Take-and-bake slices new niche: bake-at-home pizza faces huge demand, competition

Nation's Restaurant News, Nov 28, 1988 by Alan Liddle

Take-and-bake slices new niche

The decade-old take-and-bake pizza segment is suffering from growing pains as it stretches to satisfy escalating consumer demands for both convenience and value.

The take-and-bake niche, in which operators prepare pizzas to order for customers to bake at home, is growing quickly as low start-up costs and the convenience boom attract more and more players. Since kitchen equipment, exhaust systems, and seating are unnecessary, take-and-bake pizzas can be sold for 20 percent to 40 percent less than pizzeria products.

Although many take-and-bake operators express optimism about the future, several serve as a reminder that growth can be costly.

Today take-and-bake chains, which have a high-acceptance among value-conscious patrons, stretch from Florida to California.

Food-service veterans that have gotten into the segment include former TGI Friday's chief Daniel Scoggin, co-founder of three-unit Juliano's Pizza Jubilee in Richardson, Texas, and former Pepsico restaurant czar Terry Collins, who bought controlling interest in 13-unit Murphy's Take & Bake of Petaluma, Calif.

Two of the segment's oldest companies -- 10-year-old, 24-unit Kid's Corner in Wakeegan, Wis., and 9-year-old, 20-unit Mom's Bake-At Home in Philadelphia, claim to have been profitable since the start. But several other chains have yet to make a profit or consistently stay in the black.

Losing money and blaming development costs and start-up expenses are Juliano's, three-unit U-Take & Bake Pizza of Clearwater, Fla., and 13-unit Jake's Take 'n Bake of San Louis Obispo, Calif.

And even though seven-unit Pizza Fresh of Dallas is profitable, seven units have closed during the concept's 10-year run, a co-owner of the company that licenses the concept acknowledged.

Meanwhile, the two largest chains in the niche -- Portland Ore.-based Papa Aldo's International and Everett, Wash.-based Saucy's -- are fighting to regain profitability in 1988. Officials from both companies said recently that they expect changes in personnel and operations to help.

Both chains, which own and franchise more than 70 stores each, enjoy relatively high visibility and dominate the bake-at-home business in their respective home states. But neither has had an easy time in recent years, according to documents filed in California, where both companies are now selling franchises.

Seven-year-old Papa Aldo's has posted a profit just once during the past four fiscal years, reporting losses of $255,374 and gains of $63,646 during that time. In fiscal 1987, the company lost $31,450, while revenues fell 10 percent, to $1.25 million.

Saucy's remained marginally profitable during the same four years, reporting gains of $85,942 and losses of $83,256. The 6-year-old company lost $36,757 in fiscal 1987, a year in which revenues slipped 9 percent, to $3.21 million.

Efforts to increase systemwide sales and strengthen the bottom line at Papa Aldo's began in March 1987, when founder John Gundle hired Roger Goertz as vice president of operations. Goertz, formerly vice president of advertising and operations for Pizza Inn of Dallas, was promoted to executive vice president and chief operating officer five months later.

While acknowledging that the Papa Aldo's management team "would like [the company] to have a stronger financial position," Goertz stressed that the company's financial profile is not unlike that of other growing businesses.

"In light of our business plan, our goals and objectives, and what we know we can accomplish, we feel very good about ourselves, our system, and its expansion," Goertz declared.

Encouraged by systemwide per-store sales growth of about 18 percent for the first four months of 1988 and expectations that such a double-dig-it rise will occur again throughout the fall, Goertz said he expects Papa Aldo's to show profit in 1988.

To achieve those sales gains, he said, Papa Aldo's "extended and improved training programs" and directed its operations staff to spend more time in the field helping franchisees and company store managers.

The company also announced plans to add salads and frozen yogurt to its menu in an effort to stabilize business during the warmer summer months when bake-at-home pizza sales traditionally drop off.

Goertz credited Dennis Steinman, who joined the company as director of franchising in April, and Karen D. Schroeder, who became the corporate controller in February, with helping devise and implement new programs and systems.

Last year's loss, he said, was primarily attributable to two things: Papa Aldo's decision to "clean up" some "old debt" and its determination to acquire some franchised units.

Disclosure documents indicate that a slide in company stores sales from $533,483 in 1986 to $293,191 in 1987 was a major factor behind Papa Aldo's 10-percent drop in 1987 revenues. Goertz said the sale of some company stores and a falloff in pizza sales caused by unusually warm weather in Oregon during much of the year contributed greatly to the slump in company store sales.