Ep 194: Pizza & Profit: The Slice Factory Story

 

Join Jaime Oikle from RunningRestaurants.com as he speaks with Dom Diana, the CEO and founder of Slice Factory, the family-focused and welcoming Chicago-based pizza franchise and home to Chicago's original jumbo slice. We discussed the history of Slice Factory, its expansion and franchising plans, and the competitive pizza market in Chicago.

Highlights from their conversation include:

• The history of Slice Factory, from its beginnings in 1998 to its rebranding in 2013 and expansion plans
• The decision to rebrand Slice Factory and the challenges of franchising & finding the right franchisees
• The competitive pizza market in Chicago
• The qualities Dom looks for in potential franchisees
• How baking a massive 28-inch pizza is part of their branding success
• Handling the challenge of staffing by building a fully automatic pizza robot to aid back of the house labor
• How technology has helped Slice Factory streamline their operations, shave off 6 points & become more profitable
• Slice Factory's social media presence, with a focus on TikTok and Instagram

The episode provides valuable insights into the pizza industry and the importance of technology and social media in running a successful restaurant business. So, grab a slice of pizza and tune in to learn more!

Be sure to check out the episode. Find out more at https://www.slicefactory.com and https://www.runningrestaurants.com.

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Watch the episode here

 

Listen to the podcast here

 

Pizza & Profit: The Slice Factory Story

I've got a great episode for you with Dom DiDiana, CEO and Founder of Slice Factory. First of all, I love the name. We're going to talk pizza. Tell us about Slice Factory.

Slice Factory is a newer brand. We rebranded in 2013, but we go all the way back to 1998. My father opened up his first pizza shop in 1998. We moved back from Italy in 1996, and in 1998, he opened up his first pizza shop. That's where we got started in the pizza business.

Quick question. The family is from Naples, Italy. Correct me from wrong. You grew up or he grew up and brought pizza over. This is in the Chicago area, correct?

Yeah. A suburb right outside of Chicago called Berwyn, Illinois. We started in 1988. At the time, I was eleven. People always ask me, “How'd you get started in the business?” I literally say, “I grew up in the business.” When starting a pizza shop, my mom and dad had three employees. My father ran the front of the house. He had a helper that ran the back of the house. My mom was the delivery driver. As most parents do, they recruit their kids as their first hires and I have an older brother. He's a few years older than me and he was lucky enough to get recruited first and then I followed.

Family story, the American dream, he moved here, got his first business under his wings. After a few years, he started seeing some success. It took him a couple of years and like I said, he recruited his kids. We had to do it because of necessity, but I was always getting in the way, I always wanted to be involved and I got good at it and learned to love it. As my brother got older, my dad opened up his second restaurant and my brother took the lead on that one and he opened that location. I was able to then step in and then take over and help operate the existing business.

One of the first questions you asked is some places expand and they just start like that and expand, but how long between the first location and the second location?

1998 was the first one and then the second location was three years later.

Close enough to each other to drive over.

The second one was in Chicago. That was, I would say, about a half hour away from the existing business.

Now, Chicago is a serious pizza marketplace. What do you do there to be different and to stand out?

From Mom-And-Pop To Franchise

What made our claim famous was we do pizza by the slice. We cut a 28-inch pizza into slices. Back in the day, it was the jumbo slice and free pop for $3.

I want that now. Can I get that now?

That was our claim to fame and that's what we became known for. My dad had a brother and cousins and we all started opening up with the same name and similar concepts all over the city. At one point, we're up to twenty-something locations. That being said, as I got involved with the business, I took a lot of pride in what I was doing. When it came to like quality and just consistency overall the product, I would get so offended whenever people would come into my family's businesses and say how they didn't enjoy their experience at one of the other owners or relatives' locations because I took so much pride in what I was doing.

As the years went on, this is about 2013, I took my one restaurant and my parents' two restaurants and I rebranded them under Slice Factory. I did that because I wanted to have my own identity and I wanted to eventually scale and franchise. I knew that I didn't have the right to use the other name that we were operating under, so I couldn't do it. I had to bite the bullet.

That's a hard decision, by the way. Family involved, relatives involved, branding involved.

It really was. My family, that's what we lived off of. It didn't work out. It would have backfired on me and I wouldn't have looked too good. My brother didn't. He stayed with the concept and he's still with them and he still operates, but he was the one who didn't want to take the risk, which is what it is. It was just a big investment changing signage and changing all that. What was difficult was we had to educate our current customers that we're the same owners, we're the same business, we're just changing the signage at the front. I wanted to have a concept that focused specifically on pizza by the slice, wings, and salads.

The other brand had so many things on the menu. They had burgers, hot dogs, you name it, they had it. I knew the scale efficiently. On a large scale, we had to minimize the menu and limit everything we had. As we had it, we created diverse menus. We utilized a lot of toppings. We turned all the pizza toppings into salads. We did that in 2013, and it went well for us. We learned a lot. Once we rebranded and got the three locations stabilized, I looked into franchises. I just thought that you want to franchise, you have your business, you find someone who likes your concept, you work out a deal and you collect them. I didn't even know they were called royalties at the time.

Not that easy, right?

I went down the rabbit hole of figuring out that you need franchise disclosure documents, operations manuals, and all the legal and marketing stuff. We went down that rabbit hole and it took four years, from 2013 to 2017, to get all those documents going. If I had to redo it again, it would take a lot longer. I just didn't have the experience or the knowledge on how to do that. 2017, I got my first franchise disclosure document ready.

I said, “I have to start selling franchises.” With a handful of locations, I had to prove the concept. We've been in business since 1998, and we have had people working for me for ten-plus years, loyal managers, and good employees. What I started doing was I said, “Who would believe in me, and who would buy into this concept?” I started working out. What I did was, and I did it at one location, an employee who had been working for me for ten years and was very loyal. I said, “Do you want to be a partner of mine? I'll open the store, and we'll go into partnership.”

We did, and that was in 2017. After a year of running it, I pitched him the idea to buy me out, and he did. I was able to take my resources and capital back, and then I invested in another location. The next guy in line, we did the same thing, but instead of going into partnership, the rest of the business had a couple of years of financials, so he was able to take out a loan and buy the business back. I did that. I did a couple of those just to get the concept going, get more brand awareness, and build the brand and get known through the Chicago land market.

As you would know far better than I, pizza is a crowded marketplace. There are big giant players you see on TV. There's mom and pops and so forth. You have the brand and I love the name that catches you right away, Slice Factory. There are a lot of places where you can't just get a slice. Let me ask your question. You talked about a 28-inch pie. I'm thinking like a normal large pie is about twenty inches. Does that sound right?

Industry standards and extra large is about 18 to 20 inches. We call ours the jumbo, it's 28. I do a 28. I can make it bigger. However, I can't. We deliver those pizzas. We sell them by the slice and we sell them whole. The challenges we have is getting them out the door into people's cars and then getting them into the customers. That's why I made the 28-inch so that way, we can do volume and deliver them.

I'm just picturing that in my head. You can go to town there. Expansion, franchise, as you're growing, what are you looking for in a potential franchisee? Is it experience? Is it capital? Is it both?

Opening a restaurant now is easy. There's so much education out there. There's so much access to capital that what it comes down to is having the person who is willing to commit themselves to running a business that's typically long hours, late nights, and weekends. We look for the person who is going to commit themselves to doing that.

 

Opening a restaurant now is easy. There's so much education out there. There's so much access to capital. What it comes down to is having the person who is willing to commit themselves.

 

To go back a little bit about what you said about the Chicago market, before I forget, you said the Chicago market is one of the most dense and competitive markets in the country. I agree with you on that. I tell all my team and potential friends, potential owners, and investors that if we can make it in Chicago, we can make it pretty much anywhere else in the country. It's a tough, competitive market, but it also keeps us on our heels and keeps us improving.

 

If we if we can make it in Chicago, we can make it pretty much anywhere else in the country.

 

The ultimate Chicago pizza guide. It was sent to me that there's a pizza show out of Chicago that they do in the summertime. He sent me a copy of this. No kidding around. There's a whole book about Chicago pizza and there's a style and brand there. If you can make pizzas and survive in Chicago, you can replicate that model. Talk about the talk about your expansion. Is it just in the Chicago area now? Are you beyond that other states?

Right now, we're at 13 units, 8 corporate and 5 franchises. In 2023, we're focusing on our franchise development program, which is now going to the market and selling to franchisees. To go back to your question, what we look for are a couple of things. They must have an operating partner or be a full-time committed owner. Our concept is pizza by the slice, the big slice. In 2018, we opened up our first location that has a slice through.

Pizza by the slice, the drive-through. We opened in 2019 and then in 2020, COVID happened and our dining room shut down. Two of our locations at that point had slicers, and our sales immediately jumped up by about 60% because no one could come in, but they were able to go through the drive. What we look for now is locations that have either uncapped or freestanding buildings with a drive-through. Throughout COVID, the problem we were having was staffing the restaurants.

As the years have gone by, it just seems more difficult and difficult to hire back-of-the-house labor. It's very hard to find people who want to do that type of work and those types of hours. We're now in the process of building out a fully automatic pizza robot to aid that back of the house. With the franchisees coming in, they'll now be able to focus more on team development and hospitality, where the pizza bot fulfills the product side of it.

I just got to stick there for a second. I know I've been out to a couple of food shows, and some robots are starting to do some stuff. How much is your pizza bot going to do? Is it going to fulfill the whole order and put the toppings on? It's just going to make the initial pie?

It takes your dough ball and stretches it. Once it stretches it, it sauces it, tops it with the cheese and all the toppings, puts it in the oven, and then takes it out, puts it in the box, cuts it, and then they're working on getting to close the box as well.

All that?

Yeah.

Is that up and running for you already, or is it coming soon?

It's coming soon. It's been a project we've been working on for a year now.

You're right. You hit it on the head. The labor part is tough. If you can solve that, now you can focus on the service part, the marketing part, and the growth without that takes away a headache. COVID was a big deal for pizza places. It's not the right thing to say, but you guys are one of the few who benefited by having that quick takeout is already a part of your business. Delivery is already part of your business. People needed to phone and order some, whereas fine dining had to just shut down hard and figure out how to even take phone orders on the phone. You probably saw that big uptake. Any other learnings from COVID that you've continued to on your business?

Dealing With Changes In Consumer Behavior

I knew early on, when technology started to creep into restaurants, that we needed to adapt. We started seeing consumer behaviors changing. The younger generation does not want to use calls on the phone, using the apps. I adapted very early on. Before COVID, we had our mobile app that was up and running for a couple of years. Our online ordering was ready, and we were already on the third-party apps, which I didn't like, but they're there.

When COVID happened, we were set up and ready for all those digital and online transactions. Do we benefit? Yes, but I just think we were more prepared than other restaurants. There were those people who didn't adapt, who didn't want to accept those third-party orders, and who were just worn for it. They wanted to get on afterwards and what happened was the third parties had an influx of people wanting to be on their platforms and it just delayed and it took them a long time to accept orders on those platforms.

Crazy times and I'm sure you saw that uptake. I'm sure you learned a lot about how to do it a little quicker. I know a lot of people had to learn. That's the thing; you already had the learnings, how to put it in a box, how to deliver it, and how to make it stay well. Those are things you already answered, which is important. What did we not hit? What do you want to talk about for the last couple of minutes? What about pizza? What about growth? What about people? Marketing challenges, capturing data? There's so much that goes into what you guys do.

There are so many, for the little bit of time we have. Let me ask you a question. What do your readers typically enjoy reading?

I'll tell you, you hit on the pain point of people. People are a big deal. Cost a good soul and profitability is a big deal. Maybe if you want to stay where you were for a second and talk about how tech has helped you streamline and become more profitable, I think that's a good idea.

I have software that we use, all my managers are on it. It's helped as a company shave about six points off our bottom line using this. It's an all-in-one restaurant software. Is it okay if I give the company's name out?

Yeah, absolutely.

I would recommend them. It's an all-in-one restaurant software that was built by restaurant owners. It's called Restaurant Systems Pro. We do all of our scheduling there. We purchase and budget all of our food, and our manager logs around there. It's an all-in-one app that is on the computer. I put my team on there about two and a half years ago. It was a little struggle getting everyone on board at first, but using the software and, little by little, just shaving margins, we got about six points more in profitability because of using the software.

There are a lot of tools like that, but what is important about what you said is that you went through the pain of doing it. I know you probably had to input ingredients and endpoint inventory and input menus and input this and it's a pain in the ass. Now you are on the backside. You have those points back. They're not just back for one day. They're back forever, probably. Now, you have the systems in place.

Once the system's in place, every time we purchase, if our prices go up or down, our menu recipe cards adjust, and then our P-Mix is adjusted. It's just a one-time investment. I would really recommend it. If not that one, I would recommend some type of tech to help all those controls.

There's no excuse not to do it anymore. I know 20 years ago, it might've cost a smaller restaurant hundreds of thousands of dollars, a million dollars to build a system, but now you can buy off-the-shelf stuff for, I'm just going to make up a number, $199 a month, whatever it is, it's very affordable. It's not a barrier to entry anymore. You just got to do the work that's on that side. For you, I'll just talk for a second now, you can tell a franchisee that's looking at you that not only do we have the systems and the branding, but we have the formula to create this sort of gross margin, which, if you do this amount of sales, that can be a big selling point. Is that what you're finding? Is that correct?

Yeah, absolutely. Another thing I would recommend too is to get a point of sale that allows you to have open APIs to all of these extra things that you might need, the integrations, because the cost of labor is going to keep going up and all these extra apps that you can integrate with your point of sale will help you be more efficient and be more profitable.

 

The cost of labor is going to keep going up, and all these extra apps that you can integrate with your point of sale will help you be more efficient and be more profitable.

 

It's a very good point as well and that stuff has come a long way, too and it's amazing what it can do. I will probably end with your point on pricing. Prices and ingredients have changed, so you probably used to run a $7.99 pizza special and just make up a number.

Now, $3 pizza. No way.

Everything's changed. You have to change your prices. How have you guys adjusted to changing your prices to the consumer?

We went through five price increases through COVID. It was a challenge because we couldn't just reprint menus, change menu boards, and change drive-through signage. What I did was the initial price increase. I added a 5% surcharge to every check. I kept my prices the same. From 5%, I went to 7.5%. From 7.5%, I went to 10%. After 10%, the prices at that point stabilized and then we looked at our purchasing through our software and I want to achieve a 26.5% food cost.

That helped me adjust all my prices. As the fourth price increased, I reprinted everything. If I hadn't had that software, it would have been so difficult for me to figure out if I wanted to achieve this food cost, and where my prices had to be. Also, look at your P-Mix, too, because not all your prices have to be 26% of food costs. Some of them are 20%. Some of them are 30. Then you look at your P-Mix and you can make your best judgment off on the actual data.

I love it. Good, getting into the data. Appreciate it. Let's send them to the website. Send them where you want. Is it SliceFactory.com?

Yeah. It's SliceFactory.com for our website. It's a FranchiseSliceFactory.com for the franchise website and we do a really good job on TikTok and Instagram. If you guys want to take a look at our TikToks, they're funny and our Instagram is pretty cool, too. That's Slice Factory.

It may be fun. Maybe we'll revisit it down the road and talk about your social stuff because it is interesting what fun brands can do with Instagram and TikTok. We could talk about that and dig in.

We have about 100,000 followers on TikTok, which, for a pizza brand, it's unheard of. I’m proud of that.

Good stuff. I appreciate you taking the time and jumping in. Dom DiDiana of  Slice Factory. You can find them on the web at SliceFactory.com. For more great restaurant marketing and operations service people and tech tips, stay tuned to us here at RunningRestaurants.com. In the meantime, please do us a favor. Hit that like button or subscribe button or give us some feedback. We would appreciate it. Thank you. We'll see you next time. Thanks, Dom.

Thanks, Jamie. It was a pleasure.

 

Important Links

• Slice Factory
• FranchiseSliceFactory.com
• TikTok - Slice Factory
• Instagram - Slice Factory