The Boston Globe
The typical Boston Pizza restaurant offers more than 100 pastas, pizzas, appetizers, meal-size salads, and desserts, but at company HQ there’s only one thing on the menu: franchises.
“Some chains are half corporate stores and half franchised,” says Mark Pacinda, Mississauga, Ont.-based president of Boston Pizza International Inc. “We have 190 employees, and only three corporate stores for training. If [a company] owns half of the system’s restaurants, real estate and sales, it has a bigger investment and a bigger risk, and it’s going to spend more time worrying about those corporate stores. We’ve eliminated that — franchising is what we do.”
The first Boston Pizza and Spaghetti House opened in Edmonton in 1964, and by 1970, founder Gus Agioritis had 17 locations throughout Western Canada, 15 of which were franchised. Current owners Jim Treliving and George Melville were early franchisees who built a chain of 16 stores, then bought the entire company in 1983 when it had grown to 44 units. Convinced franchising was the way to grow, the two sold off all but one of their restaurants to individual franchisees, to focus on creating systems and standards. Their concept gradually evolved into a full-service family casual restaurant with a sports bar, and by 1995 there were 97 Boston Pizzas in Western Canada, with total system sales in excess of $110 million.
In 1997, Pacinda came aboard as executive vice-president of Eastern Canada, and the first employee hired outside head office in Richmond, B.C. His mission: build a team and expand aggressively into Ontario and points east. Today, there are 280 stores, including 100 east of Manitoba, so is it mission accomplished? “We have two-thirds of our restaurants in the West, and just one-third in the East,” says Pacinda. “[But] the population of Canada is the exact opposite, so we have a lot of room to grow.” In fact, same-store sales are up over five per cent in the first half of 2007.
When Pacinda first set up shop, Boston Pizza was mostly an unknown quantity in Ontario, Quebec and Atlantic Canada. In the early days that meant a lot of advertising in trade publications and spreading the word at franchise shows. But Pacinda says BPI has now (with the exception of Quebec) reached the point where so many franchisees want second stores, the company could open another 100 restaurants without recruiting any new buyers.
Like most successful franchisors, BPI carefully screens franchisees and guides them through the maze of leases, municipal approvals, construction, hiring and operational training. However the company pays particular attention to transparency and building strong partnerships. “On the front end, they need to know [everything] about what their life is going to be like when they become a franchisee, because we don’t want them to be surprised,” Pacinda says. For example, once a franchisee’s financials check out, “We give him a list of all the other franchisees in our system in Canada and say, ‘Call anyone you want.’ Most of them do, and a lot of our franchisees are generous about [sharing info].” Additionally, the hefty franchise deposit cheques are fully refundable in case anything changes in the year or more it takes to get a new restaurant running.
“Everything BPI told me I tested against a group of five of six franchisees across Ontario, since I was going to be dealing with the eastern region of the company,” says Bob Tuttle, who opened a BP in Orleans, Ont. just east of Ottawa in October 2005.
“Restaurateur” is very much a second career for Tuttle — he spent 25 years in senior high-tech sales positions before buying into BPI. “I wanted to do something different,” he says. “At a franchise show I chatted with the [area developer] for Boston Pizza for about half an hour, and two months later I was signing the deal.”
But that doesn’t mean Tuttle and his wife jumped in with their eyes closed — they did their homework. They were looking for three key elements in a franchise: a profitable business model, strong operational and training support, and what he calls the cultural fit. “Did we get along? Were they the kind of people we wanted to work with? We had a great connection from the beginning, and as we met more and more people we felt more comfortable with the organization,” Tuttle says. BP franchisees, including three or four key operational staff get an eight-week training course at one of the corporate restaurants, covering both the front and back of house, as well as general managerial skills. This was crucial since Tuttle’s only restaurant experience was waiting tables at The Keg in university.
Dave Staffen, who opened a store in Midland, Ont., in September 2003, is another foodservice newbie who’s prospered in the BP system. After running a pair of independent grocery stores in southern Ontario with his brother and father, Staffen sold out and moved to Midland — a Cottage Country town of 16,000 on Georgian Bay — to semi-retire by the water. Then he got a little bored.
“It wasn’t that I wanted to open a restaurant, but I went into a Boston Pizza and really liked the concept,” he says. “I had built and managed (retail) stores, but a restaurant is totally different. Basically, BPI looked after everything, which was a nice change — we’d always looked after ourselves.” However, one thing Staffen did learn is that you need one great person to make a restaurant go. That person, as it turns out, wasn’t him. But he says he was fortunate to find a talented manager close by: his son Andy. “He’s the key to our success,” Staffen says.
“Boston Pizza gave us great training and they were there when we opened up, but it was a pretty nerve-wracking first year,” Staffen continues. “In the grocery business, we’d have sales of a few hundred thousand a week, so I couldn’t get used to the [lower] numbers — it was a new world for me.” However, they did make money that first year, sales have grown every year since, and today Staffen says he’d open a second BP if a good location came up and — most importantly — he found the right managers.
In Orleans, Bob Tuttle had it a little easier — his BP exceeded expectations from the start. “Our first year was very strong, and in our second year we’ve averaged 25 per cent year-over-year growth on our weekly (numbers),” he says. Tuttle is still at his restaurant most days “managing my management team — coaching and developing them,” so he can eventually step back and focus on opening more stores. He’s working out the last details to build a new BP in Cornwall, Ont., and is eyeing both downtown Ottawa and Rockland, a town of 15,000 about 30 kilometres to the west.
Pacinda says franchisees average $2.4 million in annual sales, though some are doubling that. “The two big (profit) variables are sales and what your real estate deal was,” he says. “Every Monday morning I get a report on sales across the company, so if a store is struggling, we see it immediately, jump in, try and figure out why, and turn it around.”
Once a store is up and running, the first point of contact for franchisees is a field services manager (FSM) who typically looks after 15 restaurants. “They are in those 15 stores regularly and develop a relationship with the franchisee,” says Pacinda. “So if there’s an issue — if someone calls and says ‘I’ve just lost three cooks, can you help?’ — the FSM is there until the store gets back on its feet.” FSMs also audit every store twice a year — a daylong process looking at everything from food storage and prep to staff attitude and parking-lot cleanliness.
“Our franchisees want us to do that,” says Pacinda. Even one Boston Pizza — let alone five — represents a large investment in the brand and the company, he says, and franchisees depend on BPI to protect their equity. A big part of that is protecting the brand. “We know if the franchisees make money they’re going to be happy, build more restaurants and we’re going to grow as a company. We have a saying that ‘You go into business for yourself, not by yourself,’” Pacinda says, “and a successful restaurant company starts with a successful restaurant."