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Staying in becomes new going out giving pizza a bigger slice of sales

Back in the dark old days, though they're back with a vengeance now, Ranelagh Road's Chew 'n' Chat was known as one of the best joints in town for a pizza.

Now the home of one of the Four Star Pizza stores, it seems the ghost of Chew 'n' Chat still lingers.

The Four Star owners are embroiled in discussions with Dublin Corporation to have new signage placed on the building but a Chew 'n' Chat sign is still visible on the side of the building (if you look closely).

Franchise

For Jason Sheehy, co-owner of the Four Star chain, the delays are just part and parcel of the franchise business.

"From planning, each store takes up to 16 months, there will be an appeal somewhere down the road," he said. "There's a long lead-in in this business."

Still, while the recession grips the country, Mr Sheehy is upbeat about Four Star's future, and the company is planning to create 200 new jobs over the next 11 months, with the opening of 10 new franchise operations.

The expansion will bring the number of Four Star stores on the island of Ireland to 46.

The company is looking at 50 to 60 sites in the 32 counties, so it is already more than half-way there.

During the boom, staying in became the new going out and while punters are still dining in, their budgets have been cut and are trading in the champagne fuelled dinner parties for a pizza and beer

Enter Four Star and other mid-price or value-for-money chains who benefit from what's known as the "lipstick effect" -- during a recession consumers tend to purchase smaller, comforting items such as lipstick rather than large luxury items.

The term applies to the Four Star model. "Despite the doom and gloom people like to treat themselves," he said. "Our average pricing is €16 to €20. People are using discretionary disposable income and are not being asked to spend €80.

"It's mid-price and there's value there. As a result we have a lot of regular customers. The key is good value and our customers keep coming back. This is the secret for us and our competitors."

The company is continuing to expand, despite the gloomy landscape. "We are now laying the basis for the next 10 years. The movement in property prices also means there are better terms out there, it's a more favourable environment than even 12 months ago."

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Delivery

Whether the pizza delivery models are recession proof or not is still not clear but other chains are also in expansion mode.

Earlier this week, Domino's Pizza, one of the biggest operators in Ireland and Four Star's main competitor, said it was planning a sizeable investment in Ireland to cope with the growing demand for its product.

The company is planning to open 10 new stores here this year. Last year, its sales rose over 18pc to €397m while its profits rose to €26.5m.

While smaller in scale, Four Star will also report growth in figures for the year end 2008, with turnover expected to come in over €23m to €24m in the 12 months.

And like Domino's its busiest store is in Tallaght although operations in Ballsbridge, Cork and Galway are also flying, he said.

"It's a competitive landscape but we were the first chain in Ireland when we opened in 1986," Mr Sheehy said. Apart from Domino's, there are also brands like Godfathers, Apache and a number of individual operations.

"We have several differentiating factors. All our dough is made in-store and virtually all of our produce is Irish sourced."

Not being controlled by the US operations gives the franchise group flexibility in its plans. "We can dictate the pace of growth, branding, etc," said Mr Sheehy.

When the company bought the rights to the Four Star Pizza operations, it also agreed to purchase the rights for the international trademark in the UK.

But the group, headed up by BDO Simpson Xavier's Anthuan Xavier, has now put its plans for expansion abroad on hold.

"Our priority is rollout here at the moment," he said.

Back in 2006, Mr Xavier is understood to have paid over €5m for the Irish rights which were purchased from Wicklow businesswoman Anne O'Leary.

According to Mr Sheehy, the UK plans have not been shelved but new markets at a time of recession need more consideration.

And with the focus keenly on Ireland, Mr Sheehy said the success of each store depended on the local operator.

A franchise costs, on average, about €200,000 and involves a 10-year term. The deal involves a training period for the new operator.

The group has retained two training stores in Dublin, including the Ranelagh shop.

"There are guys who will have multiple stores and then there are former teachers, bankers and delivery people.

"Local adverting is also very important to the success of shop."

At a recent conference in Las Vegas, Mr Sheehy came upon a new branding trick -- a portable store.

The company has not introduced a Four Star travelling store where pizzas are made up on site.

Franchisees can use the portable store at local sporting events to promote the brand and their local stores.

Branding

"It's an important tool for branding and has proven very popular," Mr Sheehy said.

So far this year, Mr Sheehy said the group had not been bitten by the recession.

"In January, the pizza business is generally slower anyway -- people are broke and have to wait five weeks to be paid.

"But because they're not really spending a huge amount of money anyway, it's not really an issue."

For Mr Sheehy, whose favourite topping is pepperoni, he's banking on the continuation of the 80/20 rule to ride out the recession.

He explains -- 80pc of guys go for pepperoni, 80pc of women go for chicken or vegetarian toppings and it's 80pc marguerita pizzas for the kids.


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