As impact of Sept. 11 fades, Pizza Magia expects to grow

April 21, 2003

LOUISVILLE, Ky. -- It's taken three years for Pizza Magia to grow to 40 stores, but the chain's CEO, Dan Holland, expects to increase that number to 70 by the end of 2003.

According to a report in The Courier-Journal, Holland believes Pizza Magia may have grown faster were it not for the post-Sept. 11 economic downturn and a trademark infringement lawsuit filed against him and several company officers by hometown rival Papa John's International.

"When (Sept. 11) happened, a lot of people at the altar who were about to sign an agreement (to franchise) stopped. We lost about six to eight months on that," Holland said. Regarding the Papa John's suit, he added, "We've had probably two people that have called and said, 'Call us when the lawsuit's over with.' It's hard to evaluate how many people are sitting on the sidelines."

Speaking to a crowd gathered at the International Pizza Expo in Las Vegas in March, Holland said he expected the lawsuit will be resolved sometime this year, but that he couldn't comment on the proceedings (See also PIZZA EXPO WRAP-UP: Attendees say crowd reflects strong industry.)

To date, most of the delivery-carryout chain's growth has been in Kentucky, Indiana and Ohio, with a handful of units in Alabama. According to the report, Pizza Magia units will open in Memphis, Tenn., and Florida's Tampa-Clearwater area this year. It also plans to add units to existing markets such as Dayton, Ohio, Louisville and Indianapolis.

Holland, who was president of Papa John's when it went public in 1993, said he's building a pizza company in a business environment even more competitive than 10 years ago. Watching operational costs closely, he said, is key to steady, profitable growth.

According to the report, opening a Pizza Magia store -- 1,200 to 1,500 square feet in size -- costs around $150,000 and requires $50,000 to $75,000 in operating capital. The franchise fee is $12,500, and royalties are 4.5 percent of net sales.

"This industry is 40 years old," he said. "There probably isn't anything that hasn't been addressed over the years."

Topics: Operations Management

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