Round Table Pizza Franchise: Sales, Costs & Profits (2023)

A popular pizza franchise, Round Table Pizza has over 400 stores in the US and globally. It’s a very popular franchise among entrepreneurs and franchisees too, and for a good reason.

Indeed, Round Table Pizza franchises make on average $1,037,816 in sales per year but only cost $783,250: this sure sounds like a great investment!

In this article we’ll look into Round Table Pizza and the information disclosed in its latest Franchise Disclosure Document to find out how much sales and profits you can make with this business.

Finally we’ll see whether you should invest in a Round Table Pizza franchise. Let’s dive in!

Key stats

Franchise fee	$25,000
Royalty fee	4.0%
Marketing fee	4.0%
Investment (mid-point)	$783,000
Average sales	$1,038,000
Sales to investment ratio	1.3x
Payback period	5 years
Minimum net worth	$500,000
Minimum liquid capital	$200,000

What is Round Table Pizza?

Round Table Pizza is an American fast-food restaurant chain that primarily operates in the Midwest of the United States.

It serves pizza, chicken wings, salads, appetizers, desserts, and other related foods and beverages.

The chain was founded by Bill Larson in 1959 in Menlo Park, California. Round Table Pizza began franchising in 1962 as a subsidiary of FAT Brands Inc., headquartered in Atlanta, Georgia.

Today, the brand has over 400 stores in the US and five other countries worldwide.

What are the pros and cons of a Round Table Pizza franchise?

Pros

• Multiple unit formats: The brand offers flexible franchise formats for franchisees to choose from. Franchisees can operate dine-in, carryout, and pick-up formats. Also, franchisees can open restaurants in any potential area, such as supermarkets, convenience stores, campuses, airports, and gas stations.
• Exclusive territory protection: The franchisor grants its franchisees exclusive rights to operate their business within a geographical location approved by the franchisor. The franchisor does not authorize other franchises or itself to operate competing restaurants in the protected area.
• Comprehensive training: The brand’s training program consists of about 180 hours of on-the-job and 24 hours of classroom training to help franchisees establish and manage their restaurants. It trains franchisees on how to make the products, provide customer service, and run restaurant operations, and in addition, helps them with their grand opening.
• Franchise support: Round Table Pizza offers franchisees solid ongoing support and business coaching. The brand guides franchisees on the best franchise concept, the most convenient business location, setting goals for business growth, and best business practices.
• Quality menu: The brand is known for its quality and diverse menu. It utilizes freshly sourced ingredients and rolls its dough from scratch each day in its stores. They have also introduced over 30 new products over the last 10 years to keep up with changing market trends, which gives franchisees a competitive advantage.
• Marketing support: The brand uses excellent marketing tools to reach a wide range of new and existing markets. Franchisees can leverage the brand’s popularity, targeted advertising, and promotional campaigns to create awareness and market their local stores.

Cons

• No financing: Round Table Pizza does not directly or indirectly provide the franchisees with financing for development or ongoing costs. Also, it does not guarantee any lease, obligation, or note on behalf of its franchisees.
• No absentee ownership: The Round Table Pizza franchise does not offer franchisees a passive investment opportunity. Franchisees are supposed to participate fully in the daily operations of their restaurants.
• Not a mobile unit: The franchise can’t be run as a mobile unit or from home. A franchisee must have a fixed office facility.

How much does a Round Table Pizza franchise cost?

You would have to invest on average $783,250 to open a new Round table pizza franchise restaurant.

Note that this is the investment required to open a “Dine-in” model. Indeed, the vast majority of restaurants are Dine-in (282 out of the 288 total franchised restaurants). Indeed, there are 2 kinds of formats of restaurants you can choose: Dine-in model and delivery and carry out from restaurant (DCU).

For example, here is the cost breakdown for a Dine-in model with low / high cost estimates (from the latest Franchise Disclosure Document):

Type of cost	Amount
Real estate and improvements	$200,000 – $600,000
Initial franchise fee	$25,000 – $25,000
Furniture , fixture and equipment	$202,000 – $295,000
Additional funds	$25,000 – $50,000
Other	$52,000 – $92,500
Total	$504,000 – $1,062,500

In comparison, here is the cost breakdown for a DCU instead:

Type of cost	Amount
Real estate and improvements	$95,000 – $175,000
Initial franchise fee	$25,000 – $25,000
Furniture , fixture and equipment	$145,000 – $195,000
Additional funds	$25,000 – $50,000
Other	$37,800 – $66,500
Total	$327,800 – $511,500

What’s the turnover of a Round Table Pizza franchise?

On average, a Round table pizza franchise makes $1,037,816 in sales per year. 

Again, we included here the average sales of the Dine in model only. Instead, the delivery carry out (DCU) model generates $730,592 in sales on average.

How profitable is a Round Table Pizza franchise?

We found out that, on average, a Round Table Pizza franchised restaurant makes $268,794 in profits per year. This corresponds to a 24% profit margin (adjusted EBITDA).

We estimated this number using the information disclosed in Round Table Pizza’s Franchised Disclosure Document.

And this is where you get lucky as a franchisee: Round Table Pizza does provide a lot of details on the profitability of its restaurants.

For example, a restaurant spends on average 19.9% of its sales in sourcing the products (cost of sales ie COGS), 36.1% in staff and related labor costs (salaries, benefits) and 10.1% in rent.

Profit-and-loss	Amount ($)	As % of sales
Sales	$1,037,816	100%
COGS	$(206,525)	19.9%
Labor	$(374,652)	36.1%
Rent	$(104,819)	10.1%
Royalty + marketing fees	$(83,025)	8.0%
Adjusted EBITDA	$268,794	~24%

Is a Round Table Pizza franchise a good investment?

So as a franchisee, you would need to know whether the profits are worth the upfront investment of $783,250 you need to put down yourself (or via a bank loan, seller’s note, etc.). This is something you can easily answer with one metric: the payback period.

In summary, the payback period is a metric investors and entrepreneurs use to assess whether an investment (like buying a franchise) is profitable. To calculate payback period, we divide the initial investment by the annual expected profits.

Here the investment is $783,250 (on average). Instead, we estimated the expected annual profits at 15% of sales ($156,000).

Why don’t we use EBITDA instead as we just calculated earlier? Well, EBITDA is the metric we use to assess a business true profitability by deducting from sales all expenses related to operating the business (like COGS, labor, rent, etc.).

Yet EBITDA doesn’t take into account non-operating expenses like debt interest expenses, corporate taxes and such that are strictly specific to one business (debt interest expenses are a function of how much debt your business have for example: some do and some don’t).

In short, we found out that it takes 5 years for a franchisee to recoup your original investment to buy a Round Table Pizza franchise. This is a great investment.

Note we consider that a good investment is anywhere around 5 years, and anything beyond 7 years is mediocre.

Think about it: you would need to wait only 5 years to reimburse your original investment (meaning your own funds or to repay a SBA loan for example). After that, you can finally reap the profits!

How does it compare vs. other franchises?

Disclaimer: This content has been made for informational and educational purposes only. We do not make any representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the information presented in the article. You should not construe any such information or other material as legal, tax, investment, financial, or other professional advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.

All content in this article is information of a general nature and does not address the detailed circumstances of any particular individual or entity. Nothing in the article constitutes professional and/or financial and/or legal advice, nor does any information in the article constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this article before making any decisions based on such information or other content.