School pays

Sept. 9, 2003

As if pizza price wars weren't competitive enough, the battle for share of mouth in the school systems is just as bitter.

On Aug. 13, when Louisville, Ky.-based Pizza Magia scored its first large school contract with the Jefferson Country Public Schools (JCPS), it underbid Domino's Pizza ($6 per pie offer) and unseated Papa John's ($5.25 per pie offer), which held the JCPS contract for eight years.

The piece of business, which includes Metro Louisville, will bring in more than $1 million for Pizza Magia -- but at the thin-margin rate of $4.75 per pizza.

In Butte, Mont., the school system has yet to finish a six-week bidding battle between Papa John's and Domino's. According to the Montana Standard newspaper, the sticking point isn't price (Papa John's bid was $10,000 lower than Domino's), it's over the bidder's place of birth. The board is considering the value of the Domino's operator's claim that he should get the contract because he's a homegrown local.

In two Cleveland suburbs Angelina's Pizza won a number of new school contracts this year after convincing foodservice directors it could actually deliver the goods on time, something past pizza providers struggled to do, said Ann Reichle, the company's co-owner and operator of the Angelina's unit in Olmsted Falls, Ohio.

"(The schools) told us they'd be near lunchtime and the pizzas wouldn't be there," said Reichle. "So they'd call the (pizza operator) to ask what was going on, and the person would say, 'Oh, is that today? We forgot.'"

The good news for pizza companies is that just because one provider failed a school system, it's not as though school systems will turn their backs on the pizza industry. Not only do kids request pizza they like and recognize, many school foodservice programs are so short staffed that they have no choice but to depend on outsiders to bring branded, ready-to-eat products to lunchrooms. (See related story Pizza-centered school fundraisers pay dividends for all).

"Some of these people are being told to turn their cafeterias into profit centers," Reichle said of school foodservice directors. "If they can't get the students to buy what they make, they've got to serve them something they will buy."

Eyes wide open

What's clear is school pizza contracts are not for the operationally weak.

Many districts insist operators who bid for school contracts have enough stores and staff to serve an entire district, not just select schools. Accordingly, such an effort demands operators and school foodservice directors choreograph their delivery and service periods precisely.

Operators must also allocate labor carefully, staffing enough help to assemble the large number of pies needed in the morning for school orders, and then deciding on what to do with those workers when that brief rush is over.

"Telling someone you want them to come in for a two-hour shift isn't going to work," said Reichle.

Pizza Magia COO, Lee Bauer said his company will use 12 stores to serve about 700 pizzas a week to JCPS students, while Reichle's two Angelina's units will serve about 200 over three different delivery periods.

To maximize its labor, however, about a third of Angelina's pizzas this year will be take-and-bake pies assembled the night before and delivered to the schools at 7:30 a.m. the next day.

"It's real simple: you drive up, drop them off, sign a paper and go home," said Jim Reichle, who operates an Angelina's in North Olmsted, Ohio. "It saves us a lot on oven capacity. When a school wants 190 pizzas, it's hard to get them all through on time."

Angelina's take-and-bake pizzas will be assembled on ovenable trays, wrapped and delivered to the schools in the company's logoed pizza boxes.

Jessica Petersen, a spokesperson for Vancouver, Wash.-based Papa Murphy's Take 'N' Bake Pizza, said she didn't know if any of the 775-store company's operators were involved in school programs, though she said individual franchisees may be.

"As a

start quoteWe don't want our reputation going down the drain because someone doesn't want to handle it right. We tell them very clearly how to handle the pizza, and if they don't, then they can't have our pizza.end quote

-- Ann Reichle,
Angelina's Pizza

company, though, we don't," she said. In next-door Portland, Ore., she added, the school foodservice spec is for baked pizza only, "which isn't what our company does, and that basically eliminates us" from consideration.

Bang for the buck

Bauer admitted that Magia's margin on a $4.75 pizza isn't large, but the payback in exposure to thousands of JCPS students is invaluable. Kids at 45 middle and high schools will get the chance to eat Pizza Magia products on Tuesdays and Wednesdays, cafeteria workers will be wearing Pizza Magia uniforms, and advertising banners will hang in lunchrooms.

Those sales represent solid income reaped from a normally slow daypart as well, he said.

"We'll be selling in excess of 200,000 dough balls from our commissary, and those are sales we didn't have before," said Bauer. Pizza Magia, he added, currently is negotiating school contracts with other cities.

Ann Reichle said Angelina's takes the school sales approach a step further by contracting to supply pies to athletic events. They also get key advertising spots in event programs and on ticket stubs. Bottom line, she said, is "everybody knows who we are, and they know we support them with advertising."

Still, the deal is only as good as each partner's commitment, Reichle stressed. Operators who sell Angelina's pizzas -- whether in schools and or recreational venues -- must maintain Angelina's standards as dictated by the Reichles. In the past, she said, some foodservice vendors wanted to take delivery and then sell slices from pizzas left to cool on concession stand counters.

"We don't want our reputation going down the drain because someone doesn't want to handle it right," she said. "We tell them very clearly how to handle the pizza, and if they don't, then they can't have our pizza."

Such training and instruction will take on a new twist when Jim Reichle begins training others to cook Angelina's take-and-bake pizzas later this year.

"What I normally do is go and speak with the foodservice director and tell him to get his key employees together for about 45 minutes," said Reichle. "What we're going to do is follow up after one week and then three weeks to make sure the consistency stayed there. The trick isn't so much in baking it, but handling it right. If they can do that, it's simple."

Topics: Domino's Pizza , Independent Operation , Papa Murphy's Take 'N' Bake Pizza , Pizza Toppings

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