Amid Sales Growth, Mountain Mike’s Eyes National Push | Franchise News
The venerable Mountain Mike’s pizza chain is rolling east. Two years ago, the company had only two restaurants outside of California, said Jim Metevier, the company’s president and chief operating officer. Now it has development deals in eight states, reaching as far east as Texas.
This expansion has been accompanied by record sales growth for the brand. Total sales increased 24% year-over-year to more than $250 million in 2021, while same-store sales increased 15%. Company executives attributed the growth to the strength of sales channels and digital promotions, such as the brand’s partnership with the San Francisco 49ers and its limited-time heart-shaped pizza.
The task, in Metevier’s eyes, is simple: put the pizza in people’s mouths. Then they are addicted.
Franchisee Jim Smith said the brand’s all-you-can-eat lunch buffet was a great opportunity for people to try pizza. “For a very low risk of $8.50 you can try it out and then pay top dollar on a Friday night,” he said. And the strength of the heart-shaped pizza helped make Valentine’s Day one of the “top five selling days.”
Smith is the Oregon Region Developer for Mountain Mike’s. He bought the system in 2017, shortly before Chris Britt and Ed St. Geme acquired the company, and now operates four locations in the state.
Friends since attending Stanford University, Britt and St. Geme owned 43 Burger King restaurants through their company Fire Grill, selling to Tom Garrett’s GPS Hospitality in 2014. The two bought Mountain Mike’s Pizza in conjunction with Levine Leichtman Capital Partners in 2017. Levine Leichtman recently sold his stake in the brand to the two co-CEOs.
Britt said the biggest change they’ve made since acquiring the company is to “bring the brand into the present century”. That means getting connected, with a presence on third-party delivery apps and aggressive digital marketing.
Some franchisees initially balked at the high fees of third-party delivery apps, Britt said, prompting the franchisor to pilot the service to prove it could drive additional business. “The DoorDash client isn’t necessarily the Mountain Mike mobile client,” he explained, and third-party services get their food in front of a new set of potential customers.
Some economic factors are also at play. Britt said he’s seen less price sensitivity among third-party customers. And the pizza business is big on discounts, while DoorDash orders “don’t come with discounts,” making fees easier to bear. It also helps if the company has its own delivery fleet. Mountain Mike’s does not depend on third parties to fulfill the delivery request.
The early pivot to digital helped the brand adapt quickly to COVID-19 lockdowns, and digital sales accounted for 40% of all sales for 2021. Smith said pre-pandemic sales at his restaurants were spread also between dinner, take-out and delivery. Now it’s running at around “10-11% dine-in”, with significant gains in take-out sales.
While Mountain Mike’s adapts to business realities, it’s not giving up on-site dining. A new store design rolling out in late 2020 measures 3,000 square feet and includes a private party room. “We’ve discussed whether we should adopt this delivery/execution model,” Smith continued, but “I think you’re losing your heart doing it.”
Smith, who opened two restaurants during the pandemic, said he built both with large dining areas. He did, however, install a temporary wall in the former to make the restaurant feel less “cavernous” and “empty”. He expects on-site dining to recover over time and believes he will gain more on-site dining than he will lose off-premises when this happens.
The Newport Beach, Calif.-based chain’s customers are at the forefront of its expansion. Britt said the brand is getting lots of enthusiastic messages from Californian expats in places like Texas, saying they’re thrilled to see a hometown favorite pop up near their new home. “It happens very consistently on social media, direct responses,” he said.
“We’ve always viewed this as a regional brand,” Britt continued, but given its success, “you can now say it has real national potential.” However, it is in no particular rush to hit all 50 states. Metevier said the focus is on building Mountain Mike’s presence in existing markets.
“We want to be very careful about which partners we partner with in these states,” he explained. They’re looking for “established restaurateurs,” with established businesses to bolster their presence with multi-unit offerings, and an occasional owner-operator to help fill in the gaps.
Mountain Mike’s has 120 franchisees with an average tenure of “10 to 13 years,” Britt said. This deep experience, coupled with the support of the franchisor, has helped the brand overcome the worst labor and supply chain issues plaguing the industry. Smith said the company has been quick to mix ingredients across geographies, making up for shortages with surplus products in other states, and has done well to find approved alternatives when no surpluses can be found. find.
Although Mountain Mike’s performance in 2021 was impressive, there was a lot of anxiety at the start of the year, Britt said. “When you come out of COVID-19 and you see comparable store sales down 8% and system sales down 15%, you wonder how are you going to compensate for that?” They are wondering the same thing now, even though the path to success is clearer.
The biggest challenge for the brand this year is work. “We can’t plan around that,” Britt said. Beyond keeping restaurants staffed and running efficiently, he said opening franchises outside of California is the most important measure of success.