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Incredible Pizza owner Rick Barsness, left, and Scott Axon, director of franchise development, are using a small-market concept and a group-buying program to continue the company's growth.
Incredible Pizza owner Rick Barsness, left, and Scott Axon, director of franchise development, are using a small-market concept and a group-buying program to continue the company's growth.

2009 Dynamic Dozen, No. 1: Incredible Pizza Co. Inc.

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Incredible Pizza continues to take a healthy slice of the nation's family entertainment pie. And while some in the industry may be feeling a little thin and crispy, the family value niche that Incredible Pizza targets is proving to be deep dish.

"Our primary market focus is families that are lower white-collar and upper blue-collar - families that are on the edge of American prosperity," said Scott Axon, Incredible Pizza director of franchise development and advisory board member.

In better times, these families might take trips to major theme parks such as Disneyland, but in the current economy, value-oriented family entertainment venues close to home are a more attractive option, preserving family together time while saving airfare, travel time, gas and lodging costs.

Incredible Pizza's 2008 revenues were $82.6 million, up from $64 million in 2007. Much of Incredible Pizza's growth is fueled by development of new sites. There are now 16 Incredible Pizza locations open, and projects under construction include company partnership stores in Des Moines, Iowa, and Indianapolis, and a franchise store in Phoenix.

The economic downturn has created a buyer's market for construction, and Incredible Pizza owner Rick Barsness is stepping up to take advantage.

"We're going to build another five stores this year beyond the three that are under construction," he said. "If I can do more, I'll even do more. It's a great time to be building."

Systemwide, including company-owned, company partnership and franchise stores, Incredible Pizza locations employ 2,500 people.

As the company grows, it is refining its concept and creating new revenue opportunities.

In 2007 and 2008, Incredible Pizza devoted significant resources to customer research, including focus groups.

"We now know and have empirical evidence of what Mom wants, what she doesn't want, and we should have done that from day one," Axon said.

Based on customer input, Incredible Pizza restructured its birthday parties to include an unlimited games option. As a result, birthday party sales increased by almost 40 percent.

According to Axon, Incredible Pizza's franchise fee is $100,000 per territory, with ongoing revenue royalties of 5.5 percent, and the average budget needed to build an Incredible Pizza site in a leased facility is $5.5 million.

Incredible Pizza also is tweaking its concept - establishing a new "hometown" model for smaller markets of as few as 100,000 residents, although the company originally targeted major markets with populations of 750,000 to 1 million.

The small-market concept will launch this year, and there already is pent up demand: Axon said the company has gotten calls from would-be franchisees in smaller markets almost weekly, but until now it didn't have an option for them.

The company also is launching its Performance Enhancement Program, or PEP, that allows family entertainment businesses to benefit from Incredible Pizza's buying power and economies of scale. This cost-saving resource is available to family entertainment businesses across the U.S.

"For example, we have a PEP in Wisconsin, and they were buying their plush - which is the teddy bears, the games, the gifts, all that in the back - from the exact same vendor we were," Axon said.

Because of Incredible Pizza's volume, it can buy plush by the container load straight from China at substantial savings. As a result, in Wisconsin, Axon said, "we went in and day one, we cut their plush costs by 25 percent on the same stuff from the same vendor."

Looking ahead, the biggest challenge for Incredible Pizza is access to capital, Axon said.

"The rules are different. We used to structure our projects where we could start building (stores) with very little cash injection," Axon said. Now, the banks want the company to put up 25 percent to 33 percent of the money on the front end.

But challenges aside, the future looks bright, Axon said.

"It still looks like an unlimited opportunity," he added.[[In-content Ad]]


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