The Next Big Thing
Profile of a start-up drive-through pizza franchise.
Fast and focused, Pizza Now! is bidding to be the next McDonald's
Philip Goldman taps the steering wheel. Then he checks his watch. "Can you believe how long this is taking?" he asks.
Almost a minute has passed since he leaned out of his car window and ordered a regular 95¢ hamburger. "This is unbelievable," he says, shifting a bit. Just as he finishes speaking, a hand juts out from the booth next to him; behold the awaited delight. "Finally," says Goldman. And to think he wasted nearly 90 seconds waiting -- roughly 30 seconds more than he planned.
Goldman's restlessness arises less from a personality quirk than from a zeal for market research. After all, both the hamburger stand from which he now roars away and his own venture, Pizza Now! Inc., seek to exploit a perpetually growing niche: impatient people. Goldman anticipates that both his franchisees and his customers will be fidgety. His franchisees, he asserts, could recoup their original investment in four short years. And Pizza Now! plans to lure consumers by transforming pizza into the speediest of fast foods. Goldman claims that his company will make good on the early, now abandoned, promises of such giants as McDonald's and Burger King.
That fast-food's elders have lost some of their zing is as plain to see as the burger that Goldman clutches. Today's visit to a thriving Rally's Inc. franchise roughly two miles from Pizza Now!'s first and only unit, in Phoenix, supports his belief that McDonald's and its ilk have strayed far enough from their original recipe to make them vulnerable to low-end competitors. Battling soaring costs, the fast-food giants have tried to leverage expenses by expanding their menus and hours. The result? Increased prices and slowed service, Goldman claims.
Armed with such anecdotal ammunition and with research showing that about 60% of all fast-food consumers whisk their food off premises, a generation of diehard restaurant fundamentalists has sprung up in the past five years. Five-year-old Rally's -- with 1990 sales projected at about $60 million and the #5 slot on the INC. 100 ranking of the fastest-growing small public companies -- has led the Big Mac attack. Rally's small units offer limited menu items, minimal seating, and two drive-through windows, making them as bare as a 1950s McDonald's and nearly as cheap.
Rally's may be the most formidable proponent of what Goldman terms "the resimplification of fast food," but plenty of others want to crawl through the same window of opportunity. Back in 1988 Goldman had also turned his mind to burgers, after failing with four Cincinnati fast-food chicken outlets. But a six-week national tour convinced him there were already too many players positioning themselves as the back-to-basics alternative to burgers.
Then he consulted Gregg Pancero, a friend and the owner of four Italian restaurant franchises. It's too late for burgers, Pancero agreed, but why isn't anyone trying drive-through pizza?
Goldman was intrigued. Pizza Hut Inc., which had invented a fast six-inch pizza, still did most of its business during dinnertime hours. If Goldman could speed the process up, he could position pizza for the $3.50-and-under lunch crowd that flocked to Rally's and its kind. There ought to be room, he figured: as of 1989 pizza represented one of the fastest-growing segments of the food industry. And off-premise consumption of fast foods had grown 23% since 1985.
Put simply, Pizza Now! offers one of the nation's most popular foods conveyed through two of the most popular means: drive-through, which should comprise the majority of sales, and delivery. "Drive-through is really our niche and our competitive advantage," says Goldman. "But to optimize the return on investment, we have to have delivery."
Goldman's career has been seasoned by both tremendous success (he built up 28 Arby's franchises with $17 million in sales) and abject failure (the now-defunct Marco Pollo chain of chicken outlets "cost me a ton of money"). The 46-year-old intends to stay in touch with the market as he grows. Even so, he ambitiously figures on opening nine company-owned units by the end of next year and selling at least 50 franchises during the same time span. And, yes, he is well aware that McDonald's may roll out pizza nationally later this year, and that Pizza Hut is toying with drive-through service.
"Look, I wasn't about to invest a million dollars of my own without knowing that I had a good shot," he says. "I've learned that the Midas touch is a bunch of bull. But we do have something innovative here. I'm sensitive to what is out there. Our product is more consistently high quality, and it's more accessible. So I don't know what they can do to us.
"After all," he adds, tossing away the hamburger wrapper, "what is McDonald's doing about Rally's?"
Nary a person alive, Goldman will grant, has ever craved drive-through pizza. "But," he adds, "it's an entrepreneur's job to stay a step ahead." In fact, Goldman's grand marketing strategy requires him to grab a defensible foothold in the market before anyone else.
One way Goldman hopes to lure both consumers and franchisees is by emphasizing the proven quality of the pizza. By using the same sauce and dough Pancero uses, he can point to a track record. "People will say that one pizza is definitely better than another, and you rarely hear that about hamburgers," theorizes Goldman. "I can create a distinguishable difference, flavorwise, and that gives us a hook." (But has he? For the results of INC.'s informal taste test, see "Time Is on His Side," page 6.)
No such duodenal dialectic will take place, however, unless Goldman can convince consumers to give Pizza Now! a try.
Since opening his Phoenix unit in November, Goldman has been mailing out 5,000 direct-mail pieces a week to homes in his three-mile-radius delivery area.
