Marco's Chooses Keller Texas For New Store

AS SEEN IN THE KELLER CITIZEN

Tuesday, Mar 31, 2009

National Restaurant picks Keller
A national restaurant chain has recently chosen Keller:

Marco’s Pizza opened its first Texas restaurant at 2122 Rufe Snow Drive. With more than 70 locations planned for Dallas-Fort Worth, Keller was chosen for the inaugural store because its demographics are "strong" and "the propensity for pizza-eating families is high," said Rebecca Wagner, a spokeswoman for the Ohio-based parent company. Denton, Lewisville and Allen are being considered for the two Marco’s restaurants planned to open in 2009, Wagner said.

Technology Takes The Gut-Fell Out of Site Selection

CHAIN LEADER

Technology Takes the Gut-Feel out of Site Selection

Real-estate software can help take some of the guesswork out of finding locations for both franchised and company restaurants, but it's not perfect

January 13, 2009

By Lisa Bertagnoli

It's what every chain restaurant executive wants: a magic tool that can spot A-plus locations and ring a warning bell when a site is a dud.

Such technology exists and can help take some of the guesswork out of finding locations for both franchised and company stores. But it's not perfect: It doesn't replace site visits, and it doesn't boast 100 percent accuracy.

"Accuracy is always an issue," says Paul Sill, founder of a Chicago-based firm that supplies retailers and restaurateurs with site-selection models. "At the end of the day, what anyone's model does for you is steer you in the right direction and give you the greatest possibility of making the right decision."

The Right Direction

Salsarita's Fresh Cantina Inc., the Charlotte, N.C.-based chain of fast-casual Mexican restaurants, chose Sill's company precisely for that reason. The firm will map out the entire country for Salsarita's, which plans to open 25 new locations in 2009.

The model "will give us a roadmap to get to sites quicker," says Vas Lahanas, vice president of business development for the 80-unit chain.

The technological approach replaces a "hub and spoke" system of site selection, Lahanas adds. "Information came to us via a network of brokers, and we'd do conventional tours," he says.

Sill's company crunched data supplied by Salsarita's--consumer behavior such as how far a person will travel to visit the concept, attitudes toward the concept, plus ideal site-specific factors such as visibility, egress and ingress, and parking--and compiled it into a site-selection model.

The model is loaded onto a Web application, accessible by executives, field managers and others involved in the site-selection process. Real-estate brokers can load a potential site into the model for evaluation. Sites with possibilities are routed to Lahanas or the appropriate field manager.

Inappropriate sites are automatically rejected into a virtual recycling bin. That feature "will save us time entertaining sites that make no sense for us," Lahanas says.

Early Confidence

Salsarita's hired the firm last fall, so it's too early to tell whether the site-selection system will work, Lahanas says. However, early indicators have inspired confidence. The company produced an "existing unit scorecard assessment" for Salsarita's, to indicate which stores were underperforming or performing on target. "They probably hit 75 percent," Lahanas says. Sill claims that the technology is 80 percent to 90 percent accurate.

The site-selection model has also confirmed what Salsarita's has suspected: that it does well in areas where customers have some college education, in "green" markets (as opposed to urban locations), and where daytime traffic is heavy.

"When it's put together, the model paints a really clear picture," Lahanas says. Still, he calls the system "complementary" to site visits. "It will never replace actually touching the site."

The Price Is Right

Marco's, a Toledo-based chain of 170 pizza restaurants, uses another site-selection tool, from a Troy, N.Y.-based company, to scout locations. But the tool, which is provided as a software package, has other uses as well.

One is pricing area-development agreements. "On a macro level, the [technology] allowed us to figure the precise number of sites we can build in a territory," says Bryon Stephens, vice president of new business development for Marco's Franchising LLC. Since agreements are priced on the number of stores, the technology has enabled Marco's to charge a fair price for territories.

It has also allowed the chain to make media buying decisions in a market. For instance, Marco's knows it has enough stores in the Nashville market to justify a television buy, and that it cannot build enough stores in the New York market to afford a television buy there.

The technology, which uses demographic and site-specific information to devise a site model, has also helped Marco's narrow its selection process. One example: The chain previously focused on demographics within a three-mile radius of the store, until the model showed that 70 percent of business comes from the first one-mile radius ring.

Now, if that first mile is purely commercial, Marco's will reconsider a site. "It changed our thought process," says Jack Butorac, Marco's president.

Overall, the technology "really identifies areas we should be targeting, vs. gut feel," Butorac says. "It's helped narrow the whole exercise significantly."

MORE: Johnny's Lunch, a quick-service hot-dog chain based in Toledo, Ohio, hired a site-selection technology firm who helped customize an expansion model.

Marco's ranked #236 in Entrepreneur's 30th Annual Franchise 500 for 2009!

Thank you Entrepreneur for ranking Marco's Pizza in their top 500 franchises for 2009!

You can read more here http://www.entrepreneur.com/franchises/marcosfranchisingllc/282563-0.html

Marco's Don Vlcek radio interview with the Environment Report

Pizza Today Article January 2009

Restaurant Expansion: Profit Motives

January 1, 2008

Restaurant Expansion: Profit Motives

Restaurant chains find ways to protect margins as they expand in a recession.

By David Farkas, Senior Editor

In early November, Jack Butorac was feeling bummed out at a Las Vegas restaurant conference that focused on financial performance. Admits Butorac, CEO of Toledo, Ohio-based Marco's Pizza, which operates and franchises 175 pizzerias: “It was depressing to talk to some of these folks. They really have challenges out there.” Butorac doesn't? Apparently not. Marco's intends to open 61 restaurants this year, most run by franchisees. “We feel good,” he declares.

He wasn't the only operator Chain Leader talked to who said their companies were still adding restaurants—albeit at a slower rate—amid the wreckage of the economy. However, when asked if they were taking measures to ensure unit-level economics still provided a superior return, nearly all said yes. Creative Gatherings

“Our buildings are very expensive, and we are always working on ways to keep costs down,” says Lamar Bell, senior vice president of finance and development at Raleigh, N.C.-based buffet concept Golden Corral. The chain intends to open a half-dozen “pavilion” models, which run about 14,000 square feet.

For the last several years, Bell has been holding two-day meetings in new units with the company's suppliers and builders, asking them to examine the building for cost-saving ideas. He says his goal is to determine if there's “a way to get 90 percent of gain for 50 percent of the bucks.”

So far, most of the workable ideas involve less expensive finishes and more efficient HVAC. Bell, who says the rate of unit-level returns hasn't changed in 20-plus years, nonetheless insists, “We're not dumbing anything down in this current environment. We are not taking one thing away from the customer.”

That's become one of the biggest challenges for operators as margins have deteriorated. Customers, worried about job loss and housing values, have steered clear of restaurants since summer. Third-quarter same-store sales, for example, declined across all industry segments. Despite an uptick in consumer confidence in November, to 44.9 from 38.8, job losses for the month totaled 533,000, the highest monthly total since 1974.

“Consumers remain extremely pessimistic and the possibility that economic growth will improve in the first half of 2009 remains highly unlikely,” announced Lynn Franco, director of The Conference Board Consumer Research Center, which publishes the Consumer Confidence Index.

Minutiae Matters

The recession is forcing Spicy Pickle COO Tony Walker to evaluate every aspect of his franchise business. He recently eliminated a new pizza program and a $3,000 backup meat slicer from the Denver-based fast-casual sandwich shops. Pizza failed to spark nighttime sales, and the slicer was deemed a luxury.

Now Walker wants to trim $50,000 to $75,000 from new builds. “This is our No. 1 goal. We are going line by line, asking, 'Do we need this?'” he says. A $4,000 beverage cooler sitting next to the register got a thumbs down. It was nice to have but inefficient, recalls Walker, adding that without a top, the device was “constantly cooling itself down.” Walker is replacing it with a self-draining, ice-filled tub. He will have to extend the millwork at the register to accommodate it. “It will be a fraction of the cost,” he claims.

Butorac is going through a similar drill. He's counting on a beverage vendor to install coolers in the counters in Marco's new prototype.

Despite reporting systemwide same-store sales of 4 percent in the third quarter, Butorac is taking no chances. He has asked his team to do a better job purchasing, especially of a stone finish used extensively in the Tuscan Village prototype. Last year, he launched a “seating program,” adding 16 seats at a cost of $5,000 per unit. The result, he boasts, is an additional $1,000 a week in revenue. “We're approaching things a little differently, finding ways to help franchisees generate profits by building sales,” he says.

Landlords' Largesse

On the company side, Butorac is happy with the rent deals he is landing. “Most of our stores are in strip centers, and we have been able to negotiate very good rents,” he says. “Some of these deals were too expensive a year ago.” In some cases, he adds, landlords have even offered tenant-improvement contributions amounting to half of the unit's $125,000 construction cost. “It's not reflected in the rent. I don't know how they do it,” Butorac declares.

Rents have dropped dramatically as retailers, including restaurants, have hit the expansion brakes. Today landlords are using a variety of aggressive marketing gambits to lure successful chains. “Caps on common-area maintenance, tax abatements, tenant improvements, really anything in their arsenal are being used,” says financial strategist and former Brinker International CFO Jim Parish.

Among recipients of such largesse is BJ's Pizzeria & Brewhouse. CEO Jerry Deitchle says landlord contributions are crucial to maintaining returns at the 83-unit casual-dining chain. “Over the long run, we can only grow our way to financial success in a highly productive, efficient and leverageable manner,” he explains. Leverage is the key when it comes to new builds. The Huntington Beach, Calif.-based chain now averages $1 million in tenant improvements, equal to roughly one-fourth of the total $4 million investment package.

Systematic Approach

This year Deitchle will re-evaluate seating and kitchen layouts, though he insists he doesn't intend to trim investment costs but instead boost productivity. BJ's will roll out a “manager dashboard,” for instance, in the form of a flat-screen monitor. Placed in kitchens, it will show real-time data as each shift progresses. The company already uses a kitchen-display system, Web-based labor scheduling, table management and theoretical food-cost software.

Systems are also important at Burgerville, which is opening its first new restaurant in six years, in Tigard, Ore., in April. CEO Jeff Harvey says the Vancouver, Wash.-based chain, which operates 38 restaurants, has finally addressed labor scheduling in a systematic way. “We won't be opening [restaurants] at a high pace and then managing down to a lower pace because now we have the ability to manage cost,” he says.

The Tigard restaurant will be Harvey's first opening, though he has remodeled one unit so far. An engineer by training, he says he was hired in 2004 to create new systems. That achieved, he is also redesigning the restaurant. “We are maximizing dining rooms and minimizing kitchens,” he says. The new 2,600-square-foot-prototype features a drive-thru and wood finishes instead of costlier brick, widely used in the other restaurants. Units average $1.8 million, Harvey says.

“My main message is, given what we know about the economy, we prefer to take a little more of an aggressive approach,” he offers. “We're not about to cut the part of our business that brings in the money.”

Which is?

“New restaurants.”

Chain Leader Magazine Article

December 1, 2008

Screen Test: Online Training

Restaurant chain Marco's Pizza enhances its training program with an online, interactive, animation-based component.

By Maya Norris

Marco's Pizza has turned to the Internet to take its training program to the next level. The 171-unit pizza delivery and takeout chain is rolling a Web-based, interactive training tool that features animation to better connect with younger workers.

Working with a company that specializes in e-training, Toledo, Ohio-based Marco's Pizza spent two years developing the online training component, known as Marco's University, for hourly employees. The company contends the online program will help ensure consistency across the system as franchisees open more than 300 units by 2010.

“Often, with anybody in the store-operations end, training can vary depending on the trainer,” says Vice President of Sales, Research and Development Mike Jaynes. “With Marco's University, it really standardizes and communicates the same message across the board to not only the whole chain but also within the store. And the communication of one message results in happier employees because they're all expected to do the same thing.”

Back to School

Marco's University consists of 12 modules that cover topics such as customer service, phone answering, dough preparation, store safety and delivery. The interactive modules, each about 10 to 12 minutes long, feature animated characters that guide employees through the tasks involved in each position. The character tests the employees on the information, correcting them if they answer incorrectly. The employee must score at least 80 percent on the quiz at the end of the module to move on to on-the-job training in the store. If they don't score 80 percent, they have to take the module again.

Employees log into a password-protected Web site that keeps a record of the modules they've completed and their scores. Most employees can only access Marco's University from a computer at the store. But the company allows employees at new stores to access the program from their homes for two weeks prior to and four weeks after opening.

According to Jaynes, Marco's has received positive feedback from hourly employees about Marco's University. He says the online component resonates with its younger work force, who are comfortable with the technology. “Most of our work force have grown up on computers, whether it be MySpace, cell phones or Internet games,” he says. “The Web-based training really appeals to what they grew up with. It allows them to learn by listening, watching, while being interactive through the whole module.”

Eric Chester, a Denver-based speaker and author who works with service-oriented companies to get young employees to work harder and stay longer, says Marco's University should help the company better relate to teens because the interactive, animation-based training is fun, simple, fast and easy to use.

“It's miles beyond handing them any kind of manual or a book. It's certainly appeals to the tech-savvy generation. It's something that pulls them in,” he says. “They're required to participate, take some action, to move the ball down the field.”

However, Jaynes emphasizes that Marco's University is designed to be used in conjunction with

the company's on-the-job training. “The Web-based training is in no way intended to change or alter our current training practice,” he says. “It's only an enhancement to our current training practice. It's not meant to replace anything.”

Return on Investment

Marco's has tested the online training program in 27 company-managed stores and 13 franchised units since January. So far hourly turnover has gone down 3.9 percent and mystery-shopper scores on phone etiquette and ordering have improved 5 percent.

The company is currently rolling out Marco's University systemwide. It wants all the stores using the component by the end of February 2009. Although new restaurants are required to use Marco's University, it is not mandatory for existing franchisees. To convince older franchisees to sign on, Marco's executives, along with franchise and area representatives, are visiting the stores to demonstrate the system and share early results and testimonials from franchisees who are using it.

Franchisees who use Marco's University pay $365 per year per location. Corporate will use the funds to update current modules and develop future ones.

Marco's plans to develop one or two new modules per year. It is looking into developing modules for management that cover areas such as scheduling and paperwork and for franchisees for a new store opening.

It costs about $20,000 to create a module. Marco's also pays $140 per month to the training company it works with to host the modules on the training company's Web site.

Marco's has already invested more than $250,000 into Marco's University. But the company has no doubt it will see a long-term return on its investment, especially as it triples in size over the next few years.

Ninth Quarter Same Store Sales Growth

MARCO’S PIZZA ANNOUNCES NINTH QUARTER OF SAME-STORE SALES GROWTH

Authentic Italian Pizza Chain Reports Strong Sales through Q3 2008

TOLEDO, OHIO – Dec. 8, 2008 – Marco’s Pizza (Marco’s Franchising, LLC) has reported its ninth consecutive quarter of same-store sales increases. Marco’s same-store sales were up by more than 4 percent system-wide through the third quarter and by more than 6 percent among company-managed stores.

“Marco’s Pizza is an anomaly in the industry, where many of the sales numbers we’re seeing are down or flat,” said CEO Jack Butorac. “We attribute the strength of Marco’s same-store sales to high product quality and smart franchise growth. Marco’s Pizza is committed to using fresh ingredients (never frozen) and managing expansion so new stores are adequately supported.”

Continued national expansion has also helped bolster Marco’s profitability. The company was traditionally an Ohio- and Midwest-focused chain until Butorac purchased the franchise rights in 2004. Since then, Marco’s has expanded into 14 states and expects to more than triple its current store count in two years.

­­­­­­­­­­­­­­­­­­­

­­­­­­­­­­­­­­­­­­­­­­­­­About Marco’s Franchising, LLC (www.marcos.com)

Marco’s Pizza (Marco’s Franchising, LLC), headquartered in Toledo, Ohio, is one of Pizza Marketing Quarterly’s Top 25 Pizza Chains. Founded in 1978 by Pasquale “Pat” Giammarco, Marco’s Pizza is committed to making Ah!thentic Italian pizza with fresh ingredients. Over the past 30 years, the franchise has grown from its roots as a beloved Ohio brand to operate more than 170 stores in 14 states.

Marco's Debuts Deep Pan Pizza

MARCO’S DEBUTS DEEP PAN PIZZA

After Successful Testing, Marco’s Rolls out Product in Three States

TOLEDO, OHIO – Nov. 19, 2008 – Marco’s Pizza (Marco’s Franchising, LLC) will introduce Deep Pan Pizza in select Indiana, Michigan and Wisconsin markets on Dec. 1, following successful store testing.

“Marco’s experimented with the Deep Pan Pizza recipe for some time,” said Marco’s CEO Jack Butorac.

“We created an exciting new product the Marco’s way, with the fresh ingredients our customers expect.”

“We tested Deep Pan in several stores and it received rave reviews, so the pressure has been on to roll it out more broadly. Marco’s will introduce the product in three states, and we’re hopeful that a strong reception will lead us to expand its geographic availability. I’m glad the Marco’s Pizza team can begin delivering Deep Pan to customers this holiday season,” added Butorac.

Like all Marco’s pizzas, Deep Pan is made with fresh dough prepared daily in stores and features Marco’s proprietary blend of three fresh cheeses (never frozen) and a secret sauce recipe. Deep Pan Pizza can be combined with any of Marco’s toppings, with Pepperoni the favorite among customers so far.

Despite the challenging economic and financial landscape, high product quality and the successful introduction of new menu items such as Deep Pan Pizza have helped Marco’s achieve same-store sales growth for nine consecutive quarters. The company’s same-store sales were up by more than 4 percent system-wide through the third quarter, and by more than 6 percent among company-managed stores.

For information on specific Marco’s locations and Deep Pan Pizza availability, please visit: www.marcos.com and use the “store locator” tool.

­­­­­­­­­­­­­­­­­­­

­­­­­­­­­­­­­­­­­­­­­­­­­About Marco’s Franchising, LLC (www.marcos.com)

Marco’s Pizza (Marco’s Franchising, LLC), headquartered in Toledo, Ohio, is one of Pizza Marketing Quarterly’s Top 25 Pizza Chains. Founded in 1978 by Pasquale “Pat” Giammarco, Marco’s Pizza is committed to making Ah!thentic Italian pizza with fresh ingredients. Over the past 30 years, the franchise has grown from its roots as a beloved Ohio brand to operate more than 170 stores in 14 states.

Restaurant Chains Look For Creative Ways To Cut Costs

The Wall Street Journal

November 18, 2008

By, Raymond Flandez

Franchise restaurants, hit by higher commodities prices and a cutback in consumer spending, are aggressively searching for ways to slash costs.

Many of these businesses can't pass on the higher costs to customers without losing even more business. So, they're trying to find alternative ways to save -- including changing vendors and packaging, altering delivery schedules, cutting serving portions and even prolonging the life of fryer oil.

Read more: Restaurant Chains Look For Creative Ways To Cut Costs