Incredible Pizza Co. bouncing back with investments

Steve Mullins: The restaurant industry is dynamic and highly competitive.

Springfield-based Incredible Pizza Co. is investing in its brand, turning a page on challenges of the past, and hopping into the future.

The restaurant and gaming center in Springfield is receiving a $1 million upgrade following the exit this summer of costume and party-supply retailer Party City, which moved a half-mile north on Campbell Avenue.

The move opened up a 10,000-square-foot space for expansion, giving Incredible Pizza 52,000 square feet at 2850 S. Campbell Ave., and forwarding plans for new features.

The plans call for an indoor trampoline park at the current site of its go-kart track, remodeling its laser tag arena and adding an attraction dubbed Frog Hopper.

The expansion is part of a growth strategy for the company with nine stores across four states and Mexico, down from a high of 19 in 2010.

Incredible Pizza President and CEO Rick Barsness said the company, which started in 2002 and has been recognized for fast growth, is investing millions of dollars as it dusts off the recession’s declining revenues and a bad franchise deal that stunted aggressive plans.

“It’s time to redo and refresh,” Barsness said.

Franchise fallout
New investments are in stark contrast to some recent challenges the company has faced.

Incredible Pizza was named southwest Missouri’s fastest-growing company in Springfield Business Journal’s 2009 Dynamic Dozen awards with 2008 revenue of $82.6 million, a 29 percent increase from 2007.

The company also cracked the top 800 on the 2009 Inc. 5000 list of fastest growing companies, checking in at 369 percent three-year growth.

But the economy hit hard, and 2009 marked a turning point.

Houston-based franchisee FEC Holdings LLP filed a lawsuit that sought $46 million invested to open seven family entertainment centers in Texas and Louisiana. The suit cited misleading earnings claims and build-out promises.

Six years earlier, FEC Holdings had committed to building 30 stores by 2018. But the plans fell apart, and in 2010, Incredible Pizza Franchise Group LLC settled the suit, according to SBJ archives.

In the end, Incredible Pizza walked away with a judgment for nearly $400,000 in cash and six 1957 Chevrolet cars valued at $90,000, but they lost the franchise stores.

“They had seven stores, and even though four of them were profitable, they chose to close them anyway. I never did understand that decision, but it wasn’t my decision,” Barsness said, adding the former franchisee went on to open under different concepts. “That kind of hurt us, quite frankly.”

Barsness said 2014 revenue was around $40 million, less than half the tally a few years ago.

Competitive environment
Drury University economics professor Steve Mullins said the restaurant industry is highly competitive, which makes it difficult for many ventures to survive, let alone continue year-over-year sales increases.

“This particular industry is extremely dynamic and competitive with what economists call low barriers to entry,” Mullins said, referring to startup costs and access to the necessary tools for service. “A small percentage of firms survive in those kinds of environments.”

According to the National Restaurant Association, nearly 10,700 restaurants operated in Missouri last year, and 2015 sales are projected at $9.6 billion. A 2005 study from Cornell University found about 30 percent of new restaurants do not make it past the first year, and 60 percent fail within three years.

“Just look at the turnover in restaurants in Springfield in the last 20 years. You could think of examples where restaurants that had extremely well known names that everyone was aware of went out of business,” Mullins said, with former fine-dining Clary’s and barbeque standout Trotter’s as examples. “There are restaurants that have gone gang busters for a while and any myriad of things could cause them to lose favor.

“Part of it is that the public is extremely fickle.”

Barsness said Incredible Pizza officials might have been too ambitious in its early days after an initial taste of success and talks with FEC Holdings.

“We probably grew too fast back then. We were under a lot of pressure by that particular franchisee to open a lot of stores in a particular period of time. I think that might have been a mistake on our part. We’ll do much more slow, steady growth now, but at least we’re starting to think about growth again,” Barsness said, adding all Incredible Pizza stores are reporting annual profits.

Last year’s revenue was up 7 percent compared to 2013, and Incredible Pizza sales are up 21 percent the past three years. No new stores have opened in that time, and Barsness says franchisee discussions have been quieted.

“We couldn’t be happier to be in this position after coming through some difficult times,” he said.

Springfield and beyond
The company also dolled out $1.7 million in upgrades to its Tulsa, Okla., store last year.

It built an indoor roller coaster in Tulsa, and another is planned for the Memphis, Tenn., store, which Barsness said is budgeted for $500,000 in improvements. The Springfield building doesn’t have the height to allow an indoor coaster.

In Oklahoma City, the company is negotiating a lease on a 110,000-square-foot building for a corporate restaurant and entertainment center, with the hope to move in by midyear. Startup costs are estimated at $6 million, Barsness said. Other renovations are being considered on a store-by-store basis, but the OKC corporate store is the only new plan in the works.

“At our Tulsa store last year, we had added a trampoline park, new go-carts and it was a tremendous success,” Barsness said, noting revenue is up 22 percent in Tulsa this year. “So, we thought, let’s take this back to Springfield.

“We know this model works, so it’s not like it’s an experiment for us.”

Barsness said the expansion should be complete in December, and Bank of Missouri is helping fund the project.

Less than 2 miles away from his Springfield store, the patented Sky Zone trampoline park concept opened earlier this year. Barsness said the trampoline concept is nothing new.

“I visited 22 trampoline parks all over the United States, and we were in construction in Tulsa when we heard Sky Zone was coming to Tulsa,” Barsness said, noting Incredible Pizza caters to a family crowd. “We are not a teenage hangout.”