch Inc.Today, the chain has over 210 restaurants in 14 US states.

Pizza Ranch franchises pros and cons

Pros

• Comprehensive training: The franchisor provides franchisees with extensive training and mentorship to help them establish, operate, and manage the restaurants successfully. The initial training is about 120 on-the-job hours and 80 classroom hours.
• Multiple income streams: The brand offers its franchisees alternative income streams to improve their sales and profits. These include mobile ordering, dine-ins, and catering.
• Marketing support: Pizza Ranch has a strategic marketing team to help franchisees market their local stores to a wider market. The franchisees can leverage strong brand popularity, regional advertising, social media, targeted advertising plans, and local store promotional campaigns
• Exclusive territory protection: The franchisor grants the franchisees a protected territory to operate their restaurants. Franchisees enjoy an exclusively controlled customer base to scale and grow their businesses without facing in-house competition.
• Fun zone arcade: The brand has a fun zone entertainment section in its restaurants, which offers a great family experience and acts as a revenue booster. This creates fun for all ages, is perfect for guests’ parties, and has low operating costs.
• Community involvement: The Pizza Ranch is a franchise that values family relationships and enjoys giving back to the community. Franchisees can positively impact various social groups such as schools, churches, and other organizations, which attracts a lot of traffic in the process.

Cons

• No financing: The franchisor does not directly or indirectly finance its franchisees for development or ongoing costs. Also, it does not guarantee any lease, grant, or obligation of any lender.
• No absentee ownership: The Pizza Ranch franchise does not present a passive investment opportunity. Franchisees are required to be actively involved in the decision-making and daily operations of their restaurants.
• Competition: The Pizza Ranch franchise operates in a very competitive industry with the likes of Domino’s, Marco’s Pizza, and Papa John’s

How much does a Pizza Ranch franchise cost?

To open a Pizza Ranch restaurant you need to invest around $2,475,000. Yet that is an average: it ranges from $984,875 to $3,995,500.

The required investment varies depending on the location (as different areas have different rent costs), the market price of required equipment (as the market price can change anytime), and so on. Considering these facts, the investment depends on whether you will lease or build the restaurant from scratch:

For what reason you would pay this amount? Well, this amount will cover all the startup costs a restaurant incurs in the beginning. In addition to the initial franchise fee of $30,000, you would also pay for:

• Formation costs: furniture, fixtures & equipment, arcade games, leasehold improvements, land, construction costs, architect/engineering fees, etc.
• Pre-opening costs: pre-opening training expenses, food used during team member training, interest on pre-opening loans, etc.
• Operating costs: working capital for first 3 months

Type of cost	Low	High
Initial franchise fee	$30,000	$30,000
Formation costs	$2,376,475	$3,847,500
Pre-opening costs	$63,500	$98,000
Operating costs	$20,000	$20,000
Total	$2,489,975	$3,995,500

What’s the average turnover of a Pizza Ranch franchise?

On average, a Pizza Ranch franchise makes $1,518,000 in sales per year.

This number is the annual median sales of 204 franchised restaurants operating in 2022.

This includes 57 restaurants that have a “FunZone” and 147 restaurants that don’t have one. For example, restaurants with a FunZone generate 1.7 times more revenue than a restaurant without.

How profitable is a Pizza Ranch franchise?

On average, a Pizza Ranch franchise makes $438,136 in profits per year. This represents a 20.8% EBITDA margin. 

Yet note that this is for a restaurant with a FunZone. Instead, restaurants without a FunZone makes in comparison $158,000 in profits per year (12.3%).

	With FunZone	% revenue	Without FunZone	% revenue
Gross sales	2,108,661	100%	1,288,635	100%
Employee labor	509,031	24.1%	343,550	26.7%
COGS	598,438	28.4%	397,028	30.8%
Controllable expenses	266,956	12.7%	183,244	14.2%
Non-controllable expenses	402,166	19.1%	277,443	21.5%
EBITDA	332,070	15.7%	87,370	6.8%
Rent	106,066	5.03%	70,746	5.49%
EBITDAR	438,136	20.8%	158,116	12.3%

Is buying a Pizza Ranch franchise a good investment?

We estimate that it takes anywhere from 8 to 10 years on average to repay your investment if you were to buy and start a new Pizza Ranch franchise.

It’s an average payback, slightly higher than the industry average. In other words, you would need to wait on average 8-10 years to repay the initial investment (the $2,475,000).

Disclaimer

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