Papa Murphy's carves pizza niche

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Like its competitors, retail pizza chain Papa Murphy's Take 'N Bake pizza touts quality and convenience. But the independent chain is decidedly different from ready-made and delivery-oriented rivals in that it makes pizzas for customers to bake at home.

"You don't have to wait for the delivery guy with the nose ring to bring you a pizza that is stuck to the top of the box," quipped Brian Dixon, senior VP-marketing for the 19-year-old chain.

The chain offers pies for between $5.99 for a small cheese pizza to $13.99 for a Chicago style pizza. It even sells raw cookie dough.

It's certainly not a new concept, Mr. Dixon said. Grocery store delis sold $2 billion worth of fresh pizza last year, according to restaurant consultancy Technomic. Papa Murphy's, however, is the first exclusively take-out pizza chain to succeed with the bake-at-home concept.

"Niches in this business are big business," said Bob Goldin, exec VP at Technomic, who added the leading pizza companies have staked out their differentiating points more clearly than other fast-food segments. He said Domino's Pizza's is delivery; Little Caesars Pizza's is value; Pizza Hut's is innovation and upscale quality while Papa John International focuses on quality. With bake-at-home, the No. 11 pizza player has found its own niche.

`STRIVING FOR INNOVATION'

"It's a category that is striving for innovation," said Neil Stern, a partner at McMillan/Dolittle. "Right now the category is propelled by promotion and product innovation but is struggling to absorb all the people who want a piece of the pie."

Papa Murphy's is quickly grabbing its share. In 1999, sales for the Vancouver, Wash.-based chain reached $250 million, a 40.5% rise over 1998, marking a faster pace than any other chain on Technomic's Top 100 U.S. restaurant list. It was also No. 5 in unit growth, hitting 525 units in 1999, a 30.6% increase over 1998. With stores in 21 states from California to Alaska and as far east as Illinois, the chain is projected to grow to 675 stores by end of 2000. The chain's growth reflects "customers' desire to have a little more control over the final product," said Steve Coomes, editor in chief at Pizza Today. "We're not totally convinced here that you've got to deliver [to be successful]. When a family is home, they can bake the pie themselves and don't have to tip anybody. Their cost is lower and they also have control over the final product."

MERGED COMPANIES

Born of a merger between Murphy's Pizza and Papa Aldo's, Papa Murphy's targets busy families who purchase the freshly made pies on their home commute.

The pie maker touts its value positioning for the "pizza that's ready when you are" with the tagline, "Big pizza. Big taste. Low price" in spot TV and radio.

"You get an awful lot of great food for the money," Mr. Dixon said.

Creative and media duties for the $10 million account are split between Mering & Associates, Sacramento, Calif. and Woodson & Neuroth, Beaverton, Ore. Mering handles most TV and radio creative; Woodson has some TV and test creative as well as co-op media.

The pie maker's ads claim savings of 30% to 45% over other pizza chains. "Because of our cost structure, we can do that," Mr. Dixon said. While its $532,000 average unit volume is lower than most of its rivals, Papa Murphy's has lower equipment and labor costs.

`A STREAMLINED CONCEPT'

"They don't have the expense of ovens, exhaust systems or labor that typically would be part of pizza overhead," Mr. Coomes said. "It's a streamlined concept that favors operators and customer preference as well."

A few competitors threaten the chain's hot niche. Figaro's, a chain of 150 units, is one rival in the Northwest. Mr. Dixon said Pizza Hut tested its own take-and-bake pie in the Midwest a year ago. Little Caesars also tested the concept as an add-on product in western markets. Round Table is giving it a shot as well, readying a test of its own take 'n' bake product with an ad campaign planned for October from Siltanen/Keehn, Santa Monica, Calif. Beyond those, some small chains also dabble in take and bake, he added.

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