2009 January: Il Pizzaiolo: Marcos

2009 January: Il Pizzaiolo: MarcosJack Butorac knew when he first tasted a Marco’s Pizza that he’d found what he was looking for. As a former restaurant chain executive seeking a new challenge, Butorac wasn’t intent on joining the pizza industry specifically. Instead, he was on a quest to find a small independent company with a quality mission and a founder with the desire to grow. If he could turn the right stone, Butorac reasoned, he could nurse it into a successful chain.

 

 

 

Then he bit into a Marco’s pie while passing though Toledo. Though it was late into the evening on a weekend, he immediately began working the phones and brainstorming.

“The quality was better than anything I’d had,” recalls Butorac. “It was fresh and hot and just really tasted delicious. I knew right away it was something I wanted to look into.”

 

 

 

Butorac and a group of investors went on to purchase the franchise rights to Marco’s in 2004. Flash forward to today, and the company now has more than 170 stores in 14 states. Marco’s added nearly 40 locations in 2008 and says it plans to have 500 units in operation by the end of next year. Thus far, 735 total locations commitments have been signed.

That’s aggressive, but company officials say they’re prepared to sell, build and service those planned locations. They point to their same-store sales increase of 6 percent systemwide last year (13.1 percent for company-managed stores) as proof that they’re on the right track. Perunit sales at Marco’s were $498,000 in 2003. They now stand at $660,000.

“That was one of our goals early on,” says Butorac. “We had some primary goals and 190 action plans. We wanted to build brand awareness to 60 percent in each store area; we wanted to reach $600,000 for our average store sales; and we wanted to run 15 percent EBIDTA.”

EBIDTA, also known as operational cash fl ow, stands for Earnings Before Interest, Depreciation, Taxes and Amortization.

One of the fi rst things Butorac did after becoming president and CEO of Marco’s Pizza was to assemble a supporting cast. He considers his crew, pieced together from foodservice and outside industries alike, to be “a group of allstars.” Says Butorac: “We have some very impressive, accomplished people on board here. These are people who have already made a very nice career for themselves and decided to join Marco’s because they saw where the company was headed and wanted to be part of something special from the ground up.”

That cast includes Dave Black (executive vice president of operations), Cameron Cummins (VP of franchise marketing and recruitment), Mike Jaynes (VP of sales, research and development), Bryon Stephens (VP of new business development), Don Vlcek (VP of purchasing) and Peter Wise (VP of marketing). Together with Butorac, the aforementioned company officials sat down with Pizza Today last fall to talk about the company’s structure and its future plans. They all agreed the recipe to success starts with a quality product. They are so adamant on that point that they designed a poster that hangs in the kitchen of every Marco’s store. The poster is a mission statement of sorts with a twist — it also serves as a pep talk.

“It’s something that’s very important to us,” says Jaynes. “When you go down through it you see it covers service, product, image. It’s what we want our employees to project to our customers and it really keys in on our freshness and quality.”

When asked how the company goes about getting its employees to buy into its mentality, training was a quick answer. All new hires undergo online training as part of their orientation.

“It’s a Web-based system consisting of 12 modules,” Butorac says. Adds Jaynes: “Marco’s University is meant to enhance what they’ll be learning in the stores from their manager. It’s easy to use and is very direct.”

Of course, there’s a lot that has to happen before that point is reached. First, stores must be sold and built. That’s where the growth goals and action plans come in. A substantial investment in both time and money was given to these points from the very beginning, says Cummins.

“When we retooled the brand, 11 of us were here working,” he says. “Bryon and I worked on growth. We took the good points of chains like Subway, Quizno’s, Coldstone (Creamery) and used what worked. We contacted Walgreen’s, Lowe’s, Home Depot, and CVS — the ones that were really growing — and three of those four pointed us to MapInfo.”

MapInfo, Cummins continues, “did a regression analysis of 400-something variables. They took our typical consumer profile and put that through four additional filters: traffic counts, high schools, shopping malls over 100,000 square feet … and then competitors served as the negative filter.”

In all, Cummins says Marco’s spent “well into six figures” for the information, but the result is the foundation of the company’s future growth. Butorac and his team are using the data to determine precisely where to put their stores — which markets, which streets, etc. As Butorac put it, the information shined some light on a difficult area and will “allow us to pick the low-hanging fruit first.”

The stores are being sold by approximately 20 area reps that Cummins describes as “brand ambassadors.” Single and multi-unit operators alike are taken on, and Cummins says Marco’s meets with the area reps every two weeks as a way of keeping track of progress.

Once ground is broken in a market, Butorac says the goal is to get enough stores in the area to justify television advertising.

“We want to build enough stores to get on TV in a DMA to differentiate our brand,” he explains. Aside from television, Marco’s also utilizes print advertising as well as a new-store promotion called “Free Slice Saturday.” As the name implies, the concept is quite simple.

“Not only do we give away slices of pizza, but at the same time the customer also gets a $6.99 coupon,” says Cummins. “It’s a pretty crazy day, but it actually turns out to be profitable in the long run.”

That’s because the coupon, according to Jaynes, typically has a 30 percent redemption rate.

“It’s not something you want to do in the first week after your store opens,” adds Wise. “But we recommend you do it after the first month.”

At a time when other chains are losing ground, Marco’s recently reported its ninth consecutive quarter of samestores sales increases. Because of its momentum, Vlcek says he’s had an easier time negotiating with suppliers.

“I’ve got vendors saying ‘many of our pizza chains are going down. We want an account like you.’ I was doing a lot of single sourcing from the same people, but when I first got involved with Marco’s I had to educate myself and call people I knew and try to get people interested. Now, we’ve looked at the key components of our cost, and with the economy and everything that’s going on you can’t really give yourself to just one company these days. That said, if we add a supplier or change a supplier, we do it very, very cautiously.”

That approach, coupled with a focus on the end product, is what Black considers to be the Marco’s difference.

“One thing that has amazed me is that the product really is the same after we’ve added all these stores,” he says. “There’s consistency with the product. That’s hard to do. I was scared to death about that. I was scared it would be all over the board, but we have the quality control systems.”

Now, the trick is to continue growing and for the existing stores to stay sharp. Stephens doesn’t see that as a problem.

“We’re going to have 198 locations in Florida, and we have 31 commitments from franchisees right now,” he says. “Some of the other markets we’re looking at for growth soon are cities like Atlanta and Columbus. We’re also looking at Arizona. But all of the markets are making progress.” ?

Jeremy White is editor-in-chief at Pizza Today.

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