Restaurant dining rooms are closed, most people are quarantining at home, millions are freshly unemployed and counting their pennies, supermarkets are a hassle and cannabis retail is categorized as an “essential business.” Times like this are pretty much the perfect storm for a business like Domino’s to rule over all, isn’t it?
But does this mean, then, that this is the time to franchise a delivery pizza business? Is this the year that mediocre pizza once again becomes ubiquitous, while potholes across the land become freshly paved over and branded? Alongside franchise consultant Joel Libava, aka The Franchise King, we got answers in 30 minutes or less.
Pizza delivery seems like a slam dunk, but is this even a good time to start a business?
It’s hard to say, though later in the year, the conditions could be right for it. “My gut tells me that a lot of people are going to find themselves jobless toward the middle to end of the summer,” Libava says. “Companies are hurting, so they’re going to be slashing a lot more. And if the stock market goes up, then franchising will explode.”
What’s Domino’s got to do with the stock market and jobs?
Libava says the main people who get into franchising are mid-level managers and executives — the ones who typically get laid off during a recession. And who also have a bit of savings, presumably. And, finally, who have probably bounced around companies for a couple decades, and are sick of the bullshit. The kinds of people, in other words, who have savings, managerial experience and a strong distaste for climbing the corporate ladder, and decide they want to start their own business.
Savings, huh?
Yeah. Libava estimates a Domino’s franchise takes an initial investment of $120,000 to $461,000, with a liquid cash requirement of 75 grand.
This… probably isn’t the best time to get a loan? Especially one that huge.
Correctamundo. This is where the stock market becomes important. “If the stock market is lousy, people aren’t going to have the money to buy franchises and the banks aren’t going to be loaning money,” Libava says. “It’s going to be really tough to get a small-business loan. They’re gonna be really tight.”
What if I could come up with the money?
Then it’s a pretty damn good business to get into. Of all the restaurants, the ones that are already outfitted for drive-through, curbside service or home delivery are best able to hang in there. Look at Domino’s: Its business model is already tuned for these times — generally no dining room, and little else in their expense structure for them to trim.
What else is there to consider?
Libava says the deal breaker for lots of franchises right now is whether the local or state government deems them “essential businesses.” If it’s not, then obviously nothing else matters. Food — and specifically delivered food — is on the safe side for now. But the fact that the government can swiftly close your doors during an emergency is something to keep in mind for now and in the future.
But Domino’s is kicking ass right now, right?
Well, they’re certainly hiring! Which is usually a good sign. Its own jobs website lists lots of openings where I live, and likely all over. Libava says he sees Google ads all the time for Domino’s and other delivery drivers — delivery is really in demand right now for all sorts of industries.
How long would it take to start one?
Libava says during normal times, from the time you’ve picked a franchise and already done your research till you open the doors, it’s generally six to nine months. It could be a year or more for a burger joint with a drive-through, with the construction and zoning issues. But something like a Domino’s is typically less complicated.
Six to nine months!?!?
Yep — and who knows what the state of the world is going to even be like around Halloween and toward the end of the year. “This is a really tough time to predict,” Libava says.
So what does it really take to open up a franchise, beyond money?
Libava says it’s extremely important to do your research (he wrote a guide on it, naturally). Also, find out if it’s an essential business, and keep in mind, coronavirus could either last till the fall, or possibly come roaring back later in the year, like flu seasons do. Nobody’s got a crystal ball!
“The bottom line is, it depends on how long this lasts, and the employment situation combined with the stock market,” Libava says. “So there are a lot of things that are going to come into play. It’s tough, man, it’s a tough one.”
Though when it comes to business opportunities, nothing in this world seems to feel so right, or make quite as much sense right now, as a hand-tossed ExtravaganZZa dispatched from its oven and presented to you at your front door. Just don’t expect to accurately track it.
Adam Elder
Adam Elder is a writer in San Diego. He's also written for Esquire and WIRED magazines, VICE, The New York Times, The Wall Street Journal, The Guardian, newyorker.com and elsewhere.
