Boston Pizza International Inc. is a Canadian owned and operated
restaurant. It has many facilities in Canada and has opened facilities in
the United States and in Southeast Asia. Boston Pizza is penetrating
further into the Canadian market and is opening at a new location on 8th
Street in Saskatoon. The chosen location has been the home of many previous
restaurant failures. It seems odd that any restaurant would want to open in
a location which has proven to be unsuccessful. What characteristics does
Boston Pizza have that other restaurants don't have that may allow this
location to be successful? This new location will be the second Boston
Pizza franchise in Saskatoon, complimenting the facility operating on 50th
Street. Will the market areas of these two restaurants overlap?
The early beginnings of this restaurant occurred in Edmonton,
Alberta. In 1963 the first Boston Pizza and Spaghetti House opened. The
name of the restaurant is seemingly odd because Boston is the name of a city
in the United States, and has nothing to do with a pizza restaurant located
in Edmonton. Ron Coyle, the original owner, named the restaurant 'Boston'
because the Boston Bruins NHL hockey team was the favorite of the Edmonton
area in the 1960's and he wanted his business to use sports as a promotion.
Another reason, which may have been more of a coincidence, was that his
accountant's surname was Boston ("only way", 37).
Boston Pizza and Spaghetti House became a popular restaurant and in 1968 it
began to operate as a franchise. In mid-1968, Jim Treliving, a former drum
major for the RCMP, and his friend Don Spence bought the franchising rights
for British Columbia with the exception of Vancouver. They opened their
first unit in Penticton, British Columbia, and in the first year of
operation the pizza restaurant grossed $52,000 and the nightclub which was
co-located with the restaurant grossed $80,000 (Cameron, 16).
Meanwhile, franchise units opened in Edmonton, Winnipeg and Vancouver. As
the pizza chain grew, Treliving and George Melville (who had become involved
with Treliving's restaurants as a financial planner) became involved in real
estate ventures in Hawaii and the Okanagon Valley and also in oil
investments in British Columbia (Cameron, 16). In 1983, these two men
purchased Boston Pizza Spaghetti House from the original owner Ron Coyle for
$3 million. This money was raised from private lenders ("recipe is simple",
16). During that same year, the headquarters of Boston Pizza was moved from
Edmonton, Alberta to Richmond, British Columbia where it is found today.
In the past decade, #1601 8th Street East has not been a very successful
location from which to operate a restaurant. Since 1985, four different
restaurants have occupied the facility. This location originally housed
Ponderosa Steakhouse from 1975 until 1984. The restaurants which occupied
the facility over the past decade were: Geno's Pizza (1985-87), East Side
Sids (mid-1987-88), Taster's Whole Earth1(1989-1990), and Just Buffets
(1991). Since 1992, the facility has been vacant.
In 1994, Boston Pizza became interested in this location. Although the
location had been unsuccessful in the past, a new Boston Pizza facility will
more likely operate successfully. The previous building, torn down only a
few months ago, was a dull brown color which didn't attract attention. The
new Boston Pizza building will use the kitchen of the old facility, but the
service area is being constructed similar to other Boston Pizza restaurants.
It is shaped and colored in a way that will grab the attention of vehicular
traffic. The building has an angular bright red roof and will have a bright
red and blue sign when construction is complete.
When the 8th street location opens its door, a market will already exist.
People working at the nearby businesses Bank of Montreal and Jubilee Ford,
may decide to eat lunch at Boston Pizza. In the evening, after work these
same people may stay and relax at BP's lounge. Families looking for a
convienient place to eat quality food may decide to eat here.
One problem remains, and it is a problem that Boston Pizza can not change.
The center barrier on 8th Street makes Boston Pizza accessible to vehicles
traveling west only. Vehicles traveling east would find it difficult to
access Boston Pizza. Therefore many potential customers will pass by and
find another place to eat.
The location of this new Boston Pizza will not affect or be affected by
the operation of the 50th street location which has been in operation since
1987. The 50th street facility has not been a very successful operation
since its opening. Its location has, however, provided transient customers
on weekdays. Many employees who work at nearby industrial facilities eat
lunch here.
The 50th Street Boston Pizza is located relatively close to the Saskatoon
Airport and Saskatchewan Place. The Airport and Saskatchewan Place have
also provided some of Boston Pizza's customers. However, although it is
close to the airport, Boston Pizza is not close to any hotels or motels and
so only a limited number of travelers come to eat. After large events at
Saskatchewan Place, Boston Pizza is a popular restaurant. After Billy
Graham spoke at Saskatchewan Place in late October, the restaurant was
packed. Usually, this location has only a few late evening visitors. It
has not been very successful at attracting families because of its
inconvienient location. An alternative location for a Boston Pizza in the
north end of the city would be on Idywyld Drive. Traffic flows to and from
the Airport and Saskatchewan Place are much larger on this street. This
street is also much more accessible to families.
Business success can be attributed to the use of a franchising system. When
Treliving and Melville bought Boston Pizza in 1983, "the two men owned 16 of
the 36 existing outlets, but sold them all to new franchisees" ("recipe is
simple", 16). Treliving didn't want to compete with franchisees that were
recruited. Instead Treliving and Mwlville wanted to look after the other
people's stores so that there would be no favouritism. In order to
concentrate on franchising, Treliving and Melville created a "management
consulting firm" ("recipe is simple", 16).
According to Treliving, "The system [franchising] provides franchisees with
a brand name, a proven business system and ongoing support" ("30 years",
81). A franchisee takes a smaller amount of risk than starting his or her
own business because he or she buys into a system for which the unexpected
has been planned. The problems which a franchisee may experience have
already been encountered by the franchisers over the years. Thus, the
franchiser has learned how to overcome the obstacles which may come about
and the franchiser can provide answers to all the important questions:
"What type of location is successful? What size trading area will ensure a
large enough customer base? What are acceptable labor costs? What lease
cost is acceptable? How much parking does a location require? What
upcoming demographic changes will affect the business?" ("30 years", 81)
Boston Pizza uses the business format franchise:
[The] business format franchise involves the use of not merely goods and
services identified by a trade mark or invention, but a package or
'blueprint' containing all the elements necessary to establish the business
and run it profitably on a predetermined basis. The package or blueprint is
carefully prepared from the company's wholly-owned and/or pilot operations,
thereby minimizing the risks involved in setting up a conventional small
business (Felstead, 48).
Boston Pizza provides plans for a building, helps the franchisee to
choose a location, and provides training for franchisees before they begin
to operate their new franchise. "There are two months training and two
meetings each year attended by all franchisees..." ("recipe is simple", 16).
In order to provide training, "one company-owned unit in Richmond serves as
a classroom and training headquarters" ("only way", 36-7).
Franchising has proven itself a strong system that works. In 1989 16,500
franchised establishments were operational in Canada, and that number grew
in 1992 to 20,200 ("30 years", 81) . "Franchising businesses account for 42
cents out of every dollar spent on retail goods and services today, and that
number is expected to grow to 50 cents by the year 2000. Quite simply, as a
business system, franchising works" ("30 years", 79).
A person with no previous experience who opens a new business runs a
considerable risk. This risk can be seen by considering the following
statistics: Half of all non-franchise restaurants close within the first
year and the United States Department of Commerce has stated that 90 percent
of franchise businesses are still in operation after 10 years, compared with
18 percent of independent businesses ("30 years", 81).
Treliving also compares his franchise method, which is exclusively
franchising, with the methods used by other successful restaurants.
"Restaurant chains like McDonald's, Burger King and Pizza Hut have a mix of
franchisees and corporate managers" ("30 years", 81-2) . Boston Pizza uses
the franchising system exclusively and believes that franchisee
entrepreneurs are more motivated than managers, because they have invested
their own money and therefore are more likely to succeed.
Treliving has attributed his success to the use of a franchising system,
gourmet pizza, and diverse menu (Cameron, 16). He believes that "Ma and Pa
pizza operations [which specialize in delivery out of a small facility] are
going the way of the dinosaur" because "they can't keep up with our
high-tech society and emphasis on gourmet pizza" (Cameron, 16). In the
past, a lower quality of delivered pizza was accepted because the person
responsible for making the pizza was far away, and the delivery person was
gone by the time you began to eat so there was no one to complain to.
However, in a restaurant where people sit down and have a meal, they
complain to the server if the food is sub-standard. These complaints are
inevitable because nothing is perfect. Customer complaints can be used as
opportunities to learn about customers problems. "Research has shown that
one of the best and most loyal customers is the one who had a complaint that
was satisfactorily resolved" (Lewis & Chambers, 72). Because Boston Pizza
also delivers pizza, Ma and Pa are either forced to generate a higher
quality product or go out of business.
Advertising a diverse menu has been one way Boston Pizza has drawn
customers. Boston Pizza has always prided themselves on using only fresh
ingredients when making their gourmet pizza. In 1986 Boston Pizza went one
step further and introduced salad into their menu. This addition was found
to attract female customers (Cameron, 16). Since then Boston Pizza has
become dedicated to offering and highlighting a diverse menu which can
satisfy a broader range of consumers (Mackin "more than a feeling", 24).
The restaurant "offers exotic pizza flavors and a broad menu of pastas,
salads and grill fare" ("Boston Pizza says, 3). They have reflected this
diversity in their latest broadcast campaign which was released in late 1994
across western Canada. A new slogan ,"'Come and get it all'...conveys the
message that Boston Pizza serves more than pizza..."(Boston Pizza says, 3).
The newly released broadcast campaign also featured television star John
Ratzenberger, who is known as Cliff the mailman from the Cheers television
series. The Boston city location of the Cheers bar was one connection which
helped in selecting this character, but there was also another factor.
Boston Pizza serves 3 distinguishable markets: business lunch, a family
enjoying a dinner together, and a late night post-cinema, or post-ball game
crowd ("only way to go", 37). "Ratzenberger's klutzy mailman evinced a
certain 'humor and humanity' the restaurant would like to project... [and]
the character also appeals to viewers across generational lines"
(McCullough, 3) making him a fine choice to speak to Boston Pizza's diverse
market.
In 1986, Boston Pizza were fortunate to have three outlets on the site of
Expo 86. Treliving and Melville both remark that this location is
responsible for making Boston Pizza "known internationally" ("pans out",
D7). The publicity that was attained through Expo 86 spawned interest from
businessmen in other countries which would later result in growth. The
restaurant took its first steps to expand into the international market when
the first Asian outlet was opened in Tai-chung, Taiwan in the year 1988.
Further development of a stronger network of Boston Pizza restaurants
throughout the Pacific Rim is of primary interest. Treliving has spoken for
Boston Pizza: "Our plan is to develop the Asian market through joint
ventures with Asian partners" ("30 years", 79). By developing through
joint ventures with Asian partners, Boston Pizza can "tap into the local
culture"("30 years", 79) as it moves into the foreign markets. Boston
Pizza can then become familiar with the differences between the foreign
market and markets in Canada and the United States. The new markets can be
treated accordingly.
In August 1992, Boston Pizza opened the "first pizza restaurant in
Guangzhou, China." (Mishima, D2) . The agreement was a joint venture
between Boston Pizza International, the Chinese Government and a local
franchise operator, T.K. Wong. The three parties made an arrangement to
share the profits ("Boston Pizza.", B17). The Chinese like the style of the
restaurant because it possesses a "North American concept" (Mishima, D2),
but the menu had to be changed in order to suit the culture better: no
alcohol would be served, and a smaller pizza size, corn soup, and a salad
bar would be available.
The restaurant franchise has proven that they can overcome cultural
differences by opening many successful facilities in Southeast Asia. The
franchising system allows them to do the same at a less significant level
within more familiar markets: "We accept that there are regional differences
that we have to adapt to. The franchising system is the only way to go
because the owner lends his or her personal touch depending on the
location." ("only way to go", 37). If Boston Pizza located on 8th Street in
Saskatoon is to succeed it will probably be due to the fact that it is a
franchise operation which is nationally advertised and is known for its
quality food.
Bibiliography.
"Boston Pizza exclusive." Canadian Hotel & Restaurant v.64(1) January 1986: 10.
"Boston Pizza opens new headquarters." Vancouver Sun. January 22, 1992: B5.
"Boston Pizza splits with agency." Marketing v.98(42) October 18, 1993: 1.
"Confucius say, 'Mama mia!'" Marketing v.93(32) August 22, 1988: 7.
Felstead, Alan. The Corporate Paradox: Power and control in the business
franchise. London: Routledge, 1993.
Hogben David. "Expo 86 keeps pizza order coming." Vancouver Sun. July 5,
1991: D2.
Jones, Ken & Simmons, Jim. Location, Location, Location: analyzing the
retail environment. 2nd Edition.
Mackin, Bob, Jr.. "Boston Pizza expands to untapped Chinese market:
Guangzhou Restaurant opens this summer." Marketing v.97(6) February 10,
1992: D2.
Mackin, Bob, Jr.. "Boston Pizza moves $1m AOR business to Glennie Stamnes."
Marketing v.96(45) November 11, 1991: 4.
Mendelsohn, Matin. The Guide to Franchising. 3rd Edition. Toronto: Pergamon
Press, 1982.
"New account for Grey." Marketing v.92(7) February 16, 1987: 16
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