Tom Krouse recently received retirement advice on how to answer a question as inevitable as they come. “What will you do with all the free time?”
“Whatever the hell I want,” Krouse says, with a laugh.
The truth is, he isn’t sure. Krouse will hang it up in October as the CEO of Donatos Pizza, a company he’s been a part of since 2000, joining after 18 years with Wendy’s. Krouse became the family-run pizza brand’s top executive in 2004 and oversaw its franchise expansion and development of Donatos’ retail division, Jane’s Dough Premium Foods.
Under Krouse’s watch, Donatos doubled in size (there were 178 total units year-end 2023; 51 company run and 127 franchised, up five year-over-year and 10 higher than year-end 2020). The franchise system expanded from 10 partners to 45. Average-unit sales climbed to 60 percent higher than the pizza industry average ($1.146 million at 2023’s exit). And franchise satisfaction ratings today are 13 points better than sector benchmarks.
Krouse says he’s working with a consultant who helps executives transition. One of the main points she’s made, he explains, is to not say yes to everything out of the gate just because it seems like you can. Don’t get overcommitted.
“I’ve been saying, I’m just popping the clutch, is kind of what I’m doing,” Krouse says.
He’s been approached for some board positions. He plans to stay in that capacity at the IFA to remain within the franchising sphere. And, without debate, Krouse will “do some things” with music. He just released a seven-song rock album, “Layered Legacy” you can download wherever you listen. Krouse more recently performed solo with a 500-person choir at an event for nonprofit Harmony Project, which uses music to help students in under-resourced communities. It was originally slated for a ballpark but weather drove it inside. Krouse strummed John Fogerty’s “Centerfield” (an ode to what was supposed to be the setting) in front of some 7,000 people.
Krouse says he’s already working on a second album, which will be more of a blues, R&B type record.
But getting back to his stretch on Donatos, Krouse says a succession plan was in the works for a bit. Donatos is not your average restaurant chain and doesn’t move like one. The story goes 13-year-old Jim Grote took a job in Columbus, Ohio, making pizzas, and was hooked. He bought the original shop in 1963 for $1,300 from a young seminarian and kept the name, “Donatos”—a play on a Latin phrase that translates as, “to give a good thing.”
Grote remains involved, as does his daughter, Executive Charwoman of the Board and Chief Purpose Officer Jane Grote Abell, who wrote a book on the story called, “The Missing Piece: Doing Business the Donatos Way.” Jane explains the broad thesis of Donatos as what’s become known as “Agape Capitalism,” or doing business “based on the power of love.”
Jane has worked and earned paychecks from Donatos since she was 11. In the past three-plus decades, she’s held roles from training manager to VP of people services to chief people officer, SVP of development and franchising, COO, and president. She’s also married to Krouse.
The dynamics of a family-centric, culture-forward organization as deep as Donatos isn’t something you can giftwrap and hand to the best resume. There’s a nuance that has to be understood, or not, and Donatos found that unique package in Kevin King. King is a longtime family friend, who, as unlikely as it sounds, was roommates with Jane’s brother in college and knew him further back in grade school.
But he was also intimately aware of the brand’s day-to-day, having served as VP of development from 1990 to 2003. King’s early career took shape at Domino’s in ops, then multi-unit supervision, and lastly, guiding international ops in Australia.
Before rejoining Donatos as president in 2022, he clocked time at Papa Murphy’s as SVP of operations and CDO and watched the brand scale from about 400 to 700 units. He then directed growth as CDO of Smoothie King International for nearly six years.
Krouse says Donatos had some “fits and starts” with recruiting outside higher leadership over the years. “And so, we said, we need to make sure we’re aiming high enough and bringing in someone who could handle and understand the culture of a privately held company and has the skillset to grow,” Krouse says. “And there’s not a big pool of candidates for that.”
King, however, fit squarely in there.
Krouse says no succession date was originally outlined or anything along those terms, but it got to a point where King was able to handle the full breadth of the business. And it simply made sense for Krouse to move on and let him roll.
“He’s one of the smartest people you’ll ever meet,” Krouse says. “Way smarter than I am. He’s got a brain that has a lot of capacity.”
Alongside being a steward of Donatos’ DNA, King has the background to continue some of the work Krouse stewarded along in recent years. Krouse first surprised King with the idea at a conference in Charlotte they were speaking at. They got a drink. King’s first question? “What’s the average EBITDA of a franchise at Donatos?”
“I’m like yes, you’re the right guy,” Krouse recalls.
Donatos has long been known as a solid franchise with a great product and a unicorn culture. But it wasn’t always characterized as having a robust financial model, Krouse says. That’s become the case.
Donatos shored things up through efficient and automated cooking, among other granular efforts, intruding a line of smart equipment. This includes a Smart Saucer (automating application of sauce), Smart Ring (assisting with speed and accuracy of applying cheese) and the Smart Pepp (slicing and applying pepperoni). Together, the company says, Donatos was able to eliminate excess food waste, streamline production, and be more time efficient. In 2023, the company also entered an exclusive partnership with Appetronix to test a fully automated pizza vending machine.
And then, of course, there’s the partnership with Red Robin that’s scaled beyond 270 locations of the casual-dining brand, which nested Donatos into its menu as a pizza option many guests order as appetizers in addition to being a powerful off-premises driver. Based on Donatos’ current pipeline with franchisees and expansion from non-trad partners, the company expects to launch roughly 150 new locations in 2024. Factoring in all of the different venues, Donatos boasts a network of more than 460 points across 29 states.
When Krouse looks back, he understands the gravity of what he’s achieved. He followed the founder as CEO and, in addition to doubling franchise profitability across a 10-year period, was tasked with upholding a day one vision. Building infrastructure to do so, Krouse says, is something he’ll hold onto as he heads into whatever comes next. “The culture and the product,” he says of what he’s proud of. “But also, being able to make an impact in more places than we are, i.e., get bigger.”
People used to franchise with Donatos, Krouse continues, because they loved the food and the people. Now, they still feel that way, only it’s also a solid business to invest in on its own.
The second piece Krouse feels strongly about is the aforementioned Red Robin collaboration, a deal that began in the summer of 2018 as four stores near the home bases of both—Cleveland, Ohio, and Colorado Spring, Colorado (Red Robin being the latter)—started selling Donatos and its 100 “edge to edge” pepperonis pies cut into squares. Progress stalled during COVID but has anchored in again.
As much as the deal was financially alluring long-term, it also achieved something Donatos historically strived toward—the chance to take its unique preparation and ingredients through distribution channels across the country.
Donatos wasn’t always able to franchise in locations because it couldn’t get product there affordably, Krouse explains. Red Robin changed that. “Those two things [the profitability being the other] really helped us grow,” he says. “And that’s what our destiny is—to go beyond a regional pizza chain.”
Learning and growing from Donatos culture will stick with Krouse as well. He says he’s learned how to make decisions in the “gray area.” That’s often a unique trait of a company that leads with longevity and heart, he says. Sometimes you have to slow down and rethink decisions that go wider than what the balance sheet suggests. Is there a larger issue? You’ve got to put yourself on the other side of the table, Krouse says.
“It sounds corny, but this golden rule of treating others the way you want to be treated is really the fiber of what the culture is here,” he says. “And it is a little slower. I always say, you can be efficient but you may not be effective long-term. Like if you’re letting someone go, for example, slow down. Treat them with respect. Realize that they’re having a difficult time and ultimately that builds culture, and that’s what you get a reputation for—is treating people well.”
Krouse hopes people remember his CEO run as a time when they enjoyed what they were doing while doing it. “This business is really hard and we can do big things,” he says. “We can accomplish little things, too. So yes, it’s about that accomplishment. But I also hope they enjoyed their time here and were able to feel like it was a family.”
