Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. The next
Speaker 1: company we're gonna talk about was founded in nine headquartered
Speaker 1: in Toledo, Ohio. We're talking about Marcos Pizza and now
Speaker 1: has over a thousand stores in thirty four states, locations
Speaker 1: in Puerto Rico and the Bahamas. The company recently notes
Speaker 1: that it officially crossed the one billion dollar market annual sales.
Speaker 1: So let's get more on the business, the growth. What's next.
Speaker 1: Let's bring in Tony Lobarti, his president co CEO of
Speaker 1: Marcos Pizza. He joins us on the phone from Florida, Florida.
Speaker 1: Excuse me, Tony, how are you? How are you? I'm
Speaker 1: doing well. I'm doing well. Tell me a little bit
Speaker 1: about the business and and this achieving our achievement of
Speaker 1: one billion dollars in annual sales. Why is this so
Speaker 1: significant for your story and your story going forward? Well, really, Marco,
Speaker 1: the Marco's brand is doing incredibly well during some very
Speaker 1: difficult times the last two and a half years. As
Speaker 1: you know, it's has been challenging, but we continue to grow.
Speaker 1: Um we continue to see same our sales growth, unit growth,
Speaker 1: average unit volume growth year after year, and we're pretty
Speaker 1: excited about it. And really by crossing the billion dollar threshold,
Speaker 1: we're really now concentrating on what more can we do
Speaker 1: and be as a brand in our community. So we're
Speaker 1: establishing our new Marko's Foundation, which is really a charity
Speaker 1: foundation for our franchisees and team members to really be
Speaker 1: a positive difference in our communities, focusing on things like
Speaker 1: school and education, hunger prevention, and nutrition. Very slowed down
Speaker 1: for a second, So I want to go You've got
Speaker 1: a lot going on. I want to go back to
Speaker 1: the growth in the business. Um, what is it? Is it?
Speaker 1: Just because if I think about fast food, fast casual,
Speaker 1: there's a lot of choices out there, and you know
Speaker 1: they're not all alike. I feel like the pizza sector,
Speaker 1: in addition to your local, you know pizza places in
Speaker 1: various towns and cities. We certainly have a lot in
Speaker 1: the city. There are some really well known chains that
Speaker 1: you know, and newer ones entering. So why do you
Speaker 1: think you're growing? Is it price point, is it your demographic?
Speaker 1: What is it? Well? I think it's all of that.
Speaker 1: We we've had an opportunity just recently to become the
Speaker 1: fifth largest pizza chain. Um congratulations to our franchisees. We've
Speaker 1: seen about a thirty six percent sales growth in the
Speaker 1: last two and a half years. Um uh. And really
Speaker 1: it started with our national advertising. We we became a
Speaker 1: national brand on TV this year as an example, or
Speaker 1: on TV for thirty two weeks. Uh. We really focused
Speaker 1: on our digital footprint by rolling out a new app
Speaker 1: and working on our web page, and and we were
Speaker 1: able to take our digital our digital orders from twenty
Speaker 1: five percent just three years ago to now sixty today.
Speaker 1: Um uh. And of course we've got a great product
Speaker 1: and we're really the brand that very few people knew about.
Speaker 1: But as as we continue to tell our story and
Speaker 1: we're out there with a great value proposition getting people
Speaker 1: to try our pizza, we seem to be winning the fight.
Speaker 1: And let's talk about delivery a little bit more. I've
Speaker 1: seen the notes that you passed over that you've made
Speaker 1: big bets on the future with a third party delivery platforms.
Speaker 1: Talk to me a little bit about that decision to
Speaker 1: go that route. Yeah, we we actually were earlier adopters
Speaker 1: of the third party we felt pretty strongly that that
Speaker 1: was a creative to our business. Those were different customers.
Speaker 1: When somebody was deciding whether or not they were gonna
Speaker 1: have lunch or dinner and they went to a door
Speaker 1: dash or an uber each, they weren't thinking about Marcos UH,
Speaker 1: and so we thought that it would it would help us,
Speaker 1: and it has. In fact, we've grown that part of
Speaker 1: our business by six percent between one UH and it's
Speaker 1: up thirty six percent this year, so we'll do over
Speaker 1: eighty million dollars and thirty part third party aggregated sales
Speaker 1: and UH. It's been a big win. It's introduced our
Speaker 1: brand to a whole set of customers that didn't know
Speaker 1: who we were. Hey, I gotta ask you, um Tony.
Speaker 1: One of the big things that we talked about with
Speaker 1: anybody who runs a company, UH, and certainly in your
Speaker 1: space inflation. We did see inflation prints that were much
Speaker 1: more positive, coming in less than expected, but they're still high.
Speaker 1: What are the inflation pressures that you're seeing when it
Speaker 1: comes to labor costs and to food costs, Well, we're
Speaker 1: seeing what the rest of the industry is seeing. When
Speaker 1: we rolled through Q two, we had about increase in
Speaker 1: overall food cost in in in Q two and P
Speaker 1: seven at peaked at pent and you're right, we didn't
Speaker 1: see it go higher here in the recent uh P eight,
Speaker 1: but but is still too high. It's about five basis
Speaker 1: points pressure on the bottom line for us. And while
Speaker 1: we've been taking some pricing to try to mitigate UH
Speaker 1: the inflation, we've really been focused on trying to just
Speaker 1: take modest increase increases to ensure that we continue to
Speaker 1: grow our market share and that that that's been difficult,
Speaker 1: trying to balance the two of staying profitable for our franchisees,
Speaker 1: but at the same time trying to be there for
Speaker 1: our customers in our communities as a real value for them.
Speaker 1: During sometimes well, let's talk about the franchise e. Like
Speaker 1: Carol said, you know, you have many stores across the
Speaker 1: US thirty three states, so you really see a lot
Speaker 1: of the country there. And I'm curious, what is sort
Speaker 1: of the common denominator when you think about what the
Speaker 1: biggest UH sort of issues for your franchise ease or
Speaker 1: I'm going to mispronounce that for the franchisees and what
Speaker 1: is the biggest problem right now? Well, you know, it's
Speaker 1: funny um uh it every year is challenging, but two
Speaker 1: is proven to be a more difficult year than one.
Speaker 1: If you remember we started with COVID. That was challenging
Speaker 1: just getting stores open being essential, trying to keep your
Speaker 1: team safe, and and and and and keep keep the
Speaker 1: business moving. In one we had great, great resignation period.
Speaker 1: We're trying to find help through the summer months and
Speaker 1: through the through the fall and winter was extremely challenging,
Speaker 1: just again to keep normal operating hours. And so we've
Speaker 1: rolled that into two. And then here we go with
Speaker 1: wage increases and and and in inflation. And I would
Speaker 1: tell you that the two biggest challenges for our franchise
Speaker 1: dase today, one is retaining and finding good help to
Speaker 1: help them continue to grow their businesses and then again
Speaker 1: managing their p and l um UH to a point
Speaker 1: where we can continue our growth. And we've got about
Speaker 1: two hundred and forty years so news stores and development
Speaker 1: as we speak. We got about another hundred and fifty
Speaker 1: of those right behind it, and so we'll be at
Speaker 1: store brand and no time. So really we need people
Speaker 1: and and UH we focus on that every day, both
Speaker 1: UH our recruit efforts and our retention efforts are cultural efforts,
Speaker 1: all those kinds of pay. Tony just got about twenty
Speaker 1: five seconds here. Uh. We often talk about recession no recession,
Speaker 1: based on what you're seeing and what consumers are doing.
Speaker 1: What would you say, um, in terms of consumer spending,
Speaker 1: what the economy looks like here in the US, Well,
Speaker 1: I would tell you that they are, uh looking for value.
Speaker 1: I will tell you that they are trying to feed
Speaker 1: their families on on fewer dollars, and pizza is a
Speaker 1: great place for them to do that. Uh, They're they're
Speaker 1: being discerning in terms of number of items they're putting
Speaker 1: in their basket when they're purchasing, and so keeping a
Speaker 1: lid on price will mitigate the loss in the in
Speaker 1: the item sold, and and and people are just really
Speaker 1: trying to make ends meet. I didn't hear recessions and
Speaker 1: no recession. Well, just quickly, we're in one. If we
Speaker 1: if we believe we're in one, then yeah, it's coming.
Speaker 1: But but pizza tends to do okay recession, so it's
Speaker 1: not necessarily huge concern for us. All Right, we gotta run, Tony,
Speaker 1: Thank you so much. Tony Lobarti, President and co CEO
Speaker 1: at Marcos pizza,