QSR 50 | August 2012 | By Kevin Hardy
The Pizza Prodigy
They like to say they’re “purposefully simple.”
But to Papa Murphy’s executives, the saying is more than just lip service. It’s a way of life and business for the growing company that has paved its own route to success in the pizza segment.
Simplicity is found across all levels of the business. Stores are small and efficient. The lack of ovens and freezers cuts clutter and keeps franchise, utility, and maintenance costs low. Shorter hours keep labor costs down. The low overhead allows Papa Murphy’s to offer its signature Take ‘N’ Bake pizza at prices often significantly lower than competitors’ hot pizza.
With its organizational simplicity, the brand is able to invest more in ingredients, making what it believes is a fresher and better-quality pizza than competitors. Most of a store’s square footage is dedicated to pizza creation.
And the take-and-bake concept, in which customers personalize their toppings in the store and bake the pizza at home, lends itself well to a customer-first mentality in all Papa Murphy’s does: Families get the exact pizza they want and it’s ready whenever they are.
That might explain why Papa Murphy’s scores some
of the highest customer satisfaction marks in the business.
“Clearly one of our competitive advantages is the simplicity of our concept and how focused our stores are,” says CEO Ken Calwell. “We’ve got a very simple concept and we’re a unique concept.”
Papa Murphy’s, now in 37 states, still has a ways to go toward national name recognition. But company leaders are confident that by growing market by market, it will soon become a national brand.
In 2011, Papa Murphy’s sales climbed to $702 million, up 10.6 percent over 2010. The chain added a net 42 stores in 2011, ending the year with 1,283 units.
The U.S. pizza segment did just under $30 billion in sales last year, up about 1.5 percent from 2010, according to Technomic. Meanwhile, limited-service restaurants as a whole saw a 3.1 percent growth in sales last year.
Based in Vancouver, Washington, Papa Murphy’s has a high concentration of stores in the Pacific Northwest. In the past, new stores sometimes opened one at a time in new markets that had little or no brand awareness. That’s something Calwell has worked to change since taking the helm in June 2011.
Executives are now focusing growth on trying to expand within specific markets, rather than just looking to get a foot in as many overall markets as possible. That allows a better leverage of marketing dollars, which local franchisees appreciate.
“We want to go one market at a time, choose our markets very carefully, and then expand deeply within one market so that we can get a critical mass awareness in that market before moving to the next,” Calwell says.
That measured growth sometimes tests Calwell’s patience. But he says focusing on individual markets creates more stable and sustainable growth in stores.
“What keeps me up at night is that I want to be national immediately, because you know you’ve got a great brand. It kills me when I hear people say they’ve never heard of us,” he says. “But I know the smart long-term strategy is to build a market at a time. I want to be able to take this to a national brand sooner rather than later.”
Sometimes it’s hard to convince people to try Papa Murphy’s in markets where take-and-bake is a new idea. By opening several stores in an area, it’s easier to get the word out en masse about what it is and get people to try the concept.
“Our objective [in new markets] is to get as many people as possible to try it. Because once they try it, they are a believer. Once that happens, we have very loyal customers from there,” says Jenifer Anhorn, the chain’s chief marketing officer.
The concept, positioned as fresh, customized pizza, practically sells itself.
Anhorn says employees will go out of their way to make the exact pizza customers want, whether it be a low-carb, stuffed, or original pie. The dough is made from scratch, the cheese is grated on site, and vegetables are chopped fresh every day.
“In the pizza world, we’re really unique in the fact that we prepare everything fresh,” Anhorn says. “Our customers say they can see and taste the difference because everything is fresh. It makes a big difference.”
Without a national television presence, Papa Murphy’s relies on public relations firms to help disseminate its message in new markets. The company uses local print, television, direct mail, mobile advertising, and coupons to target customers, the core of which are families.
“We are primarily a dinner for a family,” Anhorn says. “You can feed a large family for not very much money per person.”
Because the product is finished at home, Papa Murphy’s sees itself competing against grocery and pantry items, as well as other pizza chains. But by having consumers bake the pizza in their own kitchens, there’s an intangible quality that other restaurants can’t replicate. Filling your home with the aroma of piping hot pizza is an experience more meaningful than just bringing home a cardboard pizza box.
“It’s something people really take pride in because they are part of the process,” Anhorn says. “There’s more pride in serving our pizza to family and friends because you get some of the credit.”
Fred LeFranc, managing partner, CEO, and president of consulting firm Results Thru Strategy, says relying on the home connection is a strategy similar to one used by frozen pizza purveyor DiGiornio, which positions itself as just as good as delivery pizza, but made at home.
“It’s the same angle,” he says. “It just tastes better if it comes out of the oven in your house. And that pizza is going to be delivered much hotter than at a delivery or carryout place. Clearly they’ve struck a chord with consumers.”
LeFranc says Papa Murphy’s disciplined approach to growth could realize big pay-offs down the road. “If they can grow in a way that lets them have enough name recognition, that’s probably a better strategy than jumping across markets,” he says. “If you don’t control how the growth goes, then it’s just scattershot.”
Over the last 10 years, Papa Murphy’s has opened between 70 and 100 new stores annually, says Kevin King, the chain’s chief development officer.
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