Second Boston Pizza Franchise In Saskatoon example essay topic

Location Analysis of a Franchise ResturauntKristoffer Eyvindson University of Saskatchewan Geography 319.3 Problem Statement: 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 intothe 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 reale state ventures in Hawaii and the Okanagan 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 Earth 1 (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 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 inconvenient location. An alternative location for a Boston Pizza in the north end of the city would be on IdywyldDrive. 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 Melville wanted to look after the other people's stores so that there would be no favoritism. 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 JohnRatzenberger, 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', D 7). 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, D 2). 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. ', B 17).

The Chinese like the style of the restaurant because it possesses a 'North American concept' (Mishima, D 2), 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 togo', 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.

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