Craig Sherwood, Little Caesars’ vice president of U.S. development, says the time is “really, really ripe” to go larger.
After losing a net of 125 stores from 2018–2020, the restaurant, which has about 4,200 units in the U.S., announced a series of development goals this year, including 50 more venues in New England, 35 in St. Louis, at least 15 in Denver, 25 in Charlotte, up to 10 in New Orleans, more than 50 in the Pacific Northwest, at least a dozen in New York, and 30 in Tampa Bay.
The buildup is three years in the making, with the rollout of the mobile pickup Pizza Portal in 2018, introduction of third-party delivery at the start of 2020, and the overall acceleration of the pizza category and digital/off-premises sales throughout the pandemic.
Little Caesars added the requisite talent to support this growth push as well. Sherwood, who has development experience with Yum! Brands, Fazoli’s, and Sonic Drive-In, joined in September 2020, and Mark DaSilva, the leader of international development, entered the fray a month later with nearly 12 years of experience at Dunkin’ Brands. Additionally, fellow Dunkin’ veteran Jeremy Vitaro was brought on as chief development officer in the spring.
The combination of outside talent and a booming off-premises business enables Little Caesars to expand in previously unattainable trade areas, Sherwood says.
“We look at a lot of things,” he says. “You start from the premise that we’re a legacy brand. We’ve been around for a long time. We have a major presence in every U.S. state and every major market. And so it’s really trying to drill down to where can we go to impact the consumer and do it in a way where we’re getting new growth and incremental sales and not cannibalizing from our existing operators in finding that net new area.”
Little Caesars is matching those development geographies with a core group of existing franchisees who are passionate about growth, Sherwood notes. That will be supplemented with multi-unit opportunities for new and larger quick-service restaurant operators and single-unit opportunities for veterans and first responders, which ties back to the chain’s history of giving small business owners a chance.
Sherwood says the pipeline, which is “stronger than we’ve had in a number of years” currently skews toward internal growth, but that’s expected to shift to external candidates in the next 18 to 24 months. It generally takes a year to open a unit—including site selection, design, and construction—so serious expansion is projected for 2022, with acceleration starting in the second quarter. After that, the pace will remain “pretty robust” through the end of next year and ramp up even more in 2023.
Little Caesars will be “well north” of net unit growth after shedding hundreds of U.S. stores in recent years, the executive predicts.
“The brand is resonating well, the pizza industry is obviously doing quite well, so we’ve taken advantage of that as we’ve brought on and found new development agreements, both with our existing franchisees and then onboarding these larger groups into our system,” Sherwood says.
In terms of both sales ($4 billion in the U.S.) and number of units, Little Caesars is the third-largest pizza chain in the U.S. according to the QSR 50, and its peers are chasing after the same growth opportunities.
After shutting down a net of 745 U.S. restaurants in 2020, Pizza Hut—No. 1 in domestic unit count and No. 2 in sales among pizza players—shuttered a net of only five domestic units through the first three quarters. Domino’s, which is No. 1 in U.S. sales and No. 2 in store count, believes it has enough space for 8,000 locations across the country. The brand opened a net of 45 domestic outlets in Q3.
Papa Johns, the fourth-biggest U.S. pizza brand, is also expediting franchise growth. In September, the company announced an agreement that calls for Sun Holdings to open 100 stores across Texas through 2029, which is the largest domestic deal in the chain’s history.
Amid a crowded field, Little Caesars has worked aggressively to not only offer a competitive business model, but also a unique one, Sherwood says. For instance, the pizza company leverages a vertically integrated domestic supply chain in which it’s responsible for delivering products to operators.
“We’re able to reduce the supply chain noise that we’ve got out there right now since a lot of the material, food, and equipment are coming directly from us,” Sherwood says. “We’re able to get out of the shipping business from overseas and really supply things here locally.”
Sherwood also points to the chain’s “quirky and unique” marketing platform that positions itself in front of the desirable millennial and Gen Z age group on social media. To that end, Little Caesars revealed plans to release a commercial entirely on TikTok to promote The Batman, which opens in theaters on March 4. The chain announced a #BelikeTheBatman casting call in which users submitted videos in hopes of being part of a future commercial.
Tapping further into that consumer connection, Little Caesars recently dropped a new merchandise line, with a tagline of “pizza so good, you want to wear it.” Available items include a Crazy Bread lounge set, Little Caesars sherpa, button-down pizza shirt, slip-on pizza sneakers, Hot-N-Ready gaming chair, jewelry, and more.
At the store level, the brand is working on new designs that reduce footsteps in the back of house and overall labor costs.
“We’re in the process of launching some of that,” Sherwood says. “More news to come on that. Obviously a lot of research and design going into optimizing our look, our kitchens, and making sure that we can reduce labor and make sure that it’s cost-effective in the back of the house. There will be some really interesting things coming up here in the next six months that we’re working on.”
The Little Caesars executive acknowledges that store openings have slowed this year due to a variety of issues influenced by COVID, like delays with permitting and inspections.
But Sherwood still describes 2021 as a strong year and emphasizes that macroeconomic headwinds have not impacted interest in adding new stores.
“Like I said, one of the strongest pipelines that we’ve had in a number of years, and that consists of both existing franchises as well as new, larger quick-service restaurant groups that are joining our organization as well as some of these smaller entrepreneurs,” he says. “We’re feeling pretty good going into ‘22 and structuring deals in a way where we’re going to have growth for a number of years and accelerating growth as we do these larger multi-unit deals.”