Pizzeria Looks to New Image to Overcome Past Woes
Shakey’s Inc.,a pizza parlor pioneer that hit its stride in the 1970s and has seen its share of ups and downs since,is set to undergo a facelift.
The Garden Grove-based restaurant chain recently appointed a new president, Sean Flynn, who in turn has hired a new management team with plans to spice up the 47-year-old business.
“We don’t intend to reinvent something that only requires reinvigoration,” said Flynn, a former Pizza Hut Inc. executive with more than 20 years of experience in the food and beverage industry.
Shakey’s, owned by Inno-Pacific Holdings Ltd. of Singapore, recently hired Phoenix architectural and design firm Archicon LC to come up with a new look for existing and future Shakey’s.
The chain counts 73 U.S. restaurants,including seven in Orange County,down from a high of about 400 in the 1970s. Shakey’s counts annual sales of about $200 million.
The majority of growth these days is coming from Shakey’s overseas operations. There are 392 global franchises,the largest number to date,mainly in Japan, the Philippines and Malaysia.
But Flynn said he is looking to change that ratio. He said he wants to double the number of franchise-operated units in the U.S. in the next five years.
“It’s too premature to give you any (prototype) details, but I can tell you Shakey’s will maintain its focus on its core food products: pizza, chicken, Mojo potatoes and salad,” Flynn said. “We’re going to build upon that.”
The overhaul won’t be a company first.
Through the years, Shakey’s has undergone management shifts and tested new store concepts that flopped. According to trade magazine Nation’s Restaurant News, the company opened a trendy food caf & #233; in Foothill Ranch in 1997, which “resembled a California Pizza Kitchen/Boston Market hybrid,” according to Alan Liddle, an editor at Nation’s Restaurant News.
The idea fell flat. Two years later Shakey’s converted the restaurant back to its traditional pizzeria format.
Flynn said his approach is different.
“I believe in Shakey’s product and positioning as it is,” he said.
Liddle of Restaurant News said size will be Shakey’s biggest challenge. He said the company is up against fast-growing rivals such as Papa John’s International Inc. and Tricon Global Restaurants Inc.’s Pizza Hut, which have more marketing muscle.
Still, Liddle said Shakey’s has something in its favor: strong brand recognition, particularly among consumers in California, where the company got its start.
Baby boomers still recall pizza-eating days with honky-tonk tunes, banjo players and piano music in the Shakey’s of their youth, Liddle said. And game rooms now are prominent in Shakey’s locations, which has helped fuel the success of some stores.
While entertainment still will be a push in the future, Flynn said it will take a backseat to food.
“We are primarily food,” said Flynn, who said he wants to keep the menu “fresh and exciting” while building on the brand.
Flynn recently hired three executives and industry veterans to head operations, franchise development and marketing. He said the team will ensure that “customers have a consistent and high-quality experience at all stores” and that “franchisees are successful and profitable.”
“Our stores have always been extremely successful. I don’t think any of the current stores face any particular challenges,” Flynn said. “I’m concentrating on getting a new look and prototype for our concept that’s very exciting and will attract new generations of franchisees.”
But not all store operators are content with status quo.
Gilbert Coronado, who has been the manager and owner of Shakey’s Pizza in Los Alamitos for 24 years, said he hopes new management can “improve the system,” particularly because things have been “stagnant” for some time. That’s prompted some longtime franchisees to look for a way out, he said.
“When their contracts came up they decided not to renew them,” he said. “We’ve got to wait and see what happens. We’ve been there before.”
Coronado, whose Zacatecas Enterprises Inc. filed for Chapter 11 bankruptcy protection in 1999, said he wants Shakey’s to open more franchises and spend more on advertising to promote the stores (Shakey’s yearly ad budget is around $2 million). He said business is tough right now, particularly with the rising cost of gas and electricity, which are “killing the bottom line.”
“The net profit is not what it used to be,” Coronado said.
Flynn said a six-unit Shakey’s franchise operator in California left the system late last year,well before he came on board. He said that he regrets not having a chance to relay the company’s future direction to the former franchisee. His vision has created a “genuine sense of optimism” among other franchisees, he said. Many contracts came up for renewal in 2000, and Flynn said a majority signed on.
Restaurant News’ Liddle, who has followed Shakey’s for more than a decade, said it will be a testament to Flynn and his crew if they can recruit franchise operators, many of whom also will be pursued by larger chains.
Success, according to Liddle, will be rooted in management’s ability to convince potential franchisees that Shakey’s has “something unique that can stand out on its own” and can develop a message that will cut through the food industry clutter. n
