Overcoming an identity crisis

April 9, 2006

Bill Gatti has an identity crisis.

Well, more specifically, his Snappy Tomato Pizza stores do. Despite their conversion from the Pizza Magia brand nearly eight months ago, some customers still get them confused, still fear they'll get a disappointing pizza experience, and still don't call for orders.

But many Louisvillians do know Gatti the man, who, along with his father and uncle, operated multiple McDonald's restaurants in the city for almost four decades. Dubbed the "Original

What's Important

Snappy Tomato Pizza converted five Pizza Magia stores in Louisville to its own brand in September 2005.

The transition has been challenging, however, as Snappy has worked to slough off the negative image associated with Pizza Magia in its decline. Convincing customers to return has been a struggle, officials say.

After nearly eight months, however, stores are approaching breakeven and franchisee Bill Gatti envisions adding 15 more stores to the market.

Louisville Slugger," Gatti became a local legend as a player for the Kentucky Bourbons, a professional softball team in the now-defunct American Softball Association. Gatti was the ASA's home run king in 1980 and its World Series' most valuable player in 1981.

Though Gatti isn't shy about parlaying his minor-celebrity status into drawing attention to his Snappy stores, he's much more interested in selling the brand and its quality products. If he could just erase customers' memories as easily as he once crushed pitchers' ERAs, sales would climb much faster.

"The stigmatism of where Pizza Magia went in its last six months in operation ... I didn't know it was so bad at first," said Gatti. "Even in our own stores—and we ran good stores—I didn't know there were so many people who were unhappy."

Truth is, Gatti was unhappy, too. After his family sold its 40 McDonald's units back to the company in 2001, he turned his restaurant interests to Pizza Magia, a chain founded in 1999 by Dan Holland, Papa John's president from 1990-'95. In 2000, Papa John's sued Pizza Magia and accused it of copying some of its products and trademarks. In 2003, the suit was settled with Pizza Magia being forced to make changes to its ingredients and menu, and things were never the same, Gatti said.

"I was very unhappy about the way the pizza tasted after the lawsuit," he said. Pizza Magia closed for good in

The Snappy Tomato

August of 2005. "It was a quality product when I got involved, but it never was the same after that. I watched my stores and the company stores deteriorate, and I saw other franchisees struggling. I watched things literally implode."

With the Pizza Magia eroding, Gatti knew moved to protect his pizza investment and sought to switch brands. He talked to Toldeo, Ohio-based Marco's Pizza, and Florence, Ky.-based Snappy.

"I felt Snappy hands down had the better product, though Marco's maybe has a better operation," Gatti said. "But we saw that Marco's would charge us extensively more for that better operation, and that was a big factor for us."

Seeking converts

This is the second time Snappy Tomato has converted another brand to its own. In 1993, Snappy transformed eight Cincinnati-based Spooner's Pizza stores into its own brand. Snappy's controller, Nathan Deters, said that acquisition served Snappy well, but he said the company didn't actively seek similar opportunities. When the Magia opportunity came along 12 years later, he saw it as a quick and affordable way to penetrate the nearby Louisville market.

"We didn't have to spend $100,000 a store opening new stores, they were already there and functioning," said Deters, whose father, Charlie owns the chain. "It's a lot cheaper to change over five stores than open five new ones from the ground up."

To re-badge the units, Snappy loaned Gatti between $5,000 and $10,000 per store for new interior and exterior signage. Store managers drove to Florence and trained at the chain's nearby corporate stores, and upon return, they made the switch without ever closing the Louisville operations.

"We had to learn all knew products since everything Snappy does is completely different from what Pizza Magia did," said Dawn Cherry, Gatti's operating partner. "We had to learn to make dough in the stores, and now we weigh all the ingredients we put on the pizzas. We used cups before."

Snappy also had a slightly broader menu, including sandwiches and various other appetizers, and its pizzas were baked differently, though with conveyor ovens as before.

Taking the managers to Florence was vital to keeping them after the transition, Cherry said.

"We wanted them to get at taste of it for themselves and get their buy-in on it," she said. "They were very excited about the turnover to the new products, because the changes we had to make with Magia, they didn't enjoy them."

Give our piece a chance

Getting customers to give Snappy a chance has been anything but a snap. It was one thing, Gatti said, to come in under the Snappy banner claiming, "We're new, come try us." But it was a different matter entirely to say, "We're not Pizza Magia. Trust us and try us."

He said for more than three years, Magia customers got great products, but the forced change and quality reduction broke their confidence in the company and cost it their business. The

Dawn Cherry, operating partner in Gatti's Snappy Tomato Pizza franchise.        Photo by Fred Minnick

fact that Snappy Tomato was selling out of the same outlets wasn't change enough, Cherry said.

"Surprisingly, it's been very difficult to convince them, because the perception was, since we had the same locations, this is same people with different signage, the same stuff," she said. "We've had to convince them that this is a whole new company, that everything has changed."

Though sales dipped to depressing lows, Gatti didn't give up. He said he believed in the product and knew it was only a matter of time before people caught on.

Part of getting the word out, said Bret Witte, Snappy's marketing director, was working Pizza Magia's existing customer database. "We did what we normally do: tap into the database and find those people who haven't ordered in 60 to 90 days," said Witte. "A lot of (our marketing) is community driven. Our mascot, the Snappy Tomato, is our icon, something our competitors don't have. Whether it's standing out on a street corner holding up a pizza special sign or in a parade handing out logoed Frisbees and candy, it sends a much more memorable message than a TV ad because it was a personal contact."

As a company, Snappy has never focused on electronic media, something Gatti said Marco's did. Competing for TV time with Papa John's—in its hometown, nonetheless—neither interested him nor made fiscal sense, he said.

"Marco's was electronic media marketing, and Snappy was shoe leather—getting out and talking to business owners, handshaking and doorhanging. That's good ol' Ray Kroc, early '60s workmanship. I know we can do that."

Gatti admits part of Snappy's initial appeal was its name and its mascot.

"The name's not Angelo's or Gino's, it's Snappy Tomato, and that's different. It makes people say, 'What the hell is Snappy Tomato?'" he said. "And the mascot I like. I want them asking, 'What is that damn thing?'"

Ripening fruit

Slowly but surely, Gatti said sales have risen to near breakeven overall (around $7,000 per store). The operations are running smoothly, new customers are coming on while Magia customers are being converted. He consistently hears good things about the pizza, and usually from people who don't even know he's the franchisee.

Gatti recently learned how popular Snappy was becoming with the college crowd when showing a rental house to several members of the University of Louisville rowing team. Considering whether to sell the house rather than rent it, Gatti warned them he didn't like renting to college kids, but the five women convinced him to let them have a look.

During the tour, one mentioned Snappy Tomato was her favorite pizza and another added that several team members get one apiece every Thursday night. That got his attention, and he told them about how several U of L baseball players, who used to rent the home, got five free Pizza Magia pies after they'd ordered 150 pizzas during a school year.

"So one of them asks me, 'Do you think Snappy would do the same thing for us if we ordered that many?' I said, 'Sure they will. I own Snappy Tomato.' And she said, 'We'll blow that out in no time.' So I ended up renting to them."

If all goes according to plan, Gatti will do some renting of his own in pursuit of opening as many as 15

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more Snappy Tomatoes in the Greater Louisville area.

"I'd like to be a market developer for the Snappy people, which is what we did with McDonald's," he said. And like McDonald's, Gatti said reaching his goal will hinge on continual training. "McDonald's was big on that, training on quality and service and setting the standards for what they expected. We're doing that and we'll continue to do that."

Despite the struggles, Deters said the acquisition was not only a good one, but something Snappy would entertain doing again. He sees the lessons learned along the way as an education that will make the company better.

"Though we'd done this before, there was a lot we didn't know this time around," he said. "When you get into something like this, you want to make sure to cross your Ts and dot your Is. It's not as simple as it might sound."

Topics: Marketing , Operations Management

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