Any way you slice it, the Chicago pizza market is intense, but that’s not stopping the folks at Nancy’s Pizza, a McKinley Park, Ill.-based carryout and delivery concept, from pursuing growth.
Founded in 1974 by Rocco Palese and named for his wife, Nancy’s specializes in Chicago-style stuffed pizza. The chain, which has 38 locations in and around Chicago, plans to open 177 new units in the next five years, officials said. Nancy’s also has five stores in Indiana and Georgia.
“Fast food and pizza markets are just a good place to be right now,” said David Howey, president of Chicago Franchise Systems, which owns both the Nancy’s Pizza and Al’s Beef brands. “I wouldn’t want to be in the higher-end restaurants.”
With two decades of franchising experience under their belts, officials of Chicago Franchise Systems say the stability of the pizza market, low commercial leases and streamlined operations are fueling their push toward growth.
“When you get opportunities like this and you can get rents at $17, $18, $19 a square foot, it’s a tremendous opportunity,” said Howey, who added that he has not seen lease prices this low since the 1980s.
Howey credits the brand’s smaller footprint, which offers no seating, with making it an appealing growth opportunity for potential Nancy’s Pizza franchisees.
“The right size for Nancy’s is 1,200 square feet,” he said. “These guys that are building 12,000- to 15,000-square-foot restaurants are struggling just to heat and air condition them.”
Howey noted that 76 percent of Nancy’s Pizza restaurants are run by their original franchise owners.
A smaller footprint also means a lower initial investment for franchisees. Currently, startup costs range from $290,000 to $340,000, depending on the size of the stores. The average unit volume for a Nancy’s Pizza is $650,000.
Nancy’s executives declined to comment on the average return on investment franchisees can expect.
In addition to the concept’s smaller-is-better approach, Nancy’s executives say, the menu also provides the competitive edge the chain needs to expand.
“Being the inventors of stuffed pizza since 1971, we’ve never taken our eye off quality, customer service and consistency,” said Michael Stadnicki, vice president of franchise development. “We use the same dough recipe that Rocco Palese used since 1971. We pluck our tomatoes from the same tomato fields since 1971. It’s really that focus on what was originally invented, and remaining purists to our food.”
To adapt its meat- and cheese-heavy menu to increasingly health-conscious consumers, the brand introduced two years ago its Stuffed Lite pizza, a stuffed pie that measures 1.5 inches and uses less cheese than the original version. In addition, Nancy’s introduced its Super Thin crust for carb-conscious pizza lovers.
The two more healthful pizza offerings now account for 20 percent to 25 percent of total pizza sales, officials said.
“We’ve supplied lots of choices for them, and it’s working out great for them and for us,” Howey said.
Nancy’s Pizza executives say they are confident that their Chicago-style pizza menu will fare well in other regions of the country. So far they have reason to be. Within one year of opening their first restaurant in Atlanta, it was voted Best Pizza in the Best of Atlanta 2009 survey.
The success of their Southern location is further proof to executives that the stuffed-pizza market, which they estimate at about 4 percent nationally, is underserved and therefore primed for the Nancy’s Pizza brand.
“The public’s acceptance of it is just phenomenal,” said Howey, who added that already 45 percent of the Atlanta unit’s sales are derived from stuffed crust.
Although the company’s growth will be funded primarily with money from franchise development, executives say they are also raising capital through private investors in order to beef up their marketing and human resources departments ahead of any expansion. The company’s annual sales are about $34 million, officials said.
A new aspect of Nancy’s marketing strategy is concentrated use of the Web. The company recently began using social media outlets, such as Facebook and Twitter, to get the word out to younger, Web-savvy customers.
“When people are looking for iconic Chicago brands to possibly become business partners with, our online visibility is very important,” Stadnicki said. “Facebook and Twitter are really opportunities for us to grow in the viral Web marketplace.”
In addition to Internet ordering, marketing plans include the introduction of location-specific coupons available online. In past attempts, Nancy’s found it difficult to coordinate with franchise owners as to which coupons their individual stores were required to accept. The new strategy allows customers to look up their local Nancy’s restaurant and check out deals specific to their restaurant of choice.
CHAIN FACTS NAME: Nancy’s PizzaOWNER: Chicago Franchise Systems, also parent to Al’s BeefHEADQUARTERS: McKinley Park, Ill.SEGMENT: Quick-service carryout and deliveryMENU: Pizza, pastas, sandwiches, saladsNO. OF UNITS: 43AVERAGE UNIT VOLUME: $650,000COMPANY’S ANNUAL SALES: $34 millionLEADERSHIP: Dave Howey, president; Michael Stadnicki, vice president, franchise sales; Eileen Holly, vice president, administration and communicationYEAR FOUNDED: 1974
Nancy’s Pizza has embraced other technologies as well. When the first restaurant opened in Elmhurst, Ill., as a family-style Italian restaurant, pizzas took 45 minutes to cook. A specially developed oven took that time to under 13 minutes.
“I developed a cooking system with Middleby Marshall in the early ‘90s that cooks stuffed pizzas in 12.5 minutes,” Howey said. “From a technology point of view, that was huge for us. It’s an amazing piece of equipment.”
Faster pizza means happier customers. And customer satisfaction is a guiding force in the brand’s plans for expansion. In addition to rigorous franchisee testing, Nancy’s places a strong emphasis on customer service. The brand is currently evaluating restaurants and retraining stores that have become “factory-like” and lost some of the community pizzeria feel that Nancy’s prides itself on providing.
“When you’re dealing with chains like ours, the personality end is so critical for us,” Howey said. “We have so much history in our products. The franchise system is a family, and when you’re bringing people into your family, you want to make sure you’re bringing in someone in who is going to understand that.”