Trying To Take A Bigger Bite Of The Pizza Pie

In a crowded segment of franchising, Diane Webb and her husband, Patrick, decided to take a calculated gamble on a model that's expanding across Western Canada - and eventually eastward - with a different approach than most typical pizza chains.

Ms. Webb is set to open a new Papa Murphy's Pizza location in Sherwood Park, Alta., just outside Edmonton. It's not like there's a shortage of pizza chains and independents. But she's banking on its model of "take 'n' bake" pizza.

They make the pizza in front of you and you take it home to bake it whenever you want. They don't deliver and they're not late-night pizza joints. It's their differentiator in a segment of franchising that has proven tough for many who have tried it.

Ms. Webb is eager to get her first location going, but has her eye on other potential locations. "We want to get this one up and running first," says Ms. Webb. "If all goes well, we would love to open up another couple of Papa Murphy's within five years." The couple bought in because she says they thought it was a franchising concept that stood apart from the melange of existing outlets.

Chuck van der Lee, owner of the Papa M Pizza Canada brand (Papa Murphy's), got the master franchise rights for Canada from this Pacific Northwest-based parent company in February this year, following his management of another franchise in Victoria since August 2011.

The company has a significant presence in the United States, operating in 39 states with 1,365 locations, planning to grow to 3,000. In Canada, there are currently only 15 locations, mostly in B.C., with three stores in Edmonton and two in Grande Prairie, Alta.

He plans to grow to 300 locations across Western Canada, eventually breaking into eastern markets. "Initially, the play is going to be to focus on Western Canada," says Mr. van der Lee. "When you've got strength in a given market - it's a lot easier that way." Their differentiator - the concept of taking the pizza home to bake it yourself - does stand out from the typical dine-in, take-out or delivery models. It has yet to be seen if it will catch on in Canada, but Mr. van der Lee is clearly optimistic it will.

The company is built around the recent trend toward an emphasis on freshness and quality among consumers - and marketers. They make the dough and toppings each day and the concept of taking it home to cook it yourself could cater to parents on the way home who prefer to wait to cook it later.

Advertisement After a location establishes itself, about half of the business typically comes from phone-in orders in which customers drop by and pick it up on the way home, says Mr. van der Lee.

Whatever the concept, it's not alone in its quest to quench Canadians' voracious appetite for pizza. It is, after all, eaten about 43 times per year by each household, according to some estimates - a little less than once a week on average. There's no shortage of selection.

No doubt it's a crowded market, but there appears to be room for growth.

"Yes, there is still room for competition," says Gareth Parry, a franchise consultant with CanFranGlobal Consultants Inc. in Ontario. "There is room for competition because there's market demand [and] a little more demand for quality." He represents Pizza Hut, which is currently embarking on its own expansion plan. In the past four or five years, the company has expanded in existing markets largely through its current franchisees - the majority of which are companies that own about 10 locations.

"Now they're opening up a number of new locations [in] new trading areas - you could perhaps call them tier 2 towns and cities," says Mr. Parry, referring to smaller communities outside of major centres - not unlike Papa Murphy's strategy for growth.

"[Major centres] are pretty much sewn up by existing franchisees that have development programs, but the interest is phenomenal," he says, adding he has had more than 3,000 franchise inquiries in the past few months.

Pizza Hut is looking to target single-unit franchisees, as well as independent operators who may be willing to buy into their brand.

"There's a focus on conversions of existing pizza places, so some of the big brands are looking at independent operators and asking if they'll switch over to a franchise," Mr. Parry says.

Taking on more well-established players in the market doesn't faze Mr. van der Lee. Papa Murphy's offers a relatively low entry cost of $230,000, which includes a $25,000 franchise fee.

They're also targeting smaller communities, where it's easier to break into a market and establish a local presence. Papa Murphy's will also seek out niche locations in suburban communities and outlying areas, such as its Surrey and Richmond stores in southern British Columbia, as well as its Sherwood Park and Red Deer, Alta., locations.

The company has more than 30 years of experience behind it and is the fifth-largest pizza chain in North America.

Pizza is an internationally accepted, and popular, choice - the largest quick-serve restaurant market in North America - and there's lots of reasons for that. "It's cheap, cheerful - and if you don't have a lot of money, you can still get a pizza for your family," Mr. Parry says.

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