Growth Chains: Pie FaceGrowth Chains: Pie Face

by paul Frumkin


Savory meat pies are not the kind of fare most Americans expect to find at chain restaurants around the country, but officials of the Australian-based Pie Face are confident they can export the extremely popular down-under dish stateside. 


They also have made a believer of entrepreneur Steve Wynn, the chairman and chief executive of Wynn Resorts Ltd. in Las Vegas, who just acquired 43 percent of issued and outstanding shares of Pie Face USA’s common stock for $15 million in a private placement. Wynn will appoint two directors to the company’s board.


The inaugural U.S. branch of the Pie Face concept — which specializes in handheld savory and sweet pies — debuted a couple of months ago in the Times Square area of Manhattan, and officials plan to have another three units operating in New York by the end of 2012. 


HEADQUARTERS: Sydney

MARKET SEGMENT: 
bakery cafe, quick service
AVERAGE TRANSACTION: Australia, $6.50; 
New York, $9

NO. OF UNITS: 
Australia, 75; United States, one open, three under development in New York

SYSTEMWIDE SALES: 
$50 million in 2012

NEW YORK UNIT SALES PROJECTIONS: $1.8 million

CHIEF MENU ITEMS: 
savory and sweet pies, 
coffee

AVERAGE SEATING: 10-12

FUNDING FOR GROWTH: self-funded

LEADERSHIP: Wayne 
Homschek, founder and CEO; wife Betty Fong, 
founder and COO

YEAR FOUNDED: 2003

COMPETITION: no direct chain competition in the U.S.

TARGET MARKETS: U.S., U.K., Japan
WEBSITE: www.piefacenyc.com

Founder and chief executive Wayne Homschek says the strategy is to open 10 to 15 stores in New York, “show that the model is workable and roll it out nationally.” 


Prior to partnering with Wynn, Homschek, a former investment banker with Salomon Smith Barney, had been in talks with representatives of U.S. chains, private equity firms and other potential partners who could bring a source of expansion capital to the venture.


Once Pie Face establishes a presence in New York, Homschek said he expects to expand it around the country. Meanwhile, he said doing business in New York is more profitable than it is in Australia. 


“People talk about labor costs being high here, but Australia is a tougher market for QSRs,” he said. “The minimum wage in Australia is $20 or $21 an hour. There’s a big labor advantage in the U.S.” 


Homschek also noted food costs are lower here. 


“The ingredients for a Chunky Steak pie might cost $1 in Australia, while the same pie in New York costs 88 cents,” he said. Consequently, U.S. margins are 5 percent to 8 percent better than in Australia, he said.


Pie Face — which operates 24 hours a day, seven days a week — was founded in 2003 by Homschek and his wife/chief operating officer Betty Fong, who opened their first unit in the Bondi Junction area of Sydney. The grab-and-go concept, which relies on a central commissary structure, has since swelled to 75 units in Australia, most of which are franchised. 


Supplied by a central commissary located in Brooklyn, N.Y., where the pies are prepared and blast-frozen, the U.S. Pie Face venture features a variety of savory pies and sausage rolls. Selections include Chunky Steak pie, Thai Chicken Curry pie, Mexican Pie, Breakfast Pie and vegetarian rolls. Large pies are priced at $5.95 each; mini pies are $2.75.


The mini pies can be purchased in six packs and 12 packs.


As the brand’s name indicates, each pie is decorated with a face baked into the crust that designates the flavor. For example, the letter “C” on a pie — which does double duty as a smile — indicates it is Chicken & Mushroom. 


The menu also includes sweet pies, pastries and cakes, sandwiches and wraps, soups, and coffees. In Australia Pie Face only offers espresso blend, but the U.S. menu also features drip coffee to accommodate the American marketplace. 


Homschek said the coffee currently accounts for 12 percent of sales in New York, although he anticipates that will rise to 30 percent eventually. However, the savory pies are expected to be the chief attraction, generating 45 percent of sales, he said.


Americans who have traveled to Australia and tried meat pies there have responded well, Homschek said. 


“We still have to educate people here, but over time we will,” he added.


Food trends expert Nancy Kruse is bullish on the future of savory pies in this country, as well. 


“I think it is an idea with a lot of intrinsic value,” Kruse said. “It certainly taps into the comfort-food trend, but is not the kind of thing people make at home. 


“I think it’s definitely a niche opportunity, and I suspect they will do very well,” she said. 

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Contact Paul Frumkin at [email protected].