In Round Table Pizza, franchisor gets ‘center of the plate’ concept it’s always wantedIn Round Table Pizza, franchisor gets ‘center of the plate’ concept it’s always wanted

Global Franchise Group has long wanted to add a more substantial concept to its snack-heavy menu of franchise brands including Pretzelmaker, Maggie Moo’s and Great American Cookies.

The company says it found the perfect fit in Round Table Pizza, the 450-unit, Concord, Calif.-based chain that GFG acquired for an undisclosed sum last week. 

Atlanta-based GFG plans to accelerate Round Table Pizza expansion for the first time in years by using its system to build on product quality and brand loyalty.

“We love the Round Table Pizza product,” GFG CEO Chris Dull said in an interview. “They have the best pizza out there, and their ancillary products like chicken wings and Pretzel Twists are the best in class. “

He added that Round Table has become something of a Northern California institution since it was founded in 1959. 

“The brand also has an emotional connection. It’s a longstanding, iconic brand in Northern California,” Dull said. “It has 30 percent of the Northern California pizza market.”

GFG was formed when the private-equity firm Levine Leichtman acquired what had been NexCen Brands in 2010. The goal was to create a mechanism for acquiring and operating restaurant concepts. In 2014, GFG began acquiring additional brands with the purchase of 80-unit Hot Dog on a Stick in a bankruptcy auction.

The company spent much of the next year integrating Hot Dog into its business while also working to generate sales. The mall-heavy hot dog concept had struggled with declining same-store sales for each of the previous six years but has generated same-store sales growth of 2 to 2.5 percent a year since the acquisition.

“That’s in mall real estate,” Dull said. “That’s tough.” Indeed, the company is now targeting different types of locations for Hot Dogs, including theme parks and boardwalks.

“We’re going back to our roots,” Dull said. “Hot Dog on a Stick was originally a beachfront concept participating in a lot of local California fairs.”

The improvement at Hot Dog gave GFG the confidence to get back in the market and make another deal.

With the company fully integrated, GFG began looking “pretty aggressively at various acquisition opportunities” in 2016, Dull said. The company targeted 20 different options that didn’t work out for various reasons. It began targeting the employee-owned Round Table earlier this year.

GFG believes its system can operate many brands under one roof more profitably than if they were operated separately.  The franchisor uses a shared service model, sharing the executive team and “non-core functions” like legal and human resources.

“GFG has been built to make acquisitions,” Dull said. “When we feel comfortable that we have all things under control and the business is moving in the right direction and hitting targets, we look to deploy capital to make another deal.”

“As we add brands, all in a similar space, food, we’re able to leverage the vendor community to drive cost savings and improve efficiency to our franchisees,” Dull said. “They get more profitable unit-level economics.”

In Round Table, GFG bought itself a big brand with 450 total locations, most of which are franchise units. The pizza chain has performed well in recent years, with estimated unit sales growing by 11 percent over the past two years to more than $1 million per location.

Dull plans to accelerate development of the chain’s “Round Table Clubhouse” concept, which is a self-service version of the brand with expanded alcohol offerings and an expanded menu.

Dull also believes the company can improve unit economics for franchisees. For instance, the company plans to “value engineer” the chain’s prototype to make it more profitable for operators to build locations.

“We believe that can spark development through the franchise side,” Dull said.

For Round Table, the deal was a boon to its employees. Round Table is fully employee owned through an Employee Stock Ownership Plan, or ESOP.

“Everyone is getting paid today,” Dull said.

Contact Jonathan Maze at [email protected]

Follow him on Twitter: @jonathanmaze