Uno Restaurants has been around since 1943 and has built a legacy around its signature Chicago deep dish pizza. Access to that legacy expanded in 1988, when the company launched Uno Foods to get its products onto grocery shelves.
Now, the company wants to shift its focus to just growing restaurants through franchising. To sharpen that focus, Uno Restaurants recently sold its Uno Foods Division to Great Kitchens, a Chicago-based manufacturer of take and bake pizzas. Terms of the deal weren’t disclosed, though in a recent interview, Uno CEO Erik Frederick said the brand “benefits from the other side of the transaction.”
“From a strategic standpoint, it just seemed like we had this side gig that was taking up a lot of our time. It was a distraction,” Frederick said. “We sold it to the right company. They love the brand and will take care of the brand. They’re great at manufacturing and will put the product on more shelves for us. Running a manufacturing operation is very different than running a restaurant. We couldn’t do the manufacturing part well and we found someone who could.”
Uno now includes about 80 company-owned and franchised locations across 18 states, Washington, DC, India and Saudi Arabia. The company has opened five new units throughout the last 12 months and Frederick said he’d love to have 10 new locations open by the end of this year. The pace is swift, and the pipeline is strong and Frederick believes the company has found this cadence by focusing specifically on hotel locations.
“Pizza gives you the added revenue streams from takeout and delivery, whereas with general casual dining, you wouldn’t get that upside in a hotel location. And because we’re full-service, guests can get more than pizza, like chicken, appetizers and pasta,” he said.
For franchisees, there are also the benefits of having a built-in audience, which Frederick says inoculates these new restaurants from some of the competitive pressures that exist when opening a standalone restaurant. Additionally, hotels already have the site selection, permitting and liquor license taken care, as well as other regulatory processes, like grease traps.
“They’re already in the hospitality business, so they have a lot of this stuff done. I just have to vet them to make sure they’ll care of the brand. The time to market is incredibly quick,” Frederick said.
Therein perhaps lies the biggest advantage in pursuing hotel locations. With Covid-related supply chain disruptions and labor shortages still playing catch up, “time to market” has been anything but quick in the industry. Frederick said the company is looking most closely at hotels that are going through a refresh or remodel to keep franchisees’ costs down. He adds that the benefits run both ways.
“If you are in the hotel business and you want to franchise a certain brand, like Marriott, you’re required to have a full-service restaurant just to be part of that brand. But you’re probably not making any money operating that restaurant because you’re a hotel operator,” Frederick said. “That’s where us coming in with a franchised model can provide a revenue stream and potentially make a lot of money.”
He adds that Uno locations that have already opened in hotels have doubled and tripled pre-Uno revenue numbers because of the additional revenue streams from takeout and delivery, and because pizza has lower food costs than other categories.
The timing is a bit fortuitous here. According to the American Hotel & Lodging Association, 2023 room-night demand is projected to surpass pre-pandemic levels, while a majority of American Express survey respondents said they plan to travel more this year versus last year.
“We think we’re in a good position because there is there is a lot of pent-up demand for travel, a lot of hotels are going after renovations that were deferred during Covid,” Frederick said. “And, mostly, because we’re now focusing more on what we think we’re good at and that is franchising.”
Contact Alicia Kelso at [email protected]
