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Piling it on.

In the name of growth, the management of Figaro's Italian Pizza took a simple business and made it more complicated.

Two years ago, when Dick Bunge and four other investors bought Salem-based Figaro's Italian Pizza Inc., the firm had a solid four-point growth plan in place.

Figaro's relied on franchise sales to "more and pop" proprietors, concentrated on small to mid-sized markets, stayed primarily in the Pacific Northwest and catered to the bake-your-own niche.

The strategy was, by all accounts, as successful as it was simple. Success magazine recently rated Figaro's the 18th best franchise in the country based on its financial performance, corporate growth and management, its relationship with franchisees and expansion opportunities. Figaro's growth strategy was a lot like a cheese pizza - relatively bland, good dough. Still, it was not to everyone's taste.

"We needed to do more if we were going to ensure substantial and sustained growth," says David Archer, Figaro's marketing director. "Substantial growth - we plan to double the number of our stores between now and 2001 - required a broader marketing base, a deeper product line and a more sophisticated business plan."

The company essentially reworked every component of its "cheesy" marketing plan, turning simple strategies into the managerial equivalent of a Figaro's combo.

While the company still sells franchises to onsite owner-managers, it is aggressively targeting multi-unit business owners and corporations. It also opened its first company store, in Lake Oswego (a second debuted in December in Puyallup, Wash.).

Figaro's continues to embrace what Archer terms "the Walmart way" by concentrating growth in small to medium-size cities. But it is opening more locations in bigger population centers. Most of the company stores, for example, will be dolloped in the Portland and Seattle metro areas.

Without abandoning its Pacific power base of Oregon,Washington, California, Idaho, Montana and Nevada, Figaro's is expanding beyond the West Coast. The company already has a few far-flung franchises in Minnesota, North Dakota, Indiana and Texas. ('There are still a few franchises available," quips Archer. "There are 40 more states.")

Figaro's maintains its "take and bake" business base, but the company has been adding a lot of new ingredients to its revenue recipe. Three years ago, for example, most franchises added "we bake" to "thee bake." All new franchises are required to have an on-premises oven.

The company also is testing a new lunch menu in a corporate locale, and Figaro's is encouraging its entrepreneurs to co-brand with TCBY. "One location, two franchises," says Archer."Dinner and dessert. It's a cross between synergy and vertical integration."

He summarizes the strategic changes this way: "We don't need to be all things to all people. We just need to provide the right support to the right people and franchises at the right time in the right way. Our new marketing strategy recognizes the needs of our customers - both internal and external - and goes even further to meet them."

Changing a business strategy can be a tricky undertaking. How does the company balance the different needs of small proprietors, big business franchisees and corporate stores? How are franchise owners going to feel when they see their franchise fees used in part to support potentially competitive corporate stores?

Archer doesn't foresee any "Mommy always liked you better" battles between owner/operators, multi-franchise firms and the corporate stores. "We provide everybody - we insist on providing everybody - with specific levels of support in a few given areas that are critical to overall success," he says. For example, Figaro's operations department meets with individual managers and conducts inspections on a regular basis to guarantee levels of professionalism and quality.

Other support services are available free upon request. "Some franchisees make extensive use of our marketing department," says Archer. "We create their coupons, draw up their ads, advise them on strategies. Other franchisees, particularly those with more extensive business backgrounds, take our basic marketing-materials and run with them."

The marketing efforts of the larger operations tend to support, rather than thwart, the smaller stores, he adds. A case in point is the dozen-plus Figaro's outlets operating-inside Waremart and Cub Food stores. This kind of proprietary piggybacking encourages more customers to try Figaro's, first at the inside store, later at the freestanding franchises. Everything that helps build the brand helps build the business.

Similarly, corporate stores are used to break ground rather than break franchisees. "Our corporate stores serve franchisees as much as they serve customers," says Archer. "Our people understand that." New products are designed and refined at the Lake Oswego store; extensive test marketing avoids roll-outs that just roll over and die. Training sessions, which used to be held at regular franchises, are now conducted under more controlled corporate conditions.

Much of the company's expansion into major markets in the eastern United States was by demand rather than design. Business associates of Ken Robertson, a former corporate owner, headed east and started operations in North Dakota and Minnesota. Other franchisees, familiar with Bunge's past success with Carl's Jr. franchises, saw the eastern states as a you-bake profit paradise. "Take-and-bake pizza is a strictly West Coast concept," says Archer. "We're entering a new market with a new product. We don't have to take away anybody's market share. It's ours for the taking and baking."

Dilution of the core message - a worry for many growing businesses - is not likely to be a problem. "We've been in business over 17 years, and we have to continuously communicate who we are, what we are, and what we can do," Archer says. "Some people still think that take-and-bake pizzas have to taste (I use the term loosely) like cardboard. They confuse take-and-bake with frozen-and-thawed. They see our 4-year-old ovens and ask 'Wow, you bake pizzas too?' When you have to keep reminding people what your business is all about you're not likely to forget yourself."

Marketing for growth is a never-ending struggle. "It doesn't matter how good your original marketing strategy was," says Archer. "Growth strategies have to change with the times and internal/external needs. Don't think of refinements as reinventing the wheel. You have to change wheels every once in a while or your growth plans end up in traction."
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Title Annotation:Figaro's Italian Pizza Inc.
Comment:Piling it on.(Figaro's Italian Pizza Inc.)
Author:Tylczak, Lynn
Publication:Oregon Business
Geographic Code:1USA
Date:Jan 1, 1999
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