How to make serious dough in the pizza franchise industry

How to make serious dough in the pizza franchise industry

Providing customers with high-quality ingredients, gourmet pizzas and a unique dining experience is the key to making dough in the pizza industry. However, staying competitive by meeting customers’ demands is what sets franchises apart and helps move brands forward, says Jeff Melnick, President of Boston’s Pizza Restaurant & Sports Bar.

Pizza appeared in the United States with the arrival of Italian immigrants in the late 19th century. It was popular in cities like Boston, Chicago, New York, Philadelphia, St. Louis and Los Angeles. The new-to-America product was introduced by peddlers who walked the streets, selling pizzas by the slice. It was also sold in small cafes and grocery stores which prepared pizzas for their local communities.

In 1905, Gennaro Lombardi received a license to make and sell pizza at the first pizza restaurant in New York. Fast forward to 1943, when entrepreneurs, Ike Sewell and Ric Riccardo, invented Chicago-style deep-dish pizza and opened their own restaurant on the corner of Wabash and Ohio, Pizzeria Uno. Since then, pizza restaurant concepts have proliferated and have continued to open throughout the generations. Of course, this sector remains highly popular to this day.

Pizza has universal appeal. It’s a tasty sustenance easily shared with friends and family. Traditionally, the robust flavors are comforting and allow for a wide array of additional toppings that pair well with dough, sauce, and cheese. It also complements other long-established crowd-pleasers such as pasta, burgers, wings and cold beverages, which customers often enjoy while watching sporting events. Pizza has long been an all-American fan favorite.

PIZZA IN NUMBERS

There are currently 76,993 pizza restaurants in America according to PMQ Pizza Magazine The 2019 Pizza Power Report: A State-of-the-Industry Analysis shows there are no signs of slowing down. In addition, the worldwide pizza market is up to $144.46 billion, the United States pizza market is up to $45.73 billion and the Top 50 Average Unit Sales are up to $876,867 billion compared to the 2018 Pizza Power Report.

Choosing the pizza sector over other restaurant types is an easy decision: pizza is one of the most popular foods in America. When Boston’s Pizza began in Canada in the 1960s, pizza & pasta were the focuses. While the company offers over 80 menu items including pizza, pasta, salads, ribs, burgers, wings, and more – pizza remains at the core. In addition, pizza is very business-friendly: ingredient costs are low. Even gourmet variations are typically manageable from an execution standpoint.

Approximately 1,750 pizza restaurants opened from 2017 to 2018, according to Statista. However, trends show that most restaurants close during their first year of operation. The restaurants that fail are typically the independent establishments that are undercapitalized and don’t have sufficient funds to cover operating costs or have contingency plans in place. Also, the local area’s competitive landscape can have an impact if the restaurant doesn’t differentiate itself from the competition, especially in dense markets.

The restaurants that succeed are usually the chains, which is a benefit for franchising. Larger restaurant chains have increased over the years and usually experience longer life spans and overall stability. These restaurants have higher success rates and are able to identify trends and change rapidly to meet consumers’ needs.

Across the pizza sector, adding high-quality ingredients and finding new trends that appeal to more people is key. Also, offering gourmet pizzas and menus focused on items made with dough is what will make business profitable and offers a cost savings for consumers and franchisees, which allows restaurants to succeed.

It’s also important to be able to differentiate your brand in a crowded market. In casual dining, there’s often the temptation to be everything to everyone. Where brands thrive is in finding what is core to who they are and doing that really well. When you enter the “sea of sameness”, you’re really in the danger zone. It’s those key differentiators that make customers want to enjoy a unique dining experience at your restaurant and connect with your brand. Furthermore, it’s those same key differentiators that stand out to potential franchisees and convince them to invest in your franchise brand over competitors.

Some of the essential qualities that your brand will need to succeed in this field are basic ingredients – your core company values. Authenticity. People should crave your food, your atmosphere, or both. Restaurants become special when they allow diners to block out the outside world and enjoy the moment. Be true to who you are and what you offer. Be seen as consistently refreshing, comfortable, and reliable. If you are genuine and people know what your company stands for, customers will relate and want to connect with your brand. Live and breathe your core company values and others will believe and want to follow.

Branding

One of the most valuable things that a company can do is have strong branding. Every design from the atmosphere to offering stems from an understanding of the brand. More specifically for a restaurant, that means music, uniforms, food & drink, décor, tone of voice, service model, plating, etc. Everything needs to be consistent from the look and feel to point of view, menu options, logo, design, marketing efforts, etc. It goes without saying that the location should always stay true to its brand values. In order for customers to connect to the brand they need to know the “why” behind it.

It’s also important that the look of the interior and exterior is consistent with the brand from one location to another. This varies based on concept. There are many independent restaurants that do food and service so well that if they are operating in a modest space, it’s less important. In a very competitive casual dining space, the interior and exterior of your buildings is critical. How your environment is perceived in the generation of Instagram and visual dining is paramount in a diner’s decision on where to spend their time and money. It has to be inviting, yet different so that customers will want to come in and stay, visit frequently and provide an exclusive dining experience that they can’t get anywhere else.

While it’s important to have a memorable name, it should be meaningful to the brand as it may be one of the most important decisions you make. The name of your business will have tremendous impact on how customers and potential franchisees view you. Keep it simple, unique and easy to remember.

The backstory is relevant in order to understand the “why” behind the brand. If a backstory exists, it’s important to communicate that and leverage it to explain your brand’s evolution. But back to authenticity, don’t make up a story that doesn’t exist! It has to be relevant and meaningful in order for it to resonate. The backstory is about the history of the brand and the people behind that brand. If consumers know the backstory, they understand the quality and value behind the products that you offer and are more willing to invest in your brand, whether it’s for the food or as a franchisee.

Overseas

The secret to expanding pizza restaurants overseas is knowing and understanding the international markets you are targeting. The pizza market overseas is divided into different areas — full service, quick-serve and delivery — and each segment has its own rules. The quick-service restaurants and delivery services have profited the most during difficult economic times, and yet are announcing the most aggressive expansion plans. Internationally, the pizza industry is thriving, with an increased growth rate, and the sector is trending.

On this subject, there are several trends in pizza restaurants that have evolved over the years. Customization is in high demand in the pizza sector right now. Pizza innovation is steadily becoming more creative with many variations in toppings and flavors, all the way down to cauliflower crust, which Boston’s Pizza is introducing this summer on a new menu. Guests like to play table chef and create their own variety using a range of sauces, cheeses, and toppings. With high-quality ingredients, gluten and dairy-free options, alternative meats, plant-based and vegan ingredients, the possibilities are endless. Today’s consumers want fresh, healthy ingredients and the younger generations want tech-savvy choices in terms of apps, ordering and delivery. There’s also a trend in different types of pizzas including breakfast pizzas, CBD infused pizza, dessert pizzas, gourmet-style pizzas, Keto pizzas and personalized pizzas – from crust to toppings.

Pizza has an extremely loyal following. When you align that with the attractive margins on pizza from a business owner’s perspective, it’s easy to see why pizza will continue to be a desirable item to place at the center of your restaurant’s menu. Pizza restaurants have enjoyed longevity thanks to the simple ingredients, a friendly eating experience and successful business models.

ABOUT THE AUTHOR

Jeff Melnick spent 40 years working his way up through the industry, Melnick began his 18-year career with Chili’s Grill & Bar as a manager and ended as the Regional Director of Operations, in Southern California, responsible for 78 restaurants. From there, Melnick joined Red Robin Gourmet Burgers, Inc., where he served on the executive leadership team as the Senior Vice President of Operations. His most recent role prior to becoming President of Boston’s was as a Vice President of CraftWorks Restaurants & Breweries Inc., where Melnick was the Brand Leader of the Gordon Biersch concept.

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