Toledo Pizza Chain Tries For Slice Of National Pie

TOLEDO. (Sunday, March 27, 2005) - Little more than three years ago, Pasquale "Pat" Giammarco was satisfied with Marco's Pizza Inc.'s regional status after roughly a quarter-century in the pizza business. He was not considering new franchise owners for the 125-store chain.

"When you start something from scratch and you build it and you build it and you build it, you get to a point where you're too nit-picky," the Toledo chain's founder mused last week.

Then Jack Butorac, Jr., of Louisville, a semi-retired restaurant industry veteran assessing three investment possibilities for a friend in Ann Arbor, crossed his path. That led to Mr. Butorac taking over Marco's franchise efforts in January, 2004.
Now, with plans to have 500 stores nationwide in five years - and eventually 3,500, if the company follows a consultant's advice - the chain faces growing pains that could determine whether its ambitious quest fails or leads it to national prominence.

"Will we do that? Time will tell," Mr. Butorac said of 3,500 stores. "You've got to walk before you can run."

Industry experts say Marco's might be able to pull it off.

The firm has a solid concept and a good product, so it's up to management to meet its five-year goal, said John Correll, a pizza industry guru with Correll Consulting LLC in Canton, Mich.

"It's an aggressive plan but possible," he said. "The question is: Will they have the management and the moxie to pull it off?"

Franchisers often set lofty goals, realizing they can scale back efforts if there is resistance, said Terry Hill, a vice president with the International Franchise Association.

Maintaining consistency throught the stores is the key, he explained.

"It's a challenge for franchisers to grow because it's sort of like an army," Mr. Hill said. "You've got to have the support system for people in the field."

Mr. Giammarco remains president and chief executive of Marco's Pizza, owning 25 stores, mostly in the Toledo area. He also is the founder of and adviser to Marco's Franchising LLC, which is undertaking the growth initiative. Mr. Butorac, Mr. Giammarco, and other investors own the franchising company, which shares the Monroe Street corporate office and some employees with Marco's Pizza.

The chain that Mr. Giammarco started with a single Oregon store in 1978 is looking for franchisees nationwide willing to open three to 10 shops focused on carry-outs and deliveries in markets such as Indianapolis, Pittsburgh, and Lexington.



From left, Jack Butorac, Jr., Jock Moell, and founder Pasquale 'Pat' Giammarco gather for a conference.
( THE BLADE/JEREMY WADSWORTH )

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An outside consultant advised Marco's Franchising that it could grow in new and existing markets, such as by adding up to 40 stores to the 38 already in the Cleveland area, said Mr. Butorac, president of the franchising business.

He is the former chief executive for Tumbleweed Southwest Bar & Grill Mesquite Restaurants and a former executive with Chi-Chi's Restaurants and Fudd-
ruckers.

The franchising operation brought in more key players with experience in rapid franchise growth, Mr. Butorac said.

About 10 stores have been added so far in places such as the Las Vegas area, and development agreements have been signed for more than 40 more in Phoenix and elsewhere, he said.

The plan is to build upon, but not fundamentally change, the concept Mr. Giammarco worked on over the years.

"He developed a concept that is very, very competitive with the nationals," Mr. Butorac said.

Longtime Marco's executives, besides the chain's founder, are part of the franchising efforts, including Ken Switzer, Michael Jaynes, and Jock Moell; the latter has been with Mr. Giammarco pretty much since the beginning.

Maintaining the Marco's management team is a key to success, said Mr. Correll, the consultant.

And consistency, another key for success, has long been a hallmark for Mr. Giammarco, who established a system in which franchisees use approved suppliers for ovens, a proprietary cheese blend, colorful delivery boxes, and other items.

Marco's Franchising also assists in finding sites for and establishing the architecture of stores. And it helps with training and advertising.

Such consistency was what initially impressed Mr. Butorac when he stopped at five of the chain's pizza shops while driving from Louisville to Ann Arbor on the mission for his friend, he said.

Mr. Butorac was an adviser to Mr. Giammarco for nearly two years, giving the two men time to figure out what kind of business relationship they wanted to have.

Marco's has not had trouble finding franchisees because of its relatively low investment requirement of $200,000 a store. Average shop annual revenues are $600,000, Mr. Butorac said.

The company is in discussions with a potential franchisee in Tampa, for example, and is doing seminars in Dayton and the Indiana cities of Fort Wayne and South Bend, he said.

Toledo native James Tippin, who plans to open 10 Las Vegas area Marco's stores with his brother, Gerald, said their first shop, in Henderson, Nev., has reached $500,000 in sales after just four months and is well on the way to a target of $1 million a year.

The partners opened a second Marco's nearby six weeks ago, are in the process of opening two more in the Las Vegas area, and will have the others open within five years, Mr. Tippin said.

Battling against national chains and established local players has not been easy in the Las Vegas area, but Mr. Tippin said customers have had no complaints - just raves.

Marco's Franchising has given invaluable support, including almost monthly visits from corporate personnel, Mr. Tippin said. "They're very, very strict on the quality of the product, and they back it up with supervisors," he said.

More Marco's stores are likely to be found out West if the number of people inquiring about franchise opportunities and getting information from the Tippins is any indication, Mr. Tippin said. "We can't keep the flyers in the store," he said.

From the perspective of Mr. Giammarco, a more important factor than sheer numbers is ensuring that the chain dominates in whatever markets it enters, as it does in Toledo.

While the Marco's chain is growing, Mr. Giammarco is keeping a tight rein on products. The company recently introduced a pan pizza with changes the founder worked on for two years.

Marco's also is experimenting with chicken wings on the menu, an idea Mr. Butorac champions and tested in the Cleveland area, where he owns some stores.

Five Toledo area stores will introduce them in a couple of weeks, Mr. Giammarco said.

Following other pizza chains into the realm of chicken wings was resisted at first by the chain's founder, who admitted he is reluctant to add menu items.

Products have to be consistently better in flavor, quality, and other measurements than the competition before they become a permanent fixture, Mr. Giammarco said.

Such assessments are a key part of his role, said Mr. Butorac.

"I'm looking for him to be the rudder," Mr. Butorac said.

"I've got a lot of crazy ideas, and I'm looking for him to be the rudder to keep it in line."

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