Season's readings between the lines

Dec. 10, 2002

* Some seasonal tunes sung 'round the boardroom tables of some publicly held restaurant companies:

Jingle Bells
Earnings smell
Our stock laid an egg
Investors squeal, "My money's real
"Now someone's got to pay, hey!"

And ...

Tis the season to be firing
Fa la la la la -- la la la la
CEOs are fast 'retiring'
Fa la la la la -- la la la la
Sing we now this grimmest carol
Fa la la la la -- la la la la
Our P&L is facing peril
Fa la la la la -- la la la la

On Nov. 22, Dallas-based Pizza Hut president Mike Rawlings left the company to "pursue personal interests" (read "find other employment"), and on Dec. 5, Jack Greenberg, CEO and chairman of Oak Brook, Ill.-based McDonald's Corp., suddenly decided to retire (read "Ronald's top man got a pink slip in his Happy Meal.")

Steve Coomes, Editor

For too long, shareholders of both companies got more yearnings than earnings on their stocks, and finally the corporate barber was called in to take some off the top.

While in war, foot soldiers typically die first, but in the ongoing battle on the publicly held quick-service front, it appears the folks in charge must take the first bullet.

Terribly tough biz, this foodservice game.

* Cheese, Louise! Amid the very season experts predicted cheese inventories would disappear faster than Michael Jackson's nose, cheese supplies are holding steady and 40-pound block prices have dropped to $1.10 per pound (prices updated every business day on PizzaMarketplace) on the Chicago Mercantile Exchange.

Negative to flat comp-store sales at the pizza industry's larger chains may be serving to keep supplies ample, but grocery stores -- at least the ones I frequent -- have yet to launch any noticeable queso promos. The combination of both equals high supply and low costs.

Is this good news or bad news for the pizza industry? Depends on where you get your cheese.

If you're an independent operator or a small chain, enjoy it while it lasts (and all signs point to this trend lasting for a while). If you've negotiated with your cheese supplier for a set percentage markup on the block rate, then you're paying some mighty low prices.

But if you're a large chain that generates revenue from cheese sales to franchisees, these low prices are a mixed blessing. You're not paying much for it, but you're not making much on its resale, either.

Whichever type of operations you run, there's hardly been a better time to promote extra cheese as a topping.

* Disappearing Donatos: Sounds like an Italian magical troupe, reads like reality -- for now.

No doubt some eyebrows were raised over the news of Columbus, Ohio-based Donatos Pizzeria closing 30 of its 200 or so stores in recent weeks. But if pizza pros know two things well about Donatos, they're this: Its operations and systems are as solid as its products; and it's owned by McDonald's.

Those baggy pockets on Ronald's costume don't point to a bad tailor; they're for holding deep reserves of cash, dough-re-mi that the Oak Brook Boys won't hesitate to spend on growing the Donatos chain.

The way I look at it, Donatos is only pulling back for the time being, and not pulling out.

* A Kojak Moment: Police in Lawrenceville, Pa., engineered a decoy scheme I hope other police departments will copy to reduce crimes against pizza delivery drivers.

A sharp-eyed employee of Pesaro's Pizza called police after receiving a suspicious call for a delivery to an address that was the site of an Oct. 3 driver robbery.

Two police detectives immediately went to Pesaro's, picked up the pizza and a lighted car top sign and drove to the address where the call originated. Four other detectives were dispatched to the destination neighborhood as well.

When the cop-cum-delivery driver exited the vehicle, two teens emerged from the bushes and approached him. A swarm of detectives appeared to greet the teens, who then ran for it before being caught and arrested.

The decoy scheme is a clever and simple idea that, if repeated often enough, might give notice to the numbskulls robbing, beating and murdering so many drivers, that crime doesn't pay.

* What's in a name change? The Pittsburgh-based Pizza Outlet chain likely will change its name to Vocelli Pizza come 2003. In a market that begs for uniqueness, a name like Pizza Outlet is not only woefully generic, it does nothing to turn my mouth into a pizza inlet for the 100-store chain's pies.

Though I haven't the foggiest idea what Vocelli means, at least it sounds Italian and doesn't make me think of warehouse outlets a la Sam's Club.

Kudos to Pizza Outlet's founders, the Ablak family, for having the courage to take such a bold step in repositioning their company.

* All I Want for Christmas ... is to hear from you. Never hesitate to contact me at PizzaMarketplace with story ideas or suggestions for our Web site. I like few things more than broadening my contact base by talking to the people who shake and move this industry. E-mail me at, or call me at 502-241-7545, ext. 111.

Topics: Commentary , Independent Operation , Marketing , Public Companies

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