---
title: "Why pizza is the best restaurant business"
url: https://modern-mba.com/case/pizza
sector: "Food & beverage"
sector_url: https://modern-mba.com/sector/food-and-beverage
aired: 2025-12-28
published: 2026-08-23
updated: 2026-08-28
reading_time_minutes: 10
charts: 10
video: https://www.youtube.com/watch?v=knDVq5wSAUk
author: "Yishan Lin"
author_url: https://www.linkedin.com/in/yishanlin/
publisher: Modern MBA
license: "© Modern MBA, all rights reserved. Quote and cite with credit and a link; republishing needs written permission."
---

# Why pizza is the best restaurant business

Pizza is the rare restaurant category where independents beat chains on margin and almost nobody goes out of business. Filmed with operators across Manhattan, Brooklyn, and Los Angeles, this case study reveals the real unit economics of four independent pizzerias against Domino's, Pizza Hut, and Papa John's — revenue per store, operating margin, failure rates by neighborhood, and why a second location changes the math entirely.

## Key figures

- **35% vs 11%** — Best independent margin vs Domino's
- **8.1%** — Independent pizzeria failure rate, NYC
- **1 in 10** — NYC pizzerias that are a chain

## The argument

Almost every restaurant category punishes the independent. Pizza does the opposite. Food costs are the lowest in the industry, the ingredients are shelf-stable and barely inflate, the learning curve is shallow enough for a novice, and the craft is deep enough that a good operator can still be visibly better than a chain.

That combination produces something unusual: a category where the independents out-earn the corporations on margin. The four New York and Los Angeles shops in this episode run between 10% and 35% operating margin. The average Domino's store runs 11%.

It also barely kills anyone. Independent pizzerias fail at under 9% in both New York and California, which means nine in ten change hands rather than close. The ceiling is set by the operator, the floor is set by the product, and the floor is unusually high.

## Charts

### Who owns the category

Share of stores that are independent rather than chain, by category. Pizza and Mexican are the only large categories independents still control.

|  | Independent | Corporate chain |
| --- | --- | --- |
| Mexican | 70% | 30% |
| Pizza | 53% | 46% |
| Sandwich | 40% | 60% |
| Chicken | 24% | 76% |
| Burgers | 14% | 86% |
| Chinese | 6% | 94% |

Source: Modern MBA, “Why pizza is the best restaurant business”, aired December 2025. Chart: https://modern-mba.com/case/pizza#chart-1 · Sources: https://modern-mba.com/case/pizza#sources

### The independents win on margin

Annual operating margin of the four independent pizzerias in this episode against the chains. The smallest operator in the set is the most profitable one.

|  | Percentages |
| --- | --- |
| Little Dynamite | 35% |
| Motorino | 24% |
| Pop's | 18% |
| Abbott's | 10% |
| Domino's unit | 11% |
| Papa John's unit | 4% |
| Blaze corporate | 11% |
| Pizza Hut unit | 1% |

Source: Modern MBA, “Why pizza is the best restaurant business”, aired December 2025. Chart: https://modern-mba.com/case/pizza#chart-2 · Sources: https://modern-mba.com/case/pizza#sources

### Revenue per store

Average annual sales. A single independent shop matches a chain outlet, and a small independent system clears them entirely.

|  | US dollars |
| --- | --- |
| Motorino system | $6.3M |
| Pop's system | $2.2M |
| Motorino unit | $2.1M |
| Blaze | $1.6M |
| Domino's | $1.3M |
| Pop's unit | $1.1M |
| Papa John's | $1.1M |
| Pizza Hut | $1M |
| Little Dynamite unit | $0.8M |

Source: Modern MBA, “Why pizza is the best restaurant business”, aired December 2025. Chart: https://modern-mba.com/case/pizza#chart-3 · Sources: https://modern-mba.com/case/pizza#sources

### Domino's sells ingredients, not pizza

Annual revenue by segment. The largest line is selling dough, cheese, and supplies to its own franchisees; royalties are a rounding error beside it.

|  | US dollars |
| --- | --- |
| Ingredients to franchisees | $2,846M |
| Company stores | $394M |
| International franchising | $638M |
| U.S. franchising | $319M |

Source: Modern MBA, “Why pizza is the best restaurant business”, aired December 2025. Chart: https://modern-mba.com/case/pizza#chart-4 · Sources: https://modern-mba.com/case/pizza#sources

### Cheap to open

Average cost to open a store, excluding real estate. Domino's is the cheapest entry, so franchisees buy more of them rather than chase margin.

|  | US dollars |
| --- | --- |
| Domino's | $0.45M |
| Papa John's | $0.56M |
| Little Caesars | $0.57M |
| Round Table | $0.8M |
| Blaze | $0.91M |
| MOD | $1.15M |
| Pizza Hut | $1.42M |

Source: Modern MBA, “Why pizza is the best restaurant business”, aired December 2025. Chart: https://modern-mba.com/case/pizza#chart-5 · Sources: https://modern-mba.com/case/pizza#sources

### Scale without collapse

Median annual sales at a franchised Domino's store as the network grew from 4,838 to 6,647 stores. Adding stores has not cannibalized the ones already open.

|  | US dollars |
| --- | --- |
| 2012 4,838 | $0.66M |
| 2014 5,067 | $0.75M |
| 2016 5,371 | $0.92M |
| 2018 5,876 | $1.07M |
| 2020 6,092 | $1.24M |
| 2022 6,507 | $1.26M |
| 2023 6,647 | $1.28M |

Source: Modern MBA, “Why pizza is the best restaurant business”, aired December 2025. Chart: https://modern-mba.com/case/pizza#chart-6 · Sources: https://modern-mba.com/case/pizza#sources

### New York belongs to independents

Pizzerias by borough and ownership. Chains are a rounding error in every borough — 39 corporate locations against 669 independents in Manhattan alone.

|  | Independent | Corporate chain |
| --- | --- | --- |
| Manhattan | 669 | 39 |
| Brooklyn | 534 | 62 |
| Queens | 421 | 65 |
| Bronx | 237 | 49 |
| Staten Island | 147 | 11 |

Source: Modern MBA, “Why pizza is the best restaurant business”, aired December 2025. Chart: https://modern-mba.com/case/pizza#chart-7 · Sources: https://modern-mba.com/case/pizza#sources

### Almost nobody fails

Share of independent pizzerias permanently closed, by borough. More than nine in ten change hands rather than shut down.

|  | Percentages |
| --- | --- |
| Brooklyn | 4.1% |
| Staten Island | 4.1% |
| Bronx | 4.6% |
| NYC combined | 6.5% |
| Queens | 8.1% |
| Manhattan | 8.7% |
| NY State | 10.4% |

Source: Modern MBA, “Why pizza is the best restaurant business”, aired December 2025. Chart: https://modern-mba.com/case/pizza#chart-8 · Sources: https://modern-mba.com/case/pizza#sources

### Where the rent bites

Independent pizzeria closure rate by Manhattan neighborhood. The spread from the Upper West Side to the Financial District is more than four to one.

|  | Percentages |
| --- | --- |
| UWS | 3.5% |
| UES | 3.6% |
| Midtown West | 4.4% |
| SoHo Tribeca | 8.5% |
| Midtown East | 9% |
| West Village | 9.1% |
| LES | 10% |
| East Village | 10.7% |
| Chelsea | 10.9% |
| Harlem | 12.8% |
| FiDi | 14.7% |

Source: Modern MBA, “Why pizza is the best restaurant business”, aired December 2025. Chart: https://modern-mba.com/case/pizza#chart-9 · Sources: https://modern-mba.com/case/pizza#sources

### Everyone opens a second shop

Share of independent pizzerias running more than one location. Once dough production centralizes, cost per store falls — so a quarter of operators expand.

|  | 2+ stores | 3+ stores |
| --- | --- | --- |
| Bronx | 28.3% | 16.5% |
| Brooklyn | 26.4% | 19.3% |
| Staten Island | 26.5% | 14.3% |
| Manhattan | 24% | 19% |
| NY State | 23.9% | 15.7% |
| Queens | 22.8% | 13.7% |

Source: Modern MBA, “Why pizza is the best restaurant business”, aired December 2025. Chart: https://modern-mba.com/case/pizza#chart-10 · Sources: https://modern-mba.com/case/pizza#sources


## Takeaways

1. Pizza is the third-largest restaurant category in America at roughly **75,000** stores, and the only large one where independents dominate: **70%** of Mexican and **53%** of pizza stores are independent, against **14%** of burger and **6%** of Chinese.
2. In New York the imbalance is extreme — national chains account for fewer than **one in ten** pizzerias, and Manhattan alone holds **669** independents against **39** chain locations.
3. Independent operators beat the chains on margin, not despite their size but because of it: **Little Dynamite** in Los Angeles runs **35%**, **Motorino** **24%**, **Pop's** **18%**, and **Abbott's** **10%** — against **11%** at the average **Domino's** store and **1%** at the average **Pizza Hut**.
4. The chains trade margin for volume deliberately. **Domino's** is among the cheapest franchises to open at roughly **$450,000** excluding real estate, and its median franchised store now grosses **$1.28 million** — but the franchisee keeps **11%** and makes real money only by opening more stores.
5. **Domino's** does not make its money from pizza. Of **$4.8 billion** in annual revenue, the largest single line is selling dough, cheese, and supplies to its own franchisees — **$2.85 billion** of ingredients against **$319 million** from U.S. franchise royalties.
6. The second location is where the economics change. Pizza is the rare format where dough production centralizes cleanly, so cost per store falls and margin rises with scale — which is why **24%** of Manhattan independents and **28.3%** in the Bronx already run more than one shop.
7. Failure is remarkably rare. Independent pizzerias close at **8.1%** in New York City and **8.5%** across California, meaning more than nine in ten trade hands rather than shut down — and in Manhattan the rate ranges from **3.5%** on the Upper West Side to **14.7%** in the Financial District.
8. The dataset behind this is original. **All 15,000 pizzerias ever opened in California and New York were scraped and then manually verified** — the first accurate snapshot of the industry in its two largest markets.
9. The chains are cheap by design and thin by consequence. Domino's can sell a large pizza under $10 nationwide because of scale, but **the average Domino's store earns an 11% operating margin** — there is not much cash flow in taking 5% of $8.
10. Independents run laps around that. **Pop's clears 17.5%, Motorino 24%, and Abbot's 35%** — the last as a fully bootstrapped husband-and-wife operation with no payroll above the two of them.
11. The revenue per store is not small either. **Pop's grosses $95,000 a month per store for $1.1 million a year and $2.2 million systemwide**, while **Motorino averages $176,000 a month per store, $2.1 million annually, and $6.3 million across its New York portfolio**.
12. Motorino's margin comes from cost discipline in the most expensive city in the world. **Most restaurants target food and labor at roughly 60% of revenue; Motorino holds them at 52%** while operating in Williamsburg, the Upper West Side, and the East Village.
13. That is what the second location buys. A dedicated production facility turning out **over 4,000 dough balls a week** plus cheese, mushrooms, tiramisu, and antipasti is only affordable once there is more than one store to absorb it.
14. Entry is genuinely cheap, which is why the category stays independent. One operator **opened a 750-square-foot store for $60,000** using second-hand ovens and counters assembled from tables and sheet metal — and as another put it, you can start with $500 of equipment and your hands.
15. The menu concentrates hard. At Pop's, **three pizzas — vodka, margherita, and spinach mushroom — are half of all sales**, and **70% of revenue is slices rather than whole pies**, which is a different business from the one the chains are in.
16. The format bends to its neighborhood rather than defending tradition. Abbot's in Venice added **bagel-seasoning crusts and a salad pizza with feta, avocado, and lemon olive oil**, and grosses **$107,000 a month, $1.3 million a year, split 60% takeaway and 40% dine-in**.

## Common questions

### Why do independent pizzerias survive when other restaurants fail?

Because the entry cost is low and the failure rate is genuinely small. One operator opened a 750-square-foot store for $60,000 using second-hand ovens and counters made from sheet metal. Independents close at 8% over a decade in Manhattan, 10.4% across New York State, and under 9% in California — meaning more than 90% of pizzerias trade hands rather than shut down. Los Angeles is the exception at 12%.

### Do independent pizzerias make more money than chains?

On margin, consistently. The average Domino's store runs an 11% operating margin, against 17.5% at Pop's, 24% at Motorino, and 35% at Abbot's. Chains trade margin for volume deliberately — Domino's is among the cheapest franchises to open, and it makes its money elsewhere. There is very little cash flow in collecting 5% of an $8 pizza.

### How much does a pizzeria make a year?

More than most people assume. Pop's grosses about $95,000 a month per store, $1.1 million a year, and $2.2 million systemwide across three locations. Motorino averages $176,000 a month per store, $2.1 million annually, and $6.3 million across its New York portfolio. Abbot's in Venice does $107,000 a month for $1.3 million a year.

### How does Domino's actually make money?

Not from selling pizza. Of roughly $4.8 billion in annual revenue, the largest single line is selling dough, cheese, and equipment to its own franchisees — the supply chain is the business and the storefronts are the customers. That is why the pizza can cost under $10 nationwide for decades without the company losing money, even as the average store earns an 11% margin.

### Why is New York pizza dominated by independents?

Because the category never consolidated there. National chains account for fewer than one in ten New York pizzerias, and the density of independents means an operator competes on product and neighborhood rather than on price and delivery radius. It is the only large restaurant category in America where the independents outnumber and outperform the chains.

### What does it cost to open a pizzeria?

Far less than a comparable restaurant. One operator in this case study built a 750-square-foot store for $60,000 by buying used ovens and assembling counters from tables and sheet metal, and another started with roughly $500 of equipment making dough by hand before graduating to a food truck and then a storefront. The low barrier is exactly why the category is crowded and why it stays independent.

### Why do pizzerias only sell a few things?

Because concentration is the margin. At Pop's, three pizzas — vodka, margherita, and spinach mushroom — make up half of all sales, and 70% of revenue comes from slices rather than whole pies. A short menu means predictable prep, less waste, faster service, and staff who can be trained quickly, which is what allows a small shop to run at chain-beating margins.

### When does opening a second pizzeria make sense?

When dough production can centralize. Pizza is one of the rare formats where a dedicated commissary pays for itself the moment there is more than one store to feed — Motorino's facility turns out over 4,000 dough balls a week plus cheese, mushrooms, and desserts, and holds food and labor at 52% of revenue against a 60% industry target. One store cannot justify that; two can.

## Discussion

- Almost every restaurant category punishes the independent operator. Pizza rewards them. Which specific features flip that, and which of them could a chain neutralize if it decided to try?
- The independents in this episode run 10% to 35% operating margin against roughly 11% for the average Domino's store. Why has scale failed to produce an advantage here when it does almost everywhere else in food?
- "The ceiling is set by the operator, the floor is set by the product." Name another business with an unusually high floor. What does a high floor do to the kind of people who enter the industry?
- Independent pizzerias fail at under 9%, meaning nine in ten change hands rather than close. What does a low failure rate do to competition, and to prices, over a decade?
- You have capital and want to build a pizza business worth more than the sum of its shops. Given everything above, what are you actually building?

## Sources

Store-level figures disclosed on camera by the owners of Pop’s, Motorino, Little Dynamite, and Abbott’s; chain figures from Domino’s, Pizza Hut, and Papa John’s 10-K filings and franchise disclosure documents

---

From [Modern MBA](https://modern-mba.com/). Read this case in full at [https://modern-mba.com/case/pizza](https://modern-mba.com/case/pizza), or watch the episode at https://www.youtube.com/watch?v=knDVq5wSAUk.