Sid Fanarof of Irvine-based zpizza International Inc., which bills itself as a health-conscious pizzeria, is planning a makeover of the chain he started 25 years ago.
Fanarof plans to remodel the company’s seven restaurants and work with franchises to redo theirs. The chain includes 94 pizzerias, including 87 run by franchisees. About 20 are in Orange County.
“With the economy the way it is, you have to have brand differentiation to survive,” Fanarof said. “We are just emphasizing what we have always been.”
Zpizza, which has yearly sales of about $50 million, already is something of a standout. The restaurants serve vegan, organic and gluten-free pizzas. The pizzas are made of natural, local ingredients, including whole-wheat crusts.
The food is a reflection of Fanarof, a self-described bohemian who started zpizza in 1986 in Laguna Beach.
“Our niche is health-conscious pizza,” Seth Simchowitz, Fanarof’s stepson and franchisee of the chain’s remodeled prototype in Irvine. “We’re catering to people in a different way than most pizzerias.”
Redesign
The remodeled Irvine restaurant has a minimalist design and bright colors, including what Fanarof called “tomato red.” A new zpizza logo is on menus, marketing material and pizza boxes.
A marketing campaign is slated for early next year, about when the chain plans to start pushing the makeover to its own restaurants and those of other franchisees.
Zpizza, which began franchising in 2001, faces a challenge as franchisees struggle with a still soft economy and a lack of financing.
“It has been a really hard time for everyone in the industry,” Fanarof said. “We’re working out solutions for all of our franchisees.”
He said he’s in talks with franchisees about the chain’s makeover plans, encouraging them to be receptive while working with them on the costs.
The changes could cost about $100,000 per restaurant, Fanarof estimated.
Zpizza competes with big pizza chains that have ramped up marketing and cut prices, including Louisville, Ky.-based Yum Brands Inc.’s Pizza Hut and Domino’s Inc. of the Detroit area.
“People used to ask me who my competition was, and I’d tell them UPS, because the industry became very delivery focused,” Fanarof said.
Zpizza hasn’t taken part in the bigger, cheaper wars waged by the large chains.
“You have to have value and be more interesting or you’ve got to be the cheapest guy on the block,” Fanarof said. “We’re not looking to be the cheapest.”
That means zpizza’s closer competition is specialty chains, including San Clemente-based Oggi’s Pizza and Brewing Co., Tustin-based Lamppost Pizza Inc. and Laguna Niguel-based New York Upper Crust Pizza.
Zpizza has plans to expand to 300 restaurants in the next five years by selling franchise agreements.
That plan has been stalled for the past couple of years as the recession dried up financing.
The downturn hasn’t been all bad for business.
The chain has been opening one to two zpizzas a month, down from four a month before the recession. About 20 restaurants opened last year, while eight closed.
“Next quarter, we’re going to hit our 100th store,” Fanarof said.
New franchisees are more creditworthy and can find cheaper, better locations for restaurants, he said.
“We’ve gotten locations that are unbelievable,” Fanarof said. “We’re in very affluent areas. We market to affluent, upscale, educated areas.”
The chain has restaurants in Saudi Arabia and Mexico and is working on pizzerias in Vietnam.
“Anything American and health-conscious is hip and spreading around the world,” Fanarof said.
Chris Bright, zpizza’s president, handles franchise deals through a separate company, Fransmart LLC in Irvine.
Fanarof is Fransmart’s chairman.
The franchising company has a track record of growing and selling restaurants.
It took Denver-based Qdoba Mexican Grill from one restaurant to 85 and sold it to San Diego-based Jack in the Box Inc. in 2003.
Fransmart also grew Virgina’s Chesapeake Bagel Bakery from 12 to 180 restaurants and sold it to AFC Enterprises in Atlanta in 1997.
Zpizza itself eventually could look for a suitor, according to Fanarof.
Unique Ingredients
A lot of zpizza revolves around Fanarof. He develops the menu, which also includes pasta and salads.
Fanarof said he experiments with unique ingredients—such as gorgonzola cheese, pears, chicken curry sauce and roasted yams—to create pizzas with a twist.
“I was told by General Mills that we are the largest user of gluten-free flour outside of some of the major bakeries,” he said.
The company also is pushing its restaurants to be more green, with environmentally friendly construction and carryout bags.
Fernando Vargas, the former world champion boxer who owns a zpizza in Los Angeles, had the first green certified restaurant in the company.
The remodeled Irvine prototype was built to green standards with energy-efficient lighting, low-vapor paint and other green techniques.
