Papa Murphy's and Blockbuster pair up in Indiana

Sept. 11, 2003

CROWN POINT, Ind. -- Family entertainment doesn't come any simpler than grabbing a carryout pizza and a video -- unless you can get both under one roof.

The Burrell Group, a Blockbuster Video store franchisee that signed a 100-store, Chicago-area master franchisee deal with Portland, Ore.-based Papa Murphy's Take and Bake Pizza earlier this year, is doing just that.

Needing to better utilize the space it leases at some of its large Blockbuster stores, the Crown Point, Ind., firm is carving out 1,200-1,400 square feet of space from 6,000-square-foot plans to make room for Papa Murphy's stores. The design calls for a pass-through between the two sites, allowing customers to grab a flick and a ready-to-bake pie easily.

"We plan to have four of those this year," said John Burrell, president and CEO of the Burrell Group. The stores that are open are in Northern Indiana, east of Chicago, but Burrell said his Papa Murphy's stores eventually will expand into metro Chicago. "We thought, here's a way to offset some of our lease costs and bring in a complementary business that could enhance the customer's visit to a Blockbuster store."

Burrell said retrofitting the properties to make room for the pizza stores has served both concepts well. The movie stores, he said, were due for updating, and the new configuration wound up making room for more shelf space to accommodate new releases.

"That sort of made it the perfect time to put on a new coat of paint and some enhanced graphics," he said.

Tom Morrell, president of Papa Murphy's, said his company actually pursued a direct co-branding arrangement with Blockbuster in the past, but that the talks never resulted in any action. He's pleased the desired arrangement worked out with the Burrell Group, but he said there's no plan on his company's behalf to make these a co-branded model for other Papa Murphy's stores.

"If we can marry up the two concepts to everyone's advantage, then we'll do it," said Morrell, whose company has about 675 stores, and posted sales of $325 million in 2000. "But really there's no set plan to put the two together beyond that. It just happened to work well in this arrangement."

Burrell agreed, saying that his company may do a maximum of five more co-brand stores next year in other large Blockbuster sites the company currently leases. Blockbuster store designs in the future, he said, will be scaled back mostly to inline or end-cap models, which don't have excess space for a pizza store. In those situations, he said, he'll work to place Papa Murphy's and Blockbuster stores side-by-side.

Everybody Wins

Burrell said sales at the co-branded Papa Murphy's stores started off averaging $10,000 a week -- about $2,000 a week stronger than usual at start-up for the take-and-bake chain's stores. Though both the pizza and video stores have separate entrances, the pass-through doorway has encouraged cross-over foot-traffic.

"It's really hard to say who is benefiting from whom, but I'd say the Papa Murphy's is benefiting from Blockbuster," said Burrell. "We're bringing in an unknown product in take-and-bake pizza, and it's giving us a chance to educate the customer on what it's all about."

Operators of the co-branded stores also have utilized cross-promotional specials.

"We're doing a program of a renting two videos and then getting a coupon for a discount off a family-size pizza," said Burrell. "We also did just the opposite with our Chicago Stuffed pizza, where they got a coupon for free movie rental if they bought one."

Topics: Papa Murphy's Take 'N' Bake Pizza

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