They were planning to close at 9 a.m. that first day.
Dan DiZio had just co-founded a small pretzel bakery with his former college roommate. He had been a stockbroker; his roommate was a psychological counselor. They had tired of the daily 9-to-5 grind and decided to pool their resources and get into the pretzel business.
They had designs on being a two-man wholesale outfit, spending their early mornings twisting and baking the pretzels, selling them in large quantities during the morning hours and knocking off for the day before most people had made their lunch plans.
“We weren’t set up for retail,” DiZio says. “We didn’t even have a cash register. We rented a retail space only because the rent was cheaper than a warehouse would have been.”
But somehow, on that first day, they became a retail outfit. A line of customers formed at the door of their little storefront bakery and didn’t dissipate until late in the afternoon. In the span of one day back in 1998, the seeds of the company that became Philly Pretzel Factory were planted. And DiZio was thrust into a world of change management and rapid growth.
“I went on to open up eight more stores through 2004,” he says. “In 2005, we started franchising, that became popular, and in 2006 and ’07, it really started to take off. We opened 50 stores in ’07, 46 in ’08, so it jumped from a numbers standpoint very quickly. We were opening about a store a week at that point.”
Now, the company has 120 corporate and franchised locations, employing 1,500. It’s a meteoric rise, considering DiZio didn’t have much of a business plan at the outset.
“We didn’t have a typical structured plan,” Says DiZio, the company’s president. “We were flying by the seat of our pants.”
To get from a two-man operation to 120 locations, DiZio needed to formulate a business plan that gave future employees and franchisees rigid foundational principles, which still allowing room for flexibility as the company grew. And he needed to find the right people to facilitate growth — people who could help Philly Pretzel Factory broach new markets.
Build a framework
To formulate a growth strategy, you first need to set the ground rules for your business: who you want to serve, how you are going to serve them and what you are going to serve them.
Early in the life cycle of Philly Pretzel Factory — the brand name of Soft Pretzel Franchise Systems Inc. — DiZio decided he wanted to focus on customers who bought in volume. DiZio’s target consumer isn’t an individual walking in off the street for a bite to eat. He wanted to target people who are buying for large social gatherings, community sporting events and office parties, and spread the footprint of his business based on where those people congregate. City street corners were out, office parks and suburban neighborhoods were in.
“We decided that we were looking for family-type communities where there are a lot of sporting events, a lot of salespeople,” he says. “It comes back to picking the right target and having a product that follows that target.”
To aid in targeting the right markets and, in turn, the right franchisee candidates, DiZio and his staff use software to conduct studies that analyze demographics and purchasing trends. But he says it’s a folly to rely solely on computer data to plot your growth strategy.
DiZio and his team visit potential markets, experiencing them with their own eyes and ears. He says it offers a type of insight that is difficult to quantify but extremely critical in the process of deciding whether a given market is ripe for expansion.
“We drive the markets, look at the locations, look at the area, look at the schools, then really take it back to the office and look at our research in more detail,” DiZio says. “It’s not just on a screen or a piece of paper. It’s something intangible that you can’t really touch. You kind of feel the energy, you get a sense of a neighborhood and the way it is. It’s kind of like how Ray Kroc would go out and look for places to put a new McDonald’s. He was looking for church steeples. He wanted to put his restaurants where there were churches. But regardless of how it happens, you have to get out and feel if it’s the right location. For us, taking the word of a computer or demographic numbers wouldn’t be enough.”
Ultimately, DiZio says you need to keep your growth strategy as simple as you can. That doesn’t mean you completely avoid or fail to address complicated issues, but you should build your growth strategy around some central principles that never waver. The best bet is to figure out what it is you do best as an organization, and figuring out ways to leverage that strength.
“We wanted to keep it simple, and that was our philosophy and belief,” DiZio says. “We still have that philosophy of doing what we do best, but really trying not to do everything best. Everything else trickles down from that. There are always these great new products our there that we could come up with, but it would complicate the business model and we don’t want to do that. So we have to continue to follow those core beliefs of keeping it simple.”
