Why Peyton Manning joined the pizza business
The quarterback is the latest professional athlete to become a restaurant franchisee. Others have invested in doughnuts, steakhouses and even car dealerships.
Former Dallas Cowboys quarterback Troy Aikman and team owner Jerry Jones recently announced plans to open 50 Dunkiin' Donuts shops in Texas over the next five years. The chain is part of Dunkin' Brands (DNKN). Former pro basketbal star Jamal Mashburn owns 37 Papa John's, 34 Outback Steakhouses, three Dunkin' Donuts and the largest Toyota dealership in Kentucky. Tennis star Venus Williams has invested in Jamba Juice (JAMBA).
"It's a pretty stable investment," said Michael Seid, a consultant and co-author of "Franchising For Dummies," in an interview. "These are very stable organizations with disciplined cash flows and good returns on investments."
Papa John's, based in Louisville, Ky., has a good reputation in the franchise industry, according to Seid. The chain recently opened its 4,000th restaurant. Details of the deal with Manning were not released.
According to the company's latest 10-K, Papa John's 582 company-owned restaurants averaged sales of $897,000 in 2011, which is higher than franchise locations because the company focuses its locations more heavily penetrated markets. Manning likely will be investing six figures in each restaurant. Papa John's recently unveiled a incentive program which includes no franchise fee, no royalties for 18 months and $50,000 in new restaurant equipment. A company spokesperson declined to comment further.
Odds are that the 36-year-old Manning will be a passive investor and hire a team to oversee day-to-day operations. Like any new business owner, Manning will have a learning curve. One thing that he has going for him is that he is used to playing in a system designed by coaches to win football games. The same idea applies in franchises.
"You can't call an audible," Seid said, referring to the practice of changing a football play at the line of scrimmage.
Any changes at his Papa John's locations would need to be approved by the company. Manning probably realizes, though, that it would be foolish to tamper with a successful system.
--Jonatnan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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