Entrepreneurial spirit

In the last four years, Green One Pizza Corp. has put up three Greenwich Pizza outlets.

Two of the stores are in Pampanga, the home province of Green One majority owner Jess Nicdao. "Kapampangans have a history of eating out. They like good food and they have a high economic resiliency," he said.

The third store in Olongapo is considered one of the top ten money-earners nationwide of Greenwich Pizza Corp. It also holds GPC’s best opening day sales record.

Perils of co-branding

Green One was put up when Nicdao, then a Jollibee franchisee, saw the growing market for pizza. "I heard from Jollibee managers how well Greenwich, a Jollibee subsidiary, was doing," he said.

Because he was already in the Jollibee loop, Nicdao didn’t have to wait too long to get approval for his first Greenwich store. It also helped that co-branding was a common practice then. Working along the same principle as a food court in a mall, the Greenwich store was located beside Nicdao’s existing Jollibee franchise in San Fernando. The two stores shared the dining area but maintained separate kitchens.

"Theoretically, it seemed like a perfect match," said Nicdao. "My costs were down because I didn’t have to maintain a separate dining area. It was, however, an accounting nightmare because it was hard to divide, for example, the electric bill. Was a 50-50 sharing fair if one store had more business than the other and, therefore, consumed more electricity?"

Green One Pizza eventually put up a separate establishment, where it paid for 100% of the expenses incurred in the daily running of the business.

Re-targetting the market

Unlike the first two stores, which were located near special economic zones, Green One put up its third store in Guagua, which has a lot of schools.

"I don’t worry about a drop in business during the summer months," said Nicdao. "The kids are based here or they come home from Metro Manila."

Green One’s main worry is the onset of the rainy season. In peso terms, take out account for 50% of total pizza sales.

"We’d like to deliver when people don’t want to go out but we can’t. We have to wait until the results are out on the home delivery service being piloted in the Park Square, Makati branch. We can’t go it alone because consistency is important in a franchised business like ours. Everything that is done in the Guagua store must be exactly the same way it is done anywhere in the country."

Although teen-agers are a major market for pizza, GPC has been quietly wooing the young adults market, in part because the teen market is price-sensitive. "On the one hand, a slice of pizza is about the same price as a burger and a burger is more filling. On the other hand, we are known as the Philippine pizza because we give our customers what they want – a pizza heavy with fillings," said GPC business development and franchise relations manager Froilan Manotok.

To bring in the lunch crowd, GPC launched early this month a pasta dish called the Bolognese. It also intends to introduce more rice-based dishes other than its Crispy Fried Chicken.

"It took GPC a long time to go to lunch but the company is in a good position to expand," said Nicdao. "The hardest thing to develop is the snack market because the food being sold is not so much a need as a want. Developing the lunch market is so much easier to do."

Franchise guidelines

To put up a GPC store currently costs between P7 million and P10 million, about the same amount of money needed to renovate a store. To date, only 50 of GPC’s 200 stores nationwide have been renovated to showcase the company’s new signage and new colors.

"It’s important for a franchise applicant to have a site when he applies," said Manotok, who was seconded to GPC from Jollibee. "Because of the backlog of applications, we do not start processing an application if there is no site available."

The site is given a preliminary inspection before a credit investigation and background check on the potential franchisee is done. "In the application letter signed by the applicant, he agrees to let GPC do a CI and BC on his finances and his background," said Manotok.

A second, more thorough inspection of the site is then made. Manotok and his team look for factors such as high vehicular and foot traffic and the presence of several activity generators such as schools, offices or churches.

"A big help to getting the franchise is the submission of the area’s demography," said Nicdao. "That’s been made easy now that every municipality is required to have updated data on its residents."

The final hurdle for the applicant is a panel interview headed by GPC operations director Yasmin Gruet.

The deal

The franchise is for 10 years and is renewable at a lower price.

Aside from the upfront capital investment (which includes the franchise fee and P1 million as goodwill), the franchisee must set aside 10% of his gross monthly sales for GPC. Of this amount, 5% goes to an advertising pool to push sales. "A new advertising campaign or a new product increases sales by 20% for a short period of time," said Nicdao.

A similar upsurge in sales is seen when the store is renovated. For Green One Pizza, minor renovations such as a new coat of paint is made annually. Major renovations such as expanding the dining area is scheduled next year, the fifth year for both the San Fernando and Olongapo stores.

"I have my own rule of thumb for determining how much to spend on renovation. If I’m going to spend P1 million in renovation, I must expect an increase of between P5,000 and P7,000 in my daily sales," said Nicdao.

Monthly promotions is another factor that draw in customers. Aside from national campaigns, GPC works closely with franchisees such as Green One to promote local events like school concerts.

Admittedly, a Greenwich franchise will make money even if the investor does not lift a hand in running the business. For an entrepreneur like Nicdao, however, the greater challenge is to grow the business.