Pieology expands in China with major TZG Partners deal
Customized pizzas are cooked to order in less than 10 minutes in a high-temperature oven.
At first blush, the “serving creativity” line that CEO Gregg Imamoto keeps repeating as Pieology’s brand purpose sounds like merely another corporate marketing message. But as Imamoto and later master franchisee Ben Tsen in China explain how that ethos manifests itself in international development efforts, it’s clear those two words hold more influence.
“We allow people to flex within our guardrails,” says Imamoto as he explains how “serving creativity” isn’t simply a nod to Pieology’s customizable pizzas or its people strategy of embracing individuality but an approach that extends to operations. “We don’t over-script, even in our restaurants.”
Franchisees have more autonomy than is typical in a franchise system, notes Imamoto, particularly in store design elements and even training, and it’s something he believes helps Pieology stand out in a crowded space.
“We’re very respectful of our competitors, and our competition is already out in front of us”—perhaps alluding to fast-casual players Blaze Pizza and MOD Pizza, which have 340 and 470 units, respectively, to Pieology’s 140—“so to differentiate, we use this serving creativity approach,” says Imamoto.
In the international development arena, where franchisees are already several thousand miles away and oversight is more difficult, this looser system structure could easily be a detriment to brand standards. But Imamoto isn’t worried—not, he says, when it comes to what really counts.
Pieology CEO Gregg Imamoto encourages franchisees to adapt the model to their local markets.
“The quality of the food, the ingredients, the freshness, how we make our pizza—those are the guardrails and they don’t want to change that. That’s why they want Pieology in the first place,” he says of the master franchisees that approach Pieology about bringing the brand to their market. But the tables, “do they have to get them from a specific supplier,” or the chairs, “should they be green or blue, we don’t care.”
Customization in China
That flex model, as Ben Tsen refers to it, was especially attractive as he and his TZG Partners evaluated numerous food and beverage concepts before signing a master franchisee agreement last fall to develop Pieology throughout China.
“It’s our ability to tailor the business model to what works in China,” says Tsen, particularly when presenting the opportunity to potential owners who are less familiar and experienced with franchising and want what he calls “a turnkey solution.”
“We present it as, we’ll make it easy for you,” he says, adding the group also has the freedom to incorporate “China-specific design elements” and customize the look by market.
“For example, takeout is a big part of F&B in China, much more so than in the U.S.,” he says. “So we will design that in and be able to offer custom pizza on a takeout basis.”
Tsen is managing director of Shanghai-based TZG, which he and fellow Stanford University alum Josh Brookhart founded in 2003 “with the ideology that we wanted to do something that was good for China.” The firm builds and invests in a range of companies, including Q-TZG Leasing, a financial leasing company, and food brands such as FSJuice, which Tsen describes as “China’s largest not-from-concentrate juice company.” It also built from scratch and manages China’s second largest floral franchise, Huali, which has 200 stores.
Pizza is a $6 billion market in China, and while major players such as Domino’s and Pizza Hut each has hundreds of units, Tsen believes there is ample room for Pieology’s more healthful positioning as a fast-casual brand.
“Chinese consumers are getting more sophisticated in their ability to pick and choose what they want to eat,” says Tsen, noting they’ll open a company store in Shanghai this spring, with others in major cities such as Bejing, Tianjin and Shenzhen to follow.
Pieology’s many topping options will appeal to Chinese consumers, says franchisee Ben Tsen.
TZG put a restaurant operations team in place, one with “deep pizza experience in China,” says Tsen, and the company has a full marketing, sales, HR, finance, legal, IT and retail team experienced in building food companies. In addition to FSJuice, TZG created Zen No Cook, a soup and meal replacement company, and Fields China, an online grocery company that was acquired by Sun Art Retail Group and Alibaba in 2017.
The marketing of Pieology will focus on quality differences between it and the quick-serve brands, but Tsen points out they don’t expect to do a lot of marketing and “we don’t have a huge advertising budget.” Instead, the group will rely on executing at a high level in each store “and for the experience to be one customers tell friends and family about.”
“China is a very relationship based society,” he continues. “People have more trust in that inner circle of friends and family. So that personal endorsement really matters.”
Identifying and attracting qualified franchisees, meanwhile, may take some marketing dollars, as Tsen acknowledged there simply aren’t that many in China. “A major difference between the U.S. brand and China is there aren’t hundreds of experienced operators and franchisees,” he says. “So we’re having to do a lot of that from scratch.”
Given that disparity in experience, TZG is also focusing attention now on the creation of a China-specific training system and support structure for those eventual franchisees, one that reinforces Tsen’s expectation that Pieology can win on quality.
“There will be a bigger gap in helping them understand the quality difference that they need to achieve,” he says of China’s immature operating base. “This goes back to our need to be a turnkey solution. It’s not just translating” Pieology’s U.S. manuals to Chinese.
Ben Tsen, TZG Partners
When Imamoto joined Southern California-based Pieology in January 2018, he brought with him international business experience in consumer, healthcare and financial services, which in turn helped the brand become more focused on global growth.
Pieology opts for master franchisee agreements with established operating groups that can function well within those aforementioned guardrails and, says Imamoto, that have deep local market knowledge to adapt the concept as needed. “These groups understand the dynamics of the country they’re in,” he says.
In Spain, master franchisee Comess Group has its first location open in Madrid, with plans for dozens more. “They’re the largest food group in Spain,” notes Imamoto of the multi-concept operator with more than 300 restaurants throughout the country and other parts of Europe.
Mexico City-based holding company OPFRA opened its third Pieology in the country last fall. OPFRA is a licensed partner of Costco with broad food and beverage holdings and has a subsidiary responsible for the development of Pieology.
Imamoto says he expects to learn a lot from the brand’s international partners and use their experience to bolster growth in the U.S., particularly when it comes to off-premises operations. “Third-party delivery in the U.S. is nascent” he says, especially compared to China, where “there’s more deliveries a day that the U.S. does in a month.”
“Our strategy for Pieology is we learn,” he says. “I describe myself as a learner leader, so we’ll take in that experience from other countries.”