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Delivering the dough.

Delivering The Dough

Going Public Can Be A Pie In The Sky Proposition, But Pizza Pro Founder Scott Stevens Can Almost Touch It

By Jan. 1, a homegrown player will have dropped out of the Pulaski County pizza market. But the exit of Pizza Pro, which began business in Jacksonville four years ago, should be considered more of an extended sabbatical than a final farewell.

The Oct. 26 sale of all seven Pizza Pro locations in the county to National Pizza Co., the large Pizza Hut franchiseholder based in Pittsburg, Kan., included a non-compete clause. The terms of that agreement prohibit Pizza Pro from re-entering the Pulaski County market until 1995.

For the time being at least, that geographic restriction leaves Scott Stevens with a small hole in his map of conquest. There are 74 other counties in Arkansas, not to mention the rest of the United States and the world, open for consideration. The 28-year-old founder of Pizza Pro has resigned himself to be content with this remaining territory.

Stevens has plans to establish his delivery franchise in dozens of locales, and he envisions a day in the not too distant future when investors can buy a slice of his Arkansas-based pizza franchise on the open market. By the time five years roll around, he intends to pick up a newspaper, turn to the daily stock report and see Pizza Pro listed among other publicly-traded companies.

Oh, and don't be surprised to see Pizza Pro outlets open back up in Pulaski County in 1995 with the expiration of the non-compete clause. "It would be surprising if we didn't," Stevens adds.

The seven Pulaski County outlets (three in Little Rock and one each in Jacksonville, Maumelle, North Little Rock and Sherwood) were Pizza Pro's core producers. The delivery facilities in Cabot, Russellville and Searcy are not a part of the sale to National Pizza Co. and remain under the Pizza Pro banner. The sales price of that transaction is undisclosed, but indications are the deal made Stevens a millionaire.

"Who's to say I wasn't a millionaire before this?" Stevens fires back. "I had a financial goal of retiring at age 27, but damn if I couldn't have done it at 25. I'd go crazy though. Money doesn't motivate me. The challenge of accomplishing is the thing."

With Stevens behind the wheel, the corporation generated annualized sales of $4 million and employed more than 250 at its operational peak in 1989. THE SUCCESS OF PIZZA Pro drew the attention of another young Arkansas company that made a name for itself in another segment of the franchise business -- TCBY Enterprises. In March, the yogurt concern made a brief overture toward Stevens with the idea of expanding its franchise base to include pizza delivery, one of the fastest growing segments of the $20 billion-plus U.S. pizza industry.

Stevens passed on TCBY's offer. Pizza Pro is his baby, and he wants to be there to direct its growth and maturity. While Stevens enjoys the day-to-day operations of the pizza delivery business, the sale to National Pizza Co. will free him for corporate development chores.

"I'd wake up with my list of 29 things to do, and I got such a kick out of crossing each one out as I went along," Stevens says of his hands-on management. "I had not built up my secondary level of management though, and I was too busy putting out fires. I didn't have much time for corporate planning and the administration end of it. I'll now be able to work toward the future planning of a large corporation."

Phase I of corporate development involved establishing a small chain and refining an operations system that would work for a large franchise network. Phase II entailed selling most of the delivery outlets, which permitted Stevens the time to pursue Phase III: franchising on a national level with the ultimate goal of taking Pizza Pro public.

Larry "Moon" Mullins, a former broker with Prudential-Bache in Little Rock, was hired earlier this year to help oversee Phase III. He'll be in charge of packaging franchises and lining up investors while Stevens provides the operational know-how and directs support for franchises.

Pizza Pro will in turn take in an as-yet-to-be-determined franchise fee plus a percent of the gross sales of each delivery location. Stevens and Mullins are examining the idea of locating franchises in cities with a population as small as 6,000. FRESH FROM A successful mule deer hunt in Colorado, Stevens is back at work again. His base of operations is a 6,000-SF sheet metal building at 902 E. Kiehl Ave. in Sherwood. Stevens plots the future direction of Pizza Pro and strategizes with Mullins inside the "war room."

The war room is a small office with unfinished particleboard walls and ceiling within the warehouse-style building. "The Entrpreneur's Manual" and "Iacocca" are among the inspirational titles visible among the offerings on the wall-mounted bookshelf.

Cardboard, held in place by duct tape, keeps the sunlight from entering the room through a large plate glass window. The orange glow of an electric space heater occasionally kicks on and off giving the war room a cozy bunker-like atmosphere.

A glass of iced Diet Coke is his constant companion around the office. Stevens goes through glass after glass of the soft drink munching on the ice as he goes.

Asked if he has ever failed to achieve a personal/business goal, Stevens utters two words: "Chicken Delivery."

He is referring to Chicken Quick, his short-lived attempt to do for chicken dinners what Domino's had done for pizza. Stevens abondoned this home delivery venture after three months.

"I experimented in the delivery of chicken, but you couldn't maintain ticket items that were high enough to be profitable at it," he reports. "I would like to experiment with a sit-down pizza operation. We're experimenting with adding deep pan pizza to our delivery menu right now."

At 18, Stevens entered the pizza wars on the front line delivering product for the Domino's chain in Columbus, Ohio, while attending school at Ohio State University. A year-and-a-half later, he dropped out to join the management training program with Tom Monaghan's $2.1 billion pizza army.

He left Ohio to manage a poorly performing Domino's outlet in Hattiesburg, Miss., that was ringing up weekly sales of $3,000 when projections indicated it should be producing $15,000.

Six months after taking over, weekly sales hit $20,000. What was the difference? Simply put, Stevens worked harder. One aspect of this was spending his free-time going door-to-door to visit with residents in his service area. On these sales calls, he would introduce himself and his enterprise to potential customers and hand out coupons -- a tactic he used successfully in establishing Pizza Pro.

"I wanted to rise above the rest and exceed [projections]," Stevens remarks. "It's persistence, and it's working hard. You have to be totally dedicated to it. There's no secret to it, but many people aren't willing to do what it takes."

Mullins shares an anecdote that exemplifies that persistence and hard work. "He called me the day after the sale [to National Pizza Co.] and said: `Do you realize it's Friday night, and I'm sitting here at the house. I haven't done this in 10 years.'"

At 21, Stevens became a Domino's franchiseholder himself with the operation rights for Craighead, Greene, Crittenden, Independence and Mississippi counties. In trying to open his first Domino's location in Jonesboro, Stevens was turned down by three different financial institutions. He cites his age as the underlying cause for the rejections.

With only $8,000 in savings, Stevens was forced to borrow $50,000 from outside sources who charged him 25 percent interest, which was even higher than the 20 percent-plus rates then prevalent during the early 1980s.

"I remember working 177 days straight, and I was paying $1,100 a week to pay off the loans as soon as I could," Stevens reflects on those days six years ago.

"Basically, I was living off of $20 a week. But that was okay. At that age, you've got the goal to get to the top. You've got tunnel vision. You just go for it. You've got the desire to succeed and win. Nobody likes to lose.

"I learned my lesson at 21 though. After that [first] store, I never borrowed money again."

According to Stevens, he doesn't hold a grudge against bankers. The attitude is indicative of his self-reliant personality, which is what drove him to start Pizza Pro in 1985.

A deal to acquire a Domino's franchise in California was squirreled at the regional level, but he had already sold off his franchise in northeast Arkansas. He looked to central Arkansas as his next opportunity, setting up shop in Jacksonville.

Some of the techniques he used to help establish Pizza Pro included handwritten thank-you cards to customers, no form letters. "If you ordered a pepperoni and cheese pizza, you got a thank-you note for a pepperoni and cheese pizza," Stevens points out. "People work hard for their money, and you want people to go out of their way to show the customer you appreciate them spending money with you."

He also cultivated customers at the Jacksonville Air Force Base by accepting checks between pay periods and agreeing not to cash them until the next payday, when a serviceman could deposit money to cover the check.

Stevens feels a special kinship with Pulaski County and intends to maintain Pizza Pro's base of operations here as the venture grows. It'll be interesting to see what he delivers in the newest phase of his brief but already successful business career.

PHOTO : Scott Stevens, Pizza Pro's founder and big cheese: "Money doesn't motivate me. The

PHOTO : challenge of accomplishing is the thing."
COPYRIGHT 1989 Journal Publishing, Inc.
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Copyright 1989 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Pizza Pro
Author:Waldon, George
Publication:Arkansas Business
Date:Nov 20, 1989
Previous Article:The life of Roy.
Next Article:Mark Abernathy.

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