The Small Business Administration is a big player in American small business. We’ve been doing a good bit of thinking on what the SBA can do for franchises in recent weeks.
You’ve might have watched the interesting video that Joel Libava produced for Franchise Direct about our SBA-approved franchises. It’s a really topical discussion for anyone on the verge of investing in a franchise. Then Monday, Entrepreneur magazine published a long interview with Susan Mills, the head of the SBA, who was marking her second year in the position.
If you’re interested in the politics of small-business funding, this interview will appeal to you. Of all the jobs that President Obama was handing out after his election, head of the Small Business Administration was certainly one of the more challenging ones, and despite the difficulties, Mills seems to feel that the SBA is making strides towards delivering results for entrepreneurs seeking funding.
She was asked in particular about the boosted guarantees that expired:
“As those guarantees ended, we had the highest quarter of lending ever in SBA history. In the quarter ended Dec. 31, we helped facilitate $11 billion worth of loans. And after that, we were concerned that we would see a fall-off. But, in the past several weeks, we’ve continued to rebound. At the SBA, we are back at 2008 lending levels.”
It’s great to see lending levels back to ‘08 levels. The challenge is meeting that the demand for funding like the IFA saw is out there. We hope Susan Mills can help get franchisees there.
It’s Monday and pizza (and basketball) are on our mind.
America is just coming to grips with March Madness. Over the next few weeks, the country will become obsessed with college basketball and the NCAA tournament. So now that the brackets have been revealed and the anticipation is mounting, it’s interesting that Domino’s Pizza have announced they are now the “Official Pizza of the NCAA”. Domino’s has not been involved with a national sports marketing sponsorship since 2007 and the NCAA represents a big investment for them. The sponsorship deal extends beyond basketball, though the NCAA Tournament will provide them with the greatest exposure. Given the perpetual popularity of the tournament, the deal seems like a slam dunk.
In other pizza news, the New Orleans-based pizza franchise Naked Pizza has turned a few heads with its choice for its first international unit: Dubai. The bustling Arab city may not have a long pizza tradition, but it has attracted great wealth of the past decade and rather than pursue the European or southeast Asian markets, Naked Pizza has decided to build their international identity with their Dubai store. Of course, there are cultural sensitivities for Naked to consider and they’ve rebranded their Arabian stores as “N_K_D Pizza”.
In all, Naked Pizza plan open over 100 stores on the Arabian peninsula. There’s a lot of political strife in the region at the moment, and it’s interesting to see Naked choosing the Arab world over China and India. Hopefully this strategy will prove to be a profitable one.
Some people see franchisors as men in suits who simply do math while franchisees do the real work. Well, today we’d like to offer up a story on pizza franchising that contradicts that preconception.
Siler Chapman is a pizza savant. He has competed in the Pizza Olympics in Italy and was even the winner of the freestyle acrobatic title at the U.S. Pizza Championships. He has a gift for tossing pizza dough. But Chapman also has a brain for business and Entrepreneur magazine has profiled his role within the Donatos Pizza franchise.
Chapman offered two very interesting insights, one regarding how to run a franchise, the other about how to create a thriving pizza franchise:
Was it hard changing to a franchise?I was running around with my head cut off. I didn’t have any basic structure or systems in place. I’ve seen hundreds of pizza concepts, but Donatos believes what I believe in: Their mission is to promote goodwill through their products and go above and beyond in service. My sales increased 33 percent when I made the switch.
Are you still tossing dough?
Last year, Donatos brought in a hand-tossed product, and my tossing is great marketing. Next spring, I’m going to Italy for one more title. They see me as the has-been kid, but they’ll be surprised when I step back in.
Chapman brings both flair and business expertise to his franchise ownership. He is living proof that you can bring particular expertise, beyond sales, to franchise ownership.
Americans love pizza. Americans love food franchises. Put the two together and you’ve got the great success of pizza franchises. Because of pizza’s enduring popularity, Franchise Direct has examined the state of pizza franchising in its 2010 Pizza Franchise Report. After assessing the Franchise Disclosure Documents (FDDs) of 25 pizza franchises, Franchise Direct has found that pizza franchises are growing again.
Franchise Direct’s 2010 Pizza Franchise Report studies both the FDD’s of market leaders like Papa John’s and Pizza Hut and growing names in the industry like Papa Murphy’s and Shakey’s. As such, it provides invaluable information and analysis for entrepreneurs considering buying in a pizza franchise.
While 59% of American pizzerias are independently-run, franchises have almost 50% of the total pizza sales share. Like all businesses in America, pizza franchises struggled in the latter part of 2008 and throughout 2009, as the cost of ingredients soared and consumer spending dropped. According to the Franchise Direct pizza report, delivery and take-out pizza franchises have quickly regained their market share, thanks to their high-quality and affordable product.
Pizza franchises are both some of the country’s oldest and most advanced food franchises. Three of America’s biggest pizza franchises – Domino’s, Pizza Hut and Little Caesars – have been operating for over 50 years. While the pizza pie hasn’t evolved much over the last few hundred years, America’s biggest pizza franchises are driving success in 2010 by tapping into the country’s growing fascination with technology, especially of the environmental-friendly variety. Online and text-message ordering platforms are generating sales, while Papa John’s is pioneering the use of green technology with new eco-friendly ovens. Meanwhile, Domino’s took the risk of ripping up the script entirely, and have boldly introduced a brand-new recipe to attract new eaters.
With nearly 70,000 pizzerias in America, consumers want a name they can trust. With sales rising across the industry in the first quarter of 2010, Franchise Direct’s latest report predicts that pizza franchises will enjoy greater success in the future as they give Americans the food they want, the way they want it.
Franchise Direct is about to publish its latest franchise report, a second investigation of the pizza industry.
We’ll be blogging more about the 2010 pizza franchise report next week. It’s a very thorough examination of the pizza franchise industry, and specifically provides an interesting perspective on the evolution of Domino’s Pizza. As we’ve blogged before, Domino’s has begun to deconstruct its image this year. They’ve changed their pizza recipe and publically admitted that their previous pizza wasn’t tasty enough.
With pizza on our minds, we were hugely interested to see the latest step in their evolving marketing position: the “Show Us Your Pizza” campaign. The pizza franchise is asking their customers to upload photos of their just-delivered Domino’s pie. They don’t want anything photoshopped or airbrushed. Just pizza straight out of the box (or in the box, if you prefer). Domino’s will award $500 to four of the entrants. We wouldn’t recommend viewing the site on an empty stomach. There’s a whole lot of pizza there to make you hungry.
In conjunction with this campaign, Domino’s have vowed that they will never doctor any official photographs of their pizza and that the only people who will photograph their pizzas will be employees trained in making their pizza by hand.
It’s a pretty radical step in pizza marketing and Chief Marketing Officer Russel Weiman believes it will change food photography and marketing forever. Their belief is that if the real thing doesn’t make your mouth water, why bother? The implicit message is that all of Domino’s competitors manipulate the images of their pizza to make it look tastier, while with Domino’s, you’re looking at the real deal. Brandweek are calling it the “Real Beauty” campaign of pizza.
Now whether or not customers see it that way is another thing entirely. But Domino’s is undergoing a massive effort to change the way the public thinks of its product, and this campaign marks an even braver step. It will be interesting to see how pizza eaters respond.
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