Dec. 5, 2005
I love history, so when I get to dig into pizza history, hobby and career cross paths and life gets fun.
One "historian" I spoke to recently is Don Boroian, 70, founder and chief executive of Francorp, a consulting firm to franchised businesses and companies seeking to franchise. Boroian has watched the franchise business for nearly four decades, and what he's learned along the way he now preaches passionately to business owners and at industry gatherings.
Interestingly, little of what he says is earth-shattering, but any business owner — franchisee or independent — can benefit from hearing "the gospel according to Don." The message is simple: If you want to build a business you can grow, create a foolproof system that allows for duplication.
"It is all about the system," Boroian said. "It is the most important thing."
Even if you never grow your business beyond one unit, he said, you still need a system, that:
- takes care of the business while the owner is away
- simplifies training of new staff
- makes crystal clear all recipes, policies and procedures
- minimizes the need for ad hoc management
- and is stable enough to endure adjustments as the market warrants.
Your concept doesn't even have to be the greatest, Boroian said, but if your system allows you to "execute it well and consistently, you could be successful.
"But even if you have the best food in the world, if you don't know how to run the business, and you don't have a good business system, you won't succeed."
Several times in our conversation, Boroian singled out McDonald's as the poster child for restaurant systems. No, McDonald's food isn't that great, he said, but its system for delivering it is unparalleled. And the good news is operators with solid systems can improve products and services much easier because the basic operation takes care of itself.
Like a steamship pushing through the seas, a systematized business has enough momentum to maintain both speed and heading despite small changes in course. That the chef is changing the menu and the crew is fixing the pool don't affect the ship's ability to arrive at its destination. They merely enhance the experience.
Proof of McDonald's ability to do that was evident in its spectacular salad rollout and breakfast menu upgrade in 2003. And despite the deaths of two influential CEOs in one year, its sales and stock price continue to soar well into 2005.
Even if you have just one unit, you still should apply Boroian's principles of systemization to your business.
You can bet that La Nova Pizza, which took more than 40 years to add a second unit, is systematized to the teeth. Its original pizzeria grosses more than $5 million a year in sales, and the second pulls in more than $3 million.
Systems behind great pizza operations have at least these elements:
- strict portion control measures
- tightly managed ordering and inventory procedures
- easy-to-follow recipes
- copies of written policies and procedures for every employee
The first three items have a profound effect on profits (via food cost) and product consistency. The last, an employee manual, is tedious to produce, but necessary. Every employee must have one.
Before you add a new unit, take some expert advice. Donatos founder Jim Grote learned the hard way that opening a new unit by raiding the old unit's crew always helps one at the expense of another — unless plenty of experienced staff is left behind.
Domino's founder Tom Monaghan said much the same. Before adding units, Monaghan said your first store should be generating consistent double-digit sales and profit increases and its crew must be highly skilled at handling the rush. And even at that point, Monaghan believes the operator should wait one more year before opening the new store in order to deepen his crew strength. In other words, the crew that moved to the new store had to be as strong as the crew left behind.
Sounds like the backbone of a system to me.