CEO Q&A: Jack Butorac of Marcos Pizza
Jack Butorac was in retirement mode in 2002 when he was hired by Marco’s founder Pasquale “Pat” Giammarco to consult for the chain, which he founded in 1978 and had grown it to more than 100 locations.
With estimated 2009 sales of $102 million, Marco’s pizza is considered to be the 23rd largest pizza chain in the United States and has approximately 220 locations on 17 states. In 2010, while many restaurant chains were recoiling from the recession, Marco’s opened 34 stores and announced expansion plans into Indiana, Tennessee and the Caribbean.
The company’s expansion efforts were aided by the approval of up to $7.5 million in funding from Main Street Bank to allow franchisees who own at least one Marco’s Pizza to continue with their expansion.
For Butorac, who purchased a majority stake of the chain from Gianmarco in 2004, Marco’s growth was the result of a both a strong leadership team and its franchise community.
“What I wanted to do was build on what (Gianmarco) had created,” he said. “When I became CEO and Pat was an investor, that’s when we started down the trip … of growing the brand beyond what he wanted to do.”
Pizza Marketplace recently spoke with Butorac about Marco’s success and what he saw beneath the chain’s surface that led to his investment.
You retired from Tumbleweed in 2000 and yet, two years later, found yourself in a position to lead Marco’s. What did you see in the chain that piqued your interest?
What I saw was that it was a 25-year-old company that had created operational discipline. Pat had a little over 100 locations … and as I went from store to store, I found that the product was the same quality everywhere. What he didn’t have was how to brand it and differentiate it from other brands out there.
What were some of the people and practices the company put in place to enable differentiation and growth?
We hired Syl Sosnowski, who was instrumental in the creation of the “Better Ingredients, Better Pizza” for Papa John’s, and he was the one who created the Ah!thentic better pizza for Marco’s. I wanted us to take credit for the quality of the product. We also made our stores look different. So, we had to rebrand it and then go out and sell franchises.
Also we hired Bryan Stevens, who used to work for Yum. He helped us identify where to build and that was instrumental, and then he came on board with his partner. That was the second thing. The third was we hired Cameron Cummins, and we started to study the geographic area.
The fourth that came along was financing. In 2008, were having problems getting stores financing through the SBA. We created Marcos Assurance. If a franchisee fails at a location, Marco’s Assurance will continue to make bank loans and lease payments until we can sell that store. … If a location doesn’t work for us, MA will pay the first $50K of a loss. It’s been kind of a challenge to sell it to banks because they don’t understand it. And so we’ve had to be creative. Going to your local bank isn’t easy; going to the SBA isn’t as easy as it used to be. We’ve had to come up with a lot of programs to eliminate barriers that franchisees have in opening up stores.
We’ve had a lot of fun and a lot of challenges and a lot of things on the horizon.
So, what’s in store for 2011?
As a matter of a fact, a year ago, a couple of unique things happened in the pizza category. One is Pizza Hut created the $10 pizza and that shook the industry tremendously. The other thing that happened is Domino’s reformulated their product and that created a huge trial. So, we had to fight those.
How did we fight those? We created some programs that were introduced in our company markets to get back the trial and our customers, and we have done that. Same-store sales are in the double digits so what we’re going to focus on in 2011, is we feel we found the key to fight Domino’s and Pizza Hut and beat them at their game. We’re going to implement those programs in company stores and communicate our differentiation.
We’re going to start an ad fund with franchisees and collectively advertise the message we choose to advertise. And that’s what we want. We want the franchisees to be successful. We also will continue to develop the area rep program and so the emphasis is going to be to build stores. But we’re planning on 65 stores (opening this year) and it could be well over 100.