Little Caesars selling 500 stores to franchisees

March 28, 2002

DETROIT -- Little Caesar Enterprises Inc. plans to sell 500 of its estimated 4,000 pizza stores to franchisees, leaving it with just 50 to 100 company-owned outlets. A report published by the Associated Press quoted Little Caesars spokeswoman Lisa Cosnowski saying that store sales to franchisees are expected to be completed soon.

The initiative is part of a part of a five-year plan announced last January called Manage To Own, in which Little Caesars store managers get the opportunity to buy their own restaurants. Managers are deemed eligible for the program based on performance evaluations, length of time with the company, sales at his or her particular store, and a $5,000 down payment. Actual sale price for each franchise is then based on store sales at the time the restaurant is selected. Manage To Own franchisees also could receive discounts toward a re-image package where the company would match 50 cents on every dollar the franchisee contributes to the plan.

"We envision a big turnaround for Little Caesars, and part of that is operating the company mainly as a franchise operation," Marian Ilitch, vice chairwoman of Ilitch Holdings Inc., told The Detroit News. "It's difficult to operate one company with 600 restaurants, and then oversee hundreds of franchise stores. We sold around 100 stores last year, and we're just trying to simplify things."

Ilitch and husband Mike Ilitch founded Little Caesars in 1959. Last year, two of their children, Denise and Chris Ilitch, became co-presidents of Ilitch Holdings, which includes Little Caesar Enterprises, the Detroit Tigers, the Detroit Red Wings, Fox Theatre and several restaurants and entertainment venues. The privately held company does not disclose financial results, though restaurant industry trackers estimate the company's gross sales at $1.7 billion, and a per-store sales average of $209,000.

Marian Ilitch said profits and revenues have been increasing for the chain, which, in recent years, has struggled to overcome sagging sales. After growing quickly in the '70s and '80s on its innovative two-for-one "Pizza, Pizza" promotion, both sales and store growth at the number-four pizza chain flattened in the '90s amid an industry-wide price war.

In the summer of 1999, the chain shuttered almost 400 stores overnight -- almost 10 percent of its stores -- raising concerns that Little Caesars' situation was more tenable than many had thought. That year, Little Caesars' COO, Harsha Agadi, was confident that a planned three-year systemwide store redesign effort, dubbed Little Caesars 2000, would reinvigorate sales and set a new course for the company. However, there is little evidence to suggest it has. In 2001, the company swapped spots with Papa John's as the world's third-highest-grossing pizza company in 2000, and Agadi is no longer with the company.

Latest Content

comments powered by Disqus