Commentary: Are you sure it's time to add a pizzeria?

 
Sept. 18, 2006
So you've got just one pizzeria, when you wanted 100. In fact, you'd be happy with two, but you're not sure it's time to add one.
 
Well, join the crowd. The expansion question isn't an easy one to answer. Where most mortals fidget and fret over opening a new store, pizza giants like Frank and Dan Carney, Tom Monaghan, John Schnatter and Mike and Marian Illitch had the nerve to make it look easy. The truth is, the task of opening thousands of units is so hard, it's likely we'll never see it recur.
 
But what about store No. 2? No big deal, right? Find another unit in your area that can serve your demographic, duplicate the brand, the food and the staff, and off you go. Of course, it's not that easy. Ask the many thousands who've failed.
 
Apparently a second pizzeria isn't even that desirable for some. The fortune gained from one kept the Todaro family owners of a single La Nova Pizza unit for 47 years before adding a second. And, well, why rush when store No. 1 is raking in $5 million a year, right? The five-year-old second unit remains the runt of the litter, pouring a mere $3.5 million into the family pot every year.
 
Mark Gold and Louie Sicinski grew Pizza Shuttle to three units in 17 months before realizing all they had was three mediocre pizzerias. When they closed two and poured all their interests into one, they created a monster that chewed through the $5 million annual sales mark in 2005.
 
What got me pondering the issue of growth was the announcement that the church I attend is planning to add four satellite churches within the next decade. In many ways, Southeast Christian Church is a lot like the aforementioned pizzerias. It started small (51 members), became huge (18,000 members), and it's always faced the enviable problem of figuring out how to serve all the people who come there.
 
In its 45-year history, the membership has entertained spinning off new churches many times, but its leadership, with the support of members, always voted against it. Instead, it built larger facilities, and I propose there's a lot of wisdom in their thinking, plus a lot of common sense shared by the owners of La Nova Pizza and Pizza Shuttle.
 
Starting small, bursting the seams
 
The first building Southeast owned was a 1,200-square-foot ranch house bought in 1961. Services were held in its cramped basement. Membership was nearly 200 when it moved into its first true church, a 500-seater, in 1967. Fifteen years later, the rolls had swollen to 2,000, the parking lot was overflowing, and church officials asked the membership if it should build again. The vote was yes, a fundraiser began for a new 2,400-seater, and it opened in 1987.
 
But the growth wouldn't stop. Just five years later, membership had doubled to more than 4,000, and actual attendance exceeded that. Three worship services were held each weekend, and the senior minister joked that if the elders asked him to do four, he would quit.
 
By 1993, he was preaching five services — two on Saturday and three on Sunday — and membership was 8,000. Both church leaders and members agreed that a new church should be built: a 760,000 square-foot multipurpose facility on 113 acres of land, including a main sanctuary seating 9,100. That facility was occupied in 1998, when membership was 10,000, and membership since has grown by 80 percent.
 
It's necessary to point out some crucial keys to that growth,

start quoteOnce an operator has achieved those goals, Tom Monaghan said the operator must be 100 percent certain he's ready to open a second store. That meant the operator had the capability to staff and manage that next store. And even then, he still stressed the eager operator should wait one more year before opening the second store.end quote

— Jim Moran, Restaurant Consultant

elements I believe apply to great businesses.
 
Consistent product: The Christian message preached at Southeast never changes, and the faithful — for the purposes of this article, let's call them customers — rely on that consistency. The church's methods of delivery have changed over time, but not its product.
 
Longstanding leadership: Senior Minister Bob Russell served the church for 40 years before retiring this summer, and he mentored his replacement for 18 years. Do you think the new guy understands what the "customers" want and need?
 
Balanced leadership: Southeast is led by 24 elders, and no vote counts more than another. By design, leadership decisions can't be made by fiat, rather they are made, in essence, by a family that understands its "customers." Joe Todaro, president of La Nova Pizza, told me several years ago he always discusses serious business decisions with his father and grandfather. Gold and Sicinski, best friends since childhood, discuss everything about Pizza Shuttle.
 
So, when to grow?
 
In the past, Southeast's biggest worry about planting new churches was "product consistency," i.e., whether the gospel of Christ would be preached the same in the new churches as in the old. Talk to any of the independent owners mentioned above and you'll find they share like concerns about consistency.
 
The Todaro family is so obsessed with product quality and service that every member works seven days a week. Gold and Sicinski work considerably fewer hours, but the business is not open without one of them at the helm.
 
Quite simply, it's impossible to grow units when owners want a hand in all the action, but that focus has made these men rich.
 
Southeast is overcoming its ubiquity problem with video preaching during services at the new satellite churches. The message will be the same preached at the main church, though new leadership and volunteers will have to be trained to run those facilities.
 
Like multiple units, satellite churches also bring the product closer to the customer. Most Southeast members come from within a 30-minute drive of the church, and it believes placing satellites near those limits will draw even more people who might not otherwise make the drive to the main campus.
 
Monaghan's maxim on growth
 
In a 2003 Pizza Marketplace commentary written by Jim Moran, the former Domino's Pizza manager cited Tom Monaghan's "maxim" for when you should add a second store. He wrote: "A firm handle on your first store is a must, and by that he meant generating consistent double-digit sales and profit increases, plus being able to handle the rush. He believed that maintaining good service during the busiest times is the biggest key to long-term success.
 
"Once an operator has achieved those goals, Tom said the operator must be 100 percent certain he's ready to open a second store. That meant the operator had the capability to staff and manage that next store. And even then, he still stressed the eager operator should wait one more year before opening the second store."
 
It took La Nova 47 years to be 100 percent certain it should open that second store. Pizza Shuttle has operated one unit for 19 years and doesn't want another. Southeast, one of the country's top-10 largest churches, will be nearly 50 when its first satellite site opens.
 
Talk about cautious.
 
Maybe rushing to open that second unit isn't all it's cracked up to be. Unless your facility simply can't handle more business, some experts say maybe you should wait.

Topics: Commentary , Operations Management


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