http://www.thefranchisemall.com/news/articles/16672-0.htmEmerging Concept: Redbrick Pizza
(Tuesday, June 20, 2006) - It took Pizza Hut 40 years to reach the 12,000 restaurant mark, but Jim Minidis believes his company, RedBrick Pizza, can do it in 10.
At nearly 60 units, Minidis' fast-casual pizza chain is a steady grower, one well regarded by industry observers and restaurant-savvy franchisees alike. The concept is both simple and unique: Gas-fired stone-hearth ovens cook gourmet pizzas and sandwiches in three minutes while staffers tickle waiting customers' taste buds with gelato samples. Stores, called "neighborhood pizza cafes," blend exhibition cooking, contemporary décor, seating and amenities, such as flat-screen TVs at every booth. The whole package is designed to attract pizza customers looking for something beyond the run-of-the-mill experience, patrons willing to pay $7 to $9 per visit.
Great idea. But can an already tight restaurant market sustain 12,000 RedBricks? Technomic researcher Darren Tristano is respectfully doubtful.
"My impression of the company is very, very positive. But to think they'll have 12,000 stores that soon, well, maybe that's aiming a little bit high," said Tristano, executive vice president of research for the Chicago-based firm.
Minidis doesn't pay much attention to such pessimism. He believes his chain can become the Starbucks Coffee of the pizza business for one simple reason: there's nothing like it in fast-casual dining.
"The dining public today is much more sophisticated than they were years ago," said Minidis, whose six-year-old company is headquartered in Palmdale, Calif. "They don't want ordinary coffee now that they know what Starbucks is like. They don't want ordinary chicken when they can have fire-roasted chicken. We're doing the same with pizza."
New to fast casual
As a 12-year Little Caesars franchisee, Minidis saw firsthand the oversupply of bargain-priced pizza. As he pondered developing a new concept, he realized the market for a fast-casual pizza experience was virtually untapped. Plus, the common juxtaposition of gelato to pizza in Italy assured him it would work in the United States as well.
"They've been doing this same thing for centuries in Italy, and I knew it could work here," Minidis said, adding that gelato itself carries an attractive Italian cachet. "We knew there were no other chains that focused strictly on fire-roasted pizza, gelato, sandwiches and fresh salads."
Ideally, six minutes elapse from the time RedBrick customers order their food until it's brought to the table. During the
wait, customers can sample any of 12 to 15 gelato offerings made in the store daily, view their food being made or watch TV at their booth. The casual and visually entertaining atmosphere was part of what captured franchisee Dan Rama's interest.
"My kids are challenging, young and very active," said Rama president of RBP Investment Group, which operates six RedBricks in Arizona. "The first time we went to one, the TV was there, a cartoon was on and that entertained them. My wife and I enjoyed our dinner without the kids fidgeting. Plus it was fast, good-quality food."
That RedBrick was unique in fast-casual dining attracted Dan Dumont and Paul Chong to the concept. The two are partners in RBP of Florida, a master development company for RedBrick in the Sunshine state, and they've committed to open 300 units.
"A big reason we signed on the dotted line was that RedBrick had a sustainable competitive advantage," said Chong. "We felt it wasn't going to be easily replicated by any pizza competitors or fast-casual competitors. We knew Papa John's and Domino's weren't suddenly going to declare they're doing gourmet pizzas."
Asked whether the skills of a serious pizza maker are required to master the company's super-hot ovens (company literature claims the ovens cook at 1,000 F, but Rama said he operates his at a still-scorching 700 F), Minidis said no. He declined to elaborate on the rapid baking process, saying only the pizzas cook as quickly and evenly as they do because of a proprietary dough recipe and cooking process. Thorough training makes the ovens as simple to operate as conveyors, he said. Rama agreed.
"It's all visual; you just rotate the pizzas in the oven in cycles and take them out when they're done," he said. "This is what I love about the concept. It's easy even for me, and especially with employees. Sometimes their biggest challenge is memorizing what goes on the gourmet pizzas."
Franchisees said they see great potential in the chain's gelato component. Few customers actually know what gelato is, "but once they taste it, they're hooked," Dumont said. Gelato ($2.50 per serving) makes up only 10 percent of total sales at his two Orlando stores, but when viewed as portions sold, gelato sales become more meaningful. "In a three-and-a-half-month period, we sold 15,700 total pizzas and 4,000 gelatos. When you think that 30 percent of our pizzas were sold with gelato, it's a bigger indicator of its importance than overall dollar sales."
Cost of bricks and mortar
It costs about $275,000 to open a RedBrick store, some 50 percent more than a common inline delivery-carryout unit, but considerably less than many comparable dine-in pizzerias. Units average 1,600 square feet and seat about 40. Currently the company has development agreements for more than 1,500 stores.
According to RedBrick's Web site, the franchise fee is $25,000 and potential candidates need a minimum net worth of $300,000 ($80,000 of that in liquid assets). The company takes a 6 percent royalty on sales, plus a 2 percent contribution to advertising.
Minidis declined to discuss per-store sales averages, but according to Gilbert, Ariz., franchisee Mo Zahoui, who was quoted in Nation's Restaurant News, annual sales in his first year could total $850,000 — about $300,000 more than the average U.S. pizzeria.
Such numbers present a potentially good return on investment, and that, Minidis said, should draw plenty of franchisees and further his incredible growth goals.
"Growing the company is a matter of minding your business and making sure your system can be duplicated in any state and
any country," he said. "We've proven we can double our system, and we expect to keep doing that."
Even if RedBrick is the perfect concept, Tristano said expects it will face many of the same hurdles Pizza Hut did on its climb to the top of the pizza heap. He said RedBrick has to battle many more pizza players than Pizza Hut did when it was small, plus it's competing for the same share of wallet sought by fast-casual stars like Chipotle Mexican Grill and Panera Bread. And then there are franchisee issues.
"Obviously, when you deal with franchises, you could run into struggles," Tristano said. "And site selection, picking the right market that's most appealing to the consumer, not one that's oversaturated with pizza players.
"But overall, I really like the concept, and if they can avoid a major threat from major chains, it should see some nice growth opportunities."