How Boston's Pizza came out of the recession stronger
Few segments took as big a hit during the recession as casual and fine dining restaurants. Boston's Pizza was no exception.
Prior to the recession, frequent customers visited Boston's two and a half times a month. During the crisis, that number fell to one and a half times. Average tickets also were down, as customers ordered fewer desserts and appetizers.
Mike Best, chief operating officer for the approximately 400 unit chain, said the drop-off lasted about three years. Things began turning around in 2011, when sales broke even. In 2012, the company was up 0.5 percent, and so far this year it's up 1 percent.
"We're not fully out of the woods yet, but there is a good feeling about where we're headed and we feel much stronger," Best said.
Best believes the casual dining segment was hit particularly hard because of oversaturation, increased competition with a fledgling fast casual space and lower QSR price-points.
"We received some pressure to discount during the hard times, but we avoided that. Once you start doing that, it's hard to get off of the habit," he said. "Some brands were spinning off fast casual concepts, and we didn't want to do that either. It seems sort of 'me too.' I don't want to be a 'me too.' I like being different."
During the downturn, Boston's honed in on service initiatives. Servers also were trained on upselling techniques, specifically for beverage sales.
"We spent time in stores and were constantly reminding them to upsell. During that time, soft drink orders fell, so we trained them to sell iced tea," Best said. "When our food sales went down, we pushed beverages."
Boston's also implemented community-relations coordinators throughout most of its system. Their job was to head into the communities and drive traffic through a variety of branding efforts.
Additionally, the brand turned to big data, mining information about customers' habits through Black Box Intelligence and an updated POS system.
"We knew we could control everything below the sales line — COGS, labor scheduling, etc. We were very tight under that sales line. The data allows us to drill down to each store what's going on, and we push a lot of that information back to franchisees, which helped us get through those tough years," Best said.
Model and menu
In addition to upselling training and community branding efforts, Boston's also took a look at its restaurant model and its menu. The company is now looking at smaller footprint — units have typically been about 6,400 square feet and it just opened a 5,200-square-foot prototype.
Boston's also focused on some international growth during the U.S. downturn. It opened four stores in Mexico, for example, which Best says helped offset some of the domestic sales decline.
Finally, the brand tweaked its menu. It launched mini desserts for $2.99 to reinvigorate post-dinner orders, and it cut back from 120 menu items to about 90. The focus has remained on pizza and pastas dishes, which make up about 40 items total. The key to Boston's success, Best says, is running 43 to 45 percent pizza/pasta sales, as those dishes have higher margins than the rest of the menu.
"We had 12 pasta dishes, and we cut that down to eight and our pasta sales didn't suffer. Menu engineering helped us a lot, and now our key categories are higher quality," Best said.
Boston's switched to hand-breaded methods in the fall and began hand-pressing its dough every day. Now, about half of the menu is made on site.
"Could we streamline the process and make it easier or cheaper? Yes, but that's not who we are. It's called Boston's The Gourmet Pizza for a reason," Best said. "Consumers are more sophisticated than they were 20 years ago, and we have to be mindful of their demands."
Boston's will mark its 50th anniversary in 2014. If another downturn presents itself, Best is confident the brand will weather the storm again.
"Good operators know how to manage through hard times," he said. "We made some changes here and there to get through those bad times, but we've always stayed true to who we are."
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Alicia Kelso Alicia has been a professional journalist for 15 years. Her work with FastCasual.com, QSRweb.com and PizzaMarketplace.com has been featured in publications around the world, including NPR, Good Morning America, Voice of Russia radio, Consumerist.com and Franchise Asia magazine.