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Baltimore Pizza Company
Sees Big Returns in Small Slices
Of the 55 mamma ilardo's Pizza stores in 16 states and Puerto Rico, about one third of them are like most traditional pizzerias with expanded menus and seating. The other two thirds of their units are found in nontraditional locations such as airports, casinos, train stations, hospitals, arenas, gas stations and amusement parks. That is where the growth has taken off in the last few years.
The mamma ilardo's Corporation has been incredibly successful in adapting their marketing and operations to nontraditional locations. These ‘Express Units’ are generating much higher sales per square foot than traditional locations, yet occupy only 13 percent. Five short years ago ‘Express Units’ accounted for 25 percent of mamma ilardo's locations, but now represent 67 percent of the mamma ilardo's system.
The growth strategy that mamma ilardo's is pursuing can be called the ‘by-the-slice’ or nontraditional location strategy. This strategy does not observe the same rules normally followed by a traditional pizza chain. You may remember that at one time Papa Johns would not allow any franchising west of the Mississippi until enough units were built close enough together to provide efficient commissary distribution and a viable concentration of marketing power. This strategy is serving Papa Johns well because success against their rival Domino's means having lots of marketing dollars to spend, but not mamma ilardo's.
More on Rent, Less on Marketing
The ‘by-the-slice’ strategy is quite different. Instead of spending your marketing dollars trying to motivate customers to drive into the parking lot, get out and walk into your store, the idea is to spend more on rent and have your pizza within reaching distance of hungry customers.
Get the best locations period!
When it comes to setting up store locations, another advantage of the ‘by-the-slice’ strategy becomes clear. If you utilize this strategy and are not concerned about building new stores near your other locations, you are free to build your stores wherever you want. And in the ‘by-the-slice’ business that means you want one thing - foot traffic. That is why you are more likely to find their newer concept locations scattered around the country. You'll find successful ‘by-the-slice’ mamma ilardo's at the MGM Grand in Las Vegas as well as at the National Airport in Washington DC.
Don't Try This At Home
Although this strategy is similar to segment leader Sbarro's with their 750 units, it is also a quick way to go out of business if you don't know what you are doing. After spending a day with their corporate management staff and visiting stores in the field, I was very impressed. Their expertise goes way beyond fancy brochures and logos. They clearly understand their role as a franchise company and could serve as a model for other pizza organizations desiring to franchise their concept.
CEO Harry Ilardo, grandson of the company's namesake, was playing football for the University of Maryland when his dad, Pasquale, opened their first unit on Ritchie Highway in Pasadena, Maryland in 1976. The first store was called the Italian Villa. After finishing college in 1978, Harry joined his dad and by 1981, the Ilardo's were operating three stores. In 1985, they started franchising and adopted the current store name. Currently, there are 55 stores open with 21 new stores in some stage of development. The 100th mamma ilardo's is expected to open in 2002. Three stores are company owned while 52 are franchised.
As in any story of success in this business, solid operations are a minimum requirement. If their pizzas weren't good, they would never have been able to win the locally famous "Best of Baltimore Honor" in 1988. Of course, marketing and training support is an important service to franchisees, but without question, the most important decision a nontraditional location operator will make is in choosing a location. You do not want to make a mistake here, according to Vice President of Operations John Filipiak.
Location Location Location
Until five years ago, Filipiak was selecting locations for Subway. Now he uses his network of contacts and the other lessons he has learned to find locations that give success a better chance. "Choosing sites for Subway is not necessarily the same as finding the kind of sites we're looking for mamma ilardo's," says Filipiak. "In the nontraditional location niche, we do not see ourselves as a customer destination, we see ourselves as a pit-stop along the way of a customer's busy day. We want to be convenient, quick and offer quality food that will make them want to come back again."
Training To Ensure Solid Franchisee Operations
For 19 years, since he was a junior in high school, Training and Operations Manager Todd Holmberg has been working with mamma ilardo's. He often finds himself out of the office in the field about a week each month. Even his field consultant, Cindy DeFelice, is always in the field visiting franchisees. "She doesn't mind the travel with places like Hawaii and Puerto Rico to visit. I don't get many complaints," says Holmberg. "My job is to help our franchisees get their people to follow mamma ilardo's standards and procedures. Yes, we have plenty of training manuals to follow, but with the busy schedules our franchisee's have, there is no substitute for getting out in the field to help them perform at the level they need to be."
Simple things like training your employees to ask the right questions can make a big difference in profits. Some mamma ilardo's offer an 18" whole cheese pizza for $5.99, but the average transaction for that purchase is over $8. Part of the reason is remembering the right way to follow up the sale. Holmberg trains employees to ask questions such as ‘What would you like to drink with that?’ Holmberg explains. "We don't ask them if they want something to drink. The easiest way for them to answer the question is to pick a drink. Then, when they say Coke or Pepsi, we follow up with ‘Did you want a large?’ Again, it is easier for the customer to say yes. Very simple stuff, but people have to be trained to do it every time."
Marketing Ideas, Material and Support
Rob Hittle is the marketing director for mamma ilardo's and is fortunate to have the energy level of a 28-year-old. Besides acting as the public relations department for corporate and franchisee clients, he coordinates the creative, printing and planning of what he calls ‘The mamma ilardo's marketing buffet’. The idea is to offer plenty of choices that will fit the needs of company and franchise stores, allowing the franchisee to take the initiative with their own marketing. Hittle is able to offer some pretty good advice as he relays marketing success and failure stories throughout the company. One day he may be helping one client prepare a local news release and the next day another client may use him as a marketing counselor or coordinator. "There are three areas I work with to help get marketing information out to the field," says Hittle. "Everyone gets a mamma ilardo's marketing manual and the continual updates that go with it. We also do a lot of training here at corporate headquarters and then I have the monthly marketing newsletter that goes out once a month to all franchisees to keep our people thinking about marketing along with a copy of PMQ each quarter. I'm sort of the marketing cheerleader around here. It's important because sometimes just a simple idea can make a big a difference. At one of our gas station locations recently, we decided to give free pizza samples to motorists while they were filling their tanks. It didn't cost us a lot because we cut the pizzas into 16 slices. We did that consistently for two weeks and sales increased significantly. The location finally got some sales momentum going. People started to notice us."
"You really have to work individually with each store. Each location offers different opportunities and challenges. Artichokes are one of the favorite toppings in Portland, Oregon. In Las Vegas, jalapenos are big. We've done some experimenting and found that our egg based breakfast pizza is a big hit in airports, train stations, casinos and campus locations."
One mamma ilardo's generates $400 from breakfast in a typical day.
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