Establishment of PIZZA INN in Cyprus
SYNOPSIS
Pizza Inn is an American corporation engaged in the operation of Pizza Restaurants and Pizza Delivery outlets. It is one of the major Pizza companies ranking third in the USA after Pizza Hut and Little Caesar’s in terms of number of dine-in outlets. Pizza Inn has grown very fast to the position it holds today with 430 outlets worldwide and with a presence in 13 countries outside the USA through franchising.
Pizza Inn has gained a very high reputation due to the quality of its products and the efficiency of the service provided. Its marketing, operations and control systems have been perfected and compare favorably with the best in its sector.
In Cyprus, it is engaged in the commercialization of Pizza Inn products. These products are sold through restaurant outlets, which have been established in Nicosia, Ayia Napa, Paralimni, and Protaras.
Pizza Inn sells a wide variety of pizzas, pastas (spaghetti), and an assortment of other fast foods, such as sandwiches and deserts of various types. It also sells similar products of Delifrance Croissanterie.
A Board of Directors, appointed for a one-year renewable term, runs the company.
A General Manager appointed by the Board of Directors is responsible for the day to day management of the company. The company has the following departments which are headed each by a manager:
- Operations Department
- Food and Beverage Department
- Finance Department
Fast food is becoming more and more acceptable in Cyprus, and its consumption is expected to increase with time. Pizza in particular has high awareness and acceptability in the Cyprus market. This is supported by the results of the survey that have shown that 89 % of those questioned replied that they have pizza from take away outlets for consumption at home. From the same sample 65 % have pizza at a pizzeria. The survey was carried amongst a random sample size of 200 persons.
The advent of Pizza Hut has drastically changed the structure of the Cypriot market. While three years ago the market was highly fragmented with many outlets, all owner-managed, there now appears to be a shift towards concentration.
Pizza Inn's customer is basically every one in Cyprus who consumes fast foods. But special focus is placed on the youth market. This age group constitutes the biggest market for pizza in Cyprus. This market is be targeted directly, since they are not only the consumers of the product, but also the decision-makers, as to the type of dinner that the family will have.
The competitors of Pizza Inn, in general, can be considered to be all fast food and delivery service restaurants. Having said that, however, the following have been identified as the main competitors of Pizza Inn.
- Pizza Hut (7 outlets) is the leader of the Pizza industry
- Pizza Domino (2 outlet)
- Dolly Dimple (2 outlet)
- Toronto (7 outlets) is the leader
- Pizza Mia (1 outlet)
The objective of the company is to become one of the main market players with an important share of the fast-food market. It will aim to increase its market share by using various marketing tools, such as timely deliveries, free giveaways, and creation of prestigious image that will attract the consumer.
The company will identify the types of businesses and guests that must be targeted to secure additional income for the company. Once that is determined, the general manager will create a strategy to develop and promote the product to the specific market segments that are meaningful from a profit point of view.
The sponsors have conceived a development strategy, which is based on the creation of strategic alliances, to better penetrate and further exploit the market.
To this effect, negotiations are under way to create five more full service outlets in the Town of Nicosia, in partnership with DIMPLE PIZZA. The negotiations have been completed and the plan will be implemented soon upon signature of the relevant agreements. In the short to medium term, plans have been made for the creation of a full service outlet in Limassol Tourist Area and another in Paphos Tourist Area also. The cost to carry out this development plan is estimated at about CYP 120.000,00.
Financially, the company has not been doing well for the past three years. Its performance has deteriorated from year to year. From a marginal profit of CYP 39.000,00 in 1996 the company has moved to a loss of CYP 151.386,52 in 1997, and CYP 166.482,10 in 1998. This situation has been caused mainly by reduction of income, and increases in administrative and financial expenses, which have also resulted from increased indebtedness.
The management of the company is aiming to bring the company back to profitability through the implementation of its strategic development plan.
BIBLIOGRAPHY
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Howard L., Strategic Management and Organizational Dynamics, Second Edition 1996, Sheffield Hallam University, Sheffield, 1996.
Johnson and Scholes, Strategic Management and Practice, Exploring Corporate Strategy, Prentice Hall, 1993.
Kasavana, Michael L., Menu Engineering: A Practical Guide to Menu Analysis, Hospitality Publications, 1982.
Rimmington, M., Hospitality Business Development, Modules 4 – 7, Sheffield Hallam University, 1994
Welch, Joe L., Focus Groups for Restaurant Research, Cornell H.R.A. Quarterly, August 1985.