Whether going with a branded option or developing a proprietary menu, pizza appeals to a wide variety of pallets.
By Howard Riell, Associate Editor.
Everybody loves pizza, but which pizza? And what will it take to get it to your customers?
These are the kinds of questions convenience store operators need to ask themselves if they want to make the most out of a food so popular it’s gone from ethnic to mainstream in a single generation.
Most of the time that decision is practically made for an operator, and the question becomes not what type of pizza to offer, but which concept can they get their hands on in a crowded and competitive market.
Brandi Becker, foodservice director for Manley’s Mighty Mart LLC, based in Binghamton, N.Y., said that while management looked at branded pizza concepts back in 2003, it never went so far as to run in-store trials. Instead, executives opted for—and have since been satisfied with—a proprietary program. Of the chain’s 23 locations, 19 now offer its proprietary Big Al’s Pizza brand to customers.
After exploring the branded concepts Manley’s opted to do on its own brand primarily because it was looking to build equity in the chain. The company did quite a bit of research examining turnkey opportunities, such pre-made doughs and portioned toppings and cheeses. The result is that the company is enjoying a profit margin superior to what it would have earned with a branded program, Becker said.
Finding Your Solution
But every chain is different and there are many variables to consider, such as market demographics and existing competition. Operators willing to develop a pizza program have unlimited opportunities, but need to be cognizant of how much money they want to spend on equipment and how much room is available in each store.
“Most convenience stores that I see don’t really have the space to dedicate to a prep table—even a small six-foot table—and refrigeration,” said Tom Lehmann, the self-proclaimed Dough Doctor, who serves as director of bakery assistance for the American Institute of Baking in Manhattan, Kan.
Many stores instead opt for a branded program like Hunt Bros. or Piccadilly Pizza, which provide the ingredients, marketing programs, equipment and training for c-stores to operate their own turnkey program.
A great many of the c-store operators who want a pizza program want to devote only minimal time and money to it. According to Lehmann, a bare-bones pizza program can be put together relatively easily and inexpensively by following a series of basic steps.
“Begin with a ready-made crust,” Lehmann said. “You don’t want to be running mixers in your store, and you don’t want flour dust in the air.”
Next, get a refrigerator for holding crusts and ingredients. “The crusts are probably going to come in frozen,” Lehmann said. “Hold them frozen and take them from the freezer to the refrigerator for slacking out, then use them from there.”
An additional reach-in cooler and reach-in freezer will also be necessary. Bigger convenience stores with walk-ins can simply allocate space, if possible. “In the worst case scenario, stores would need to invest about $3,000 each for a small reach-in cooler and a reach-in refrigerator,” Lehmann said.
Instead of working with a ready-made crust, operators could choose to work with dough balls. “If I want a little bit of showmanship, I might have somebody opening up the dough by hand,” Lehmann said. “But remember, it’s going to take training and another piece of equipment. I would not use a dough roller. I would use a pizza press to press out the dough evenly.”
Firm Commitment Required
Rather than using the standard deck oven found in many convenience stores to bake pizza, Lehmann recommended a conveyor oven for employees because it requires minimal training. “There is a wide variety of conveyors out there, but probably a 32-inch one would work for your typical 3,200-square-foot convenience store.”
A new conveyor oven can cost about $12,000, so a firm commitment to execute a proprietary pizza program needs to be in place.
Stores will also need pizza disks or screens to place the dough on after it’s been dressed. Product is placed into one end of the oven and comes out the other side fully baked, at which point it can be transferred to a pizza box and cut inside the pizza box.
Toppings can be purchased pre-sliced, and meats pre-cooked. “Probably the only stumbling block is getting the person responsible for the activity trained in food safety,” Lehmann added, “and that’s not a big deal.”
Another option to bring a pizza program to market is to partner with a local distributor by carrying one or a few of his brands that are marketed locally. All you’re going to need in most cases in an oven because the product is merchandised out of a refrigerated display case.
“I’ve seen this concept before, and I think it’s pretty neat,” Lehmann said. “The customer takes the pizza they want out of the case and brings it over to you. You open the box, take it out, put it onto a baking tray and run it through your oven.”
What the customer walks away with is a fully-baked pizza of a brand they already know and trust. “They don’t have to take it home and bake it, so that provides them the customer service experience they are looking for,” Lehmann said. “Plus, you can market this pizza as freshly prepared throughout the day, which lets you service multiple dayparts without worrying about spoilage. It’s always fresh.”
Pluses and Minuses
Whether or not to develop a proprietary foodservice brand is a debate has gone on for many years, said John Matthews, president and CEO of Gray Cat Enterprises Inc., a strategic planning and marketing services firm that specializes in helping businesses grow in the c-store and restaurant industries. “Should you implement an existing branded pizza program or are you better off developing your own unique proprietary pizza brand?”
Matthews’ answer is yes to both. There is, he said, no right or wrong answer, as both have their pros and cons. Branded pizza offers the quickest path to implementation since production processes and consumer recognition have already been established.
Proprietary pizza brands, on the other hand, usually take longer to implement but can be more profitable and almost impossible for your competition to mimic.”
Building a successful pizza business within a c-store, Matthews is convinced, can enhance the bottom line like no other initiative can. “High-margin pizza items can help offset loss-leading products and categories on the down cycle of their life,” he said.
The choice between branded or proprietary pizza is largely dependent on how the organization is structured, as well as comfort level.
“If you have the wherewithal and people power to launch and manage a proprietary pizza operation, your gross profit margin potential is much larger. On the other hand, implementing a branded pizza program at your c-store allows you to capitalize on years of brand-building and operational know-how, and still turn a handsome profit,” Matthews said. He suggested looking at the pluses and minuses of each type of c-store pizza program.
Advantages of a branded program:
• Product Recognition. Consumer awareness of the brand is minimal.
• Confidence. Consumer trust already exists for the brand.
• Consistency/Quality. Time and investment have established the brand.
• Brand Support. Most branded companies provide training and marketing.
Advantages of a proprietary pizza program:
• You’re in Control. “As the owner of your brand, you determine your brand’s path,” Matthews said.
• Competitive Differentiation. It is your brand. The competition cannot use it.
• Product Cost Savings. Retailers can save product costs by perfecting portioning and minimizing product waste.
• More Mystique. “Your own brand can achieve a higher acceptance level when executed well because customers love to try something new and unique,” Matthews said.
Among the disadvantages of a branded program: Some branded companies are interested in their brand first and your store second; cost of goods, marketing promotions, licensing or franchise fees can all erode profit margins; you have less control as the branded company sets the rules.
The negatives associated with proprietary pizza programs include: it’s more time consuming; training, supply chain, operations and marketing all have to be in sync or profit margins plummet; big pizza brands command the attention of suppliers and consumers; a bigger investment is required.
“It is your nickel—every idea, every product, every marketing piece is paid by you,” Matthews said. “You can’t afford to make mistakes.”