MOD Pizza Franchise Owner Salary, Profit & Failure Rate 2024

Did you ever think of owning a franchise and entering the entrepreneurship world?

It’s normally risky to own a business but not with a franchise, especially with a Mod Pizza franchise.

Mod Pizza franchises are one of the most popular pizza franchise brands in the United States, serving many customers both in their own outlets and in their franchised outlets.

You can also be a part of this franchised outlet network and serve the local community while owning a business. But is it worth the trouble? Should you really make all that effort?

This article will try to explain to you whether it’s worth it or not by giving you all the details about the Mod Pizza franchise.

MOD Pizza Franchise

About Mod Pizza

Mod pizza was founded in 2008 in Seattle by Scott and Ally Svenson to give customers an authentic pizza experience.

The idea behind this is that you get to choose what you want on your pizza and how you want it from scratch.

That’s why the abbreviation for Mod is actually ‘Made on Demand,’ which shows that they make it as you order with the specifications you want.

In addition to being famous for their pizzas, they are also famous for how they treat their employees, as they believe happy employees mean happy customers.

They call their employees Mod squad, and they give opportunities to youth, as well, through the Opportunity Youth program.

Fortune chose them on their Change the World list in 2019 for this commitment to find employment for those struggling to find one.


Mod Pizza History

Mod Pizza History

Mod Pizza was first established in 2008 after Scott and Ally Svenson sold their first venture to Starbucks in 1998.

The restaurant chain aimed to change the way the pizza stores work and give the option for customers to choose what kind of pizza they want.

They found their success, and they opened their first branch outside of Washington in 2013, which was franchised.

Ever since then, they have been franchising locations and also opening their own locations, which are company-owned.

Mod pizza is currently serving in Canada and the United States and will serve in the United Kingdom until 2020.

The company opened its 500th location in May 2021, and they are aiming to grow to 1,000 stores within the next five years through franchising.


Franchise Model Table

Cost Or FeesAmount
Initial Investment$714,000-$1.1 million
Franchise YES
Franchising Since2013
Franchise-Fee$30,000
Royalty-Fee5%
Liquidity$600,000
Estimated Outlets500

How Much Does It Cost To Open A Mod Pizza Franchise?

To open a Mod Pizza, there are several costs that you need to account for. In total, with everything included, you can expect to spend anything between $714,000 and $1.1 million.

Most of the cost goes to the property, whether you are renting it or not, the number of employees, and the equipment. The bigger the franchise branch, the higher the cost will be.

In addition to the costs, you must possess liquid cash of $600,000 to spend in urgent cases after opening the branch.

Also, at the beginning of the process, before you start anything, you need to pay a franchise fee of $30,000 which is paid in a lump sum and directly. This is outside of the expected initial investment.


MOD Pizza Revenue & Profit

As of the end of 2020, the company had a total of 490 outlets, of which 91 were franchised locations.

The estimated total franchise sales for MOD Pizza in 2020 was $71.98 million, with an estimated average franchise revenue of $877,804. This suggests that MOD Pizza’s franchise owners have the potential to make a good profit.

Statement of Income – MOD Pizza Franchising

(in thousands)Years ended in
December 27, 2020December 29, 2019December 30, 2018
Revenues:
National marketing fee revenue$8,775$8,359$5,773
Franchise fee revenue5761,115328
Royalty revenue3,5994,9163,834
Total revenue12,95014,3909,935
Expenses:
Sales and marketing expenses6,8818,0445,191
General and administrative expenses1,1871,7121,486
Total expenses8,0679,7566,677
Net income:$4,882$4,634$3,258

MOD Pizza has had a consistent and increasing net profit over the past few years, with a net profit of $4.9 million in 2020 and an average net profit of approximately $4.2 million over the last three years.


How much does a MOD Pizza Franchise Owner make?

Key FiguresAmount
Total Franchise Sales (2020)$71.98 million
Number of Outlets (End of 2020)490
Number of Franchised Outlets91
Estimated Average Franchise Revenue$877,804
Estimated Investment for Franchise$903,000
Estimated Profit Margin (15%)$131,670
Payback Period9 years

Based on the overall sales of MOD Pizza in 2020, which was estimated at $71.98 million, franchise owners have the potential to make a significant profit.

The estimated average revenue for a MOD Pizza franchise owner is $877,804, and assuming a 15% profit margin, the estimated profit would be $131,670.

This is how we calculated this amount:

Financial OverviewPercentage of RevenueAmount ($)
Individual Franchise Annual Revenue100%877804.00
Rent10.63%(93266.68)
Insurance5.31%(46633.34)
Salaries21.25%(186533.35)
Franchise Royalty Fees5.31%(46633.34)
Utilities2.13%(18653.34)
Cost of Goods Sold (COGS)26.56%(233166.69)
Labor (Variable)13.81%(121246.68)
Total (Expenses)85.00%(746133.40)
Net Profit15.00%131670.60

Note: The displayed expenses are estimates based on industry averages and standard costs. Actual expenses may vary due to factors like location, business size, and market conditions. We recommend conducting detailed research or consulting with a financial advisor for a tailored financial analysis.


Mod Pizza Franchise Requirements

There are two types of requirements to be approved for a Mod Pizza franchise after you apply.

The first is financial, where you need $600,000 in liquid funds and an extra $714,000-$1.1 million for the initial investment.

This is to ensure that you can set up the branch and also have enough liquidity to sustain yourself in the first months of not making a profit.

The second one is experiences in the industry. Mod Pizza expects the franchisees to have experience in the restaurant industry and have a proven record of success during that experience.

But, this is not a strict requirement as the financial one, as you might still get approved if you are passionate and driven to put the Mod Pizza brand forward.


Mod Pizza Franchise Training and Support

As a Mod Pizza franchisee, you are required to receive a certain set of training, and you will also get ongoing support to help you run the branch.

For the training, you will receive both practical pieces of training, meaning on-the-job where you get to see how a branch is run in real life.

And you will also get classroom training where you will learn about the theory and the important details of daily operations.

Mod Pizza will also give you ongoing support with your software and other related things to manage the day-to-day operations.

You will also receive marketing help, including SEO, email marketing, and so on. These ongoing supports aim to help you achieve success.


Mod Pizza Franchise Terms of Agreement & Renewal

The initial term of the agreement is ten years for your franchise branch. The franchisee has the option to renew this contract at the end of the ten years for another ten years.

To be able to renew your agreement and continue being a franchisee, you have to meet the requirements and not breach your contract.

When you want to renew the contract, you will also have to pay the franchise fee again but this time only 50% of the total fee.

However, Mod Pizza will have the right not to renew your contract if they are not satisfied with you.


Mod Pizza Franchise Obligations and Restrictions

Mod Pizza doesn’t reveal the exact obligations and restrictions of the franchisees.

This means that only after you sign the agreement will you be aware of the rules you need to follow. However, with many franchises, there are certain things that you need to follow.

This includes not using the franchise area for anything other than a Mod Pizza franchise.

It also includes that you can only sell products that Mod Pizza approves beforehand, and you are obligated to sell the products and services Mod Pizza wants you to.


Mod Pizza Franchise Financial Assistance

As far as the FDD of Mod Pizza and all the other information available to the public, Mod Pizza doesn’t offer any kind of financial assistance.

This means that as a franchisee, you must find the assistance you need from third-party sources.

Unless you have the necessary financing, Mod Pizza will not help you find the resource, even through third-party sources.


Failure Rate Of MOD Pizza

Franchised Outlets:

YearOutlets at the Start of the YearOutlets at the End of the YearNet Change
20209182-9
20218284+2
20228486+2

For the Franchised outlets:

  • In 2020, the failure rate was (9)/91×100≈9.89%
  • In 2021, the growth rate was (2)/82×100≈2.43%
  • In 2022, the growth rate was (2)/84×100≈2.38%

Company-Owned Outlets:

YearOutlets at the Start of the YearOutlets at the End of the YearNet Change
2020376407+31
2021407422+15
2022422445+23

For the Company-Owned outlets:

  • In 2020, the growth rate was (31)/376×100≈8.24%
  • In 2021, the growth rate was (15)/407×100≈3.68%
  • In 2022, the growth rate was (23)/422×100≈5.45%

Total Outlets:

YearOutlets at the Start of the YearOutlets at the End of the YearNet Change
2020467489+22
2021489506+17
2022506531+25

For Total outlets:

  • In 2020, the growth rate was (22)/467×100≈4.71%
  • In 2021, the growth rate was (17)/489×100≈3.47%
  • In 2022, the growth rate was (25)/506×100≈4.94%

According to the above-mentioned data, in 2020 MOD Pizza started with negative number of outlets, showing a failure rate of 9.89%.

But later the franchised outlets for MOD Pizza grew from 2021 to 2022, showing a growth rate between 2.43% and 2.38%.

On the other hand, for company-owned outlets, the growth rate of MOD Pizza was lying in the range between 8.24% and 5.45% for 2020-2022.

Overall, when we combine the data of franchise and company-owned outlets, we can see that the MOD Pizza franchise has expanded in the years 2020-2022 showing a total growth rate between 4.71% and 4.94%.


Payback Period Of MOD Pizza

On the basis of the estimated average revenue of MOD Pizza, which is $877,804, the payback period of the franchise can be calculated.

With a midpoint investment of $903,000 and an estimated 15% profit margin on the average revenue, the yearly profit would be $131,670.6.

So, to find out how long it will take to earn back the initial investment:

Payback Period = Midpoint Investment / Yearly Profit = $903,000 / $131,670.6= 6.8 years

Based on these figures, it will take approximately 7 years to pay back the initial investment for MOD Pizza. This time period could be longer or shorter depending on your sales, revenue, and profit figures.


MOD Pizza Comparison

CompanyMOD PizzaJet’s Pizza
Founded In20081978
Initial Investment$94,480 – $144,425$437,500-$631,000
Franchise-Fee$30,000$25,000
Total Outlet500 383
Annual Revenue$1 Billion$331 Million

Conclusion

Mod Pizza is a different type of pizza franchise compared to other pizza brands, and they have good brand awareness.

This means that if you choose to own a Mod Pizza franchise branch, you have a high likelihood of success and earning good money.

However, they also require a high initial investment compared to their competitors.

That’s why you must take into account many things, whether you can afford to take the risk and if your location is good enough.

If Mod Pizza accepts you as a franchisee and you have the requirements, it might be a very lucrative business.


FAQs

Are Blaze Pizza and MOD Pizza the same concept?

Yes, Blaze Pizza and MOD Pizza have the same fast-fried customized Pizza.

How many locations does MOD Pizza has?

MOD Pizza Restaurant was founded in 2008. It began offering franchises for MOD Pizza restaurants in 2013 and has expanded to 500 locations.

How much does a MOD Pizza franchise cost?

An initial investment required to open a MOD Pizza franchise is $714,000-$985,000, with a franchise fee of $30,000.

Who is the owner of MOD Pizza?

MOD Pizza is owned by an investment firm called Alliance Consumer Growth.

The two founders, Scott and Ally Svenson, remain involved in the company’s operations and strategy.

Can you fail with the Mod Pizza franchise?

Just like with any other business, you can also fail with the Mod Pizza franchise.

The success of the franchise branch is not guaranteed by Mod Pizza itself, and if you fail to manage it, you will fail.

Is Mod Pizza the most profitable pizza franchise?

The profitability of franchises varies by a lot of things, from your experience to the franchise’s location.

Mod Pizza might have good brand awareness, but its profitability is up to you.

Who is the current CEO of Mod Pizza?

Scott Svenson is the current CEO. He is also the co-founder of the company since 2008.

Where is MOD Pizza headquatered?

The headquarters of MOD Pizza is located in Woodridge, Illinois.

Sources

https://en.wikipedia.org/wiki/MOD_Pizza

https://www.restfinance.com/app/pdf/fdd/Mod%20Pizza.pdf

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