According to the chain operator, the announcement represents a "dramatic shift" for the 48-year-old brand, which, until now distributed supplies, goods and other products from its headquarters here to its almost 300 domestic franchise operations located from its western boundaries of New Mexico and South Dakota to its eastern boundaries of Virginia and Florida.
The company said the change, considered one of the most aggressive since Tim Taft, president and ceo, took over the firm in 2005, will improve its cost structure, resulting in savings on rising fuel costs, overhead and maintenance expenses. As a result of these cost reductions, the Pizza Inn said it will lower product costs for franchisees.
In line with this decision, Pizza Inn recently signed agreements with two distributorships, which are expected to take effect on Nov. 1. The companies are: The Sygma Network, a subsidiary of No.1 distributor Sysco Corp., Houston, and The IJ Co., a privately-held Tennessee-based company and No. 11 of the ID Top 50.
The distribution agreements provide that Sygma will be responsible for distributing food and other supplies to Pizza Inn locations in the mid-western and western parts of the United States while IJ will be responsible for distributing to locations in the eastern part of the country, the operator said.
Sygma will also lease the Pizza Inn's existing warehouse facility. Franchisees will still be able to use Norco for all other services, including ordering, billing, support, R&D and quality assurance. Norco transportation and warehouse personnel will be provided employment opportunities with Sygma.
"This is one of the most significant events that has taken place at Pizza Inn in recent years. The cost savings we realize will improve franchisee economics without compromising the company's profitability. We also expect this change to be a catalyst for the recruitment of new franchisees to the system as well as future development from our existing base of operators," Taft said
"If you look at the entire supply chain from manufacturing to the delivery of groceries to restaurants, outsourcing the logistics of delivering groceries to the restaurants was the ideal solution," said Jack Odachowski, vice president of supply chain management. "Innovation and creative thinking have produced an exciting opportunity for Pizza Inn and its franchisees."
Larry Rust, president of the Pizza Inn Franchise Association, observed: "For the first time we feel as if we have a management team that has the best interest of the franchisees at heart and the integrity to realize that the company's future growth can only be realized when franchisees and shareholders both prosper."