Four chains to watch

Dec. 10, 2006
Market changer: Little Caesars Pizza
Privately held Little Caesars Pizza doesn't share clear details about its operation, but according to past officers of the company, there once were nearly 5,500 outposts of the Detroit-based army. In its first three decades, the company made millions of comrades with its two-for-one "Pizza Pizza" deals and cornered the value-driven segment.
But throughout the 1990s, unrest grew among Little Caesars' army of franchisees. In 1998, the group formed a franchisee association, and two years later it sued the emperor for offenses it said crippled their ability to battle profitably.
By 1999, Little Caesars was retreating; on single night it closed 400 units. Wounded, but not dead, two years later, the company settled its franchisee lawsuit and promised to partner with the troops in order to revive the company.
While its own Rome appeared to be burning, Little Caesars proved it wasn't fiddling. In 2002, as many pizza companies reeled from a nationwide recession, Little Caesars reported its comparable-store sales rose 11 percent on the heels of its new $5 Hot and Ready pepperoni pizza rollout. Customers pick up, on the spot, multiple pies and leave in minutes.
Little Caesars' subjects appreciated the convenience and price so much the company began growing again, reentering territories it abandoned in '99. Hot and Ready speared the wallets of many opponents who either matched the offer or surrendered. His empire expanding and his army revitalized, Christopher Illitch, president of the company and son of cofounders Michael and Marion Illitch, declared in 2006 that the United States could accommodate 6,500 units, about three times its current unit count.
The Little Caesars army is marching again.
Standard Bearer: California Pizza Kitchen
Since legendary pizza maker Ed LaDou (then a consultant, now the owner of Caioti Pizza Café) wrote California Pizza Kitchen's first menu in 1987, the Los Angeles-based 200-unit chain has thumbed its nose continually at pizza tradition.
LaDou's iconoclastic Barbecued Chicken Pizza wasn't enough for cofounders Larry Flax and Rick Rosenfield. The lawyers-turned restaurateurs insisted on pushing the envelope with unique flavor combinations on their pizzas and in their salads, pastas and sandwiches. Kung Pao Spaghetti and Thai Crunch salad might seem out of place were it not for their shared menu space with Mango Tandoori Chicken and Pear and Gorgonzola pizzas.
Not all has been California-dreamin' easy for CPK, however. Its 1991 50-percent sale to Pepsico saw it fall into the hands of a company ill equipped to help a restaurant company grow smartly. Sixty units opened in five years, but not all ran to the cofounders' standards. In 1997, 16 of those units closed and Pepsico sold its interest back to Flax and Rosenfield.
Four years later, the pair took the chain public and mashed the growth accelerator again, and this time CPK found traction. Despite some real estate miscues along the way, it has grown steadily without receding.
All the while the company has tweaked its system relentlessly. To ensure consistency of its namesake product, it put frozen dough in all stores. In continually has broadened its menu beyond pizza while keeping the menu manageable. It has added full bars in many locations and beefed up wine lists system-wide. It has a highly successful line of gourmet frozen pizzas distributed nationwide and a fast-casual off-shoot dubbed CPK ASAP. Its expansion into the Far East, a corner of the world where few of its peers dare tread, also has proven successful.
Fresh Face: RedBrick Pizza
As a 10-unit Little Caesar's Pizza franchise, Jim Minidis learned a lot about the pizza business: what it took to grow one, how to market it and how to put a product in the hands of the customer. But Minidis also learned that the value-priced pizza segment is exceedingly crowded and competitive, and he believed there might be room for growth in the fast-casual segment.
Many independents and chains like California Pizza Kitchen proved customers loved gourmet pizzas and weren't afraid of the prices. Minidis believed a bridge between his high-volume past and his gourmet hunch was paved with bricks — those you cook on.
In 2000, RedBrick Pizza was founded in Palmdale, Calif., on the premise of gourmet pizzas baked in gas-fired, brick ovens — in three minutes — and sold for $7 to $9. Stores also sell 12 flavors of gelato made fresh daily in-house.
RedBrick's dining rooms include TVs at every booth, multiple TVs hanging overhead and seats along a counter that allow guests to watch their food prepared in the open kitchen.
Today there are 60 RedBricks scattered as far away as Florida, and its best developed markets in between include Texas and Arizona. Using a master developer system, Minidis plans to grow RedBrick to a behemoth 12,000 units by 2016 — an aggressive goal to be certain. But with few pizza players in the fast-growing, fast-casual segment, rapid growth is possible.
Gourmet right away: Garlic Jim's
A quarter century after the birth of gourmet pizza, fussy, high-end pies are not hard to find — as long as you're willing to go get them. Gourmet delivery isn't exactly common, and, some say, gourmet pies don't deliver well.
Dwayne Northrop and several associates sought to end the gourmet delivery drought with the formation of Garlic Jim's Famous Gourmet Pizza in 2003. Northrop said he'd had enough of leaving his home for his favorite pizzas, and he figured he wasn't the only one who felt the same.
The Everett, Wash., chain has more than 40 units, and it's growing mostly in the western third of the United States. Garlic Jim's sets up shop in affluent neighborhoods where customers understand $12 cheese pizzas cost that much because of the ingredients used, and because getting clean-cut, service-minded drivers costs a little more. Weekly sales average $14,000.
The company believes it can grow to 500 units by 2013, but it knows its work is cut out for it in a crowded pizza segment. Essential to its success, Northrop said, is to remember Garlic Jim's pizza is not for everyone. "We know not everyone will pay that much for our pizza, but we also know we can't be in every market in town. We're not trying to be everything to everybody everywhere. We're not like Domino's in that way."
In addition to high-end pizza lineup, store lobbies trimmed in copper and wood trim, not tile and drywall. Garlic Jim's wants its customers to think "Starbucks but in a carryout and delivery store," Northrop said.

Topics: Little Caesars , Marketing , Operations Management

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