Pizza Inn to outsource bulk of food distribution

 
Aug. 27, 2006
THE COLONY, Texas — Pizza Inn announced a significant change to its supply chain management that will reduce costs at its wholly owned distribution division, NORCO Restaurant Services Company.
 
According to a news release, the announcement represents a dramatic shift for the 48-year-old brand, which, until now, distributed supplies, goods and other products from its headquarters to its almost 300 domestic franchise operations located from its western boundaries of New Mexico and South Dakota to its eastern boundaries of Virginia and Florida.
 
Pizza Inn will outsource distribution services, resulting in savings on fuel costs, overhead and maintenance expenses. Those cost reductions ultimately will lower product costs for franchisees.
 
The company signed distribution agreements with two service providers, The SYGMA Network, a subsidiary of SYSCO Corp., and Institutional Jobbers Company (IJ), which are expected to take effect Nov. 1. SYGMA will cover distribution of food and other supplies to Pizza Inn locations in the West and Midwest, while IJ will handle services in East.
 
SYGMA also will lease the NORCO warehouse. Franchisees still will be able to use NORCO for all other services, including ordering, billing, support, R&D and quality assurance. NORCO transportation and warehouse personnel will be provided employment opportunities with SYGMA.
 
"This is one of the most significant events that has taken place at Pizza Inn in recent years," said Tim Taft, Pizza Inn president and chief executive. "The cost savings we realize will improve franchisee economics without compromising the company's profitability. We also expect this change to be a catalyst for the recruitment of new franchisees to the system as well as future development from our existing base of operators."
 
Pizza Inn Franchise Association president Larry Rust called the move a demonstration of the company's renewed focus on franchisees. "For the first time we feel as if we have a management team that has the best interest of the franchisees at heart and the integrity to realize that the company's future growth can only be realized when franchisees and shareholders both prosper."
 

Topics: Operations Management , Pizza Inn


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