Damned tasty food - Hell Pizza

I was introduced to the pizza business at the tender age of 15 and worked as a pizza delivery driver. By 16, I had progressed to being a manager. At 17, a friend and I jointly owned a carpet cleaning business, debt collection contracts, and a furniture removal business. At 18, I bought a pizza parlour in Wainuiomata that had gone out of business. It was here that I tested out what would eventually become Hell Pizza, says Callum Davies.

On this page: The vision The unholy trinity Marketing matters Breaking into international markets Callum’s advice

The vision

Two years later I relocated to Wellington and the first Hell Pizza store was born. Here we also established the mission of our company, which still remains the same: “Damned tasty food and a fun working environment.”

Stu McMullin was an old classmate of mine who had been in a string of corporate jobs with Westpac,  ACC, ACNielsen, and IT Manpower. One day over a game of golf, he asked me if I wanted a partner, and the deal was struck.

We worked between 90 and 100 hours a week, opening a further three stores, and doing most of the renovations and outfitting ourselves. The business was definitely 100% organic and a “seat of your pants” sort of thing to begin with. The only plan was to turnover enough to pay the rent. Once that was taken care of, more goals were set.

The unholy trinity

In 2001, Warren Powell came on board. He had managed the Fletcher Challenge GIB franchise and been the country manager for Burger King NZ, as well as Hire a Hubby’s General Manager. He brought his franchising expertise, and I’d say that’s when the “unholy trinity” was born.

When we decided to franchise, we had those four company-owned stores, and dealing with managers was too hard. By that point we had already decided that franchising was the best way forward for our business. So we ended up financing two of our loyal and experienced staff into our stores, entrusting them with quality control and making it a point to ensure new franchises were always up-to-speed. The other two stores were sold.

I’ve always strongly believed that to make the business successful, the people who drive the business need to be the main focus. We’ve always wanted Hell Pizza to remain a fun place to work, and the proof of that is our staff satisfaction. We didn’t need to advertise for franchisees because there was always a steady stream of Hell employees and young entrepreneurs wanting a slice of the action.

We went from four stores to 66 in four years, with revenue accelerating from $1.2 million to $55 million over that period.

Marketing matters

I was in charge of marketing for Hell before we sold. We had a lot of fun – quite often, I had to hold my business partners back, as I am the conservative one. Initially, I wanted a fun name that I could theme the business around. I liked the Hell theme but thought it too risky until I asked lots of people and went to a graphic designer to see how we could pull it off. We then rebranded to Hell.

We’ve always tried to mix creative marketing with solid strategic thinking. Having identified our target market as 20 to 39 year olds who were happy to use the Internet, we launched Hell’s online pizza ordering system, the first to be established in New Zealand.

Saying that, we’d always been proud to be the underdogs, the little guys against the multi-nationals. Then we got to a certain number of stores, and could no longer deny that we had become a chain. That was an obstacle.

The way we saw it, we just had goals. Even when we were at 38 stores back in 2005, we had 66 planned for 2006 (666 all the way)!

As for advisers and consultants, initially I would ask anyone I met, who I valued, for their opinion. Much later on, we worked with accountants on preparing an exit strategy from the NZ market. Some advice I would take with a grain of salt, other advice I’d take more seriously – it would depend on the background of whoever was giving me the advice.

Breaking into the international market

Hell was sold to TPF, the owners of Burger King, reportedly for $15 million in December 2006. The money from the NZ sale was used to expand internationally. We focused on building the brand overseas.

Hell Systems Ltd. owns the Hell trademarks and other intellectual property (IP). When the company had spare cash, Stu would register Hell’s IP in countries with potential markets. Master franchise rights have been sold in Australia, Ireland and Canada. Hell gets $250,000 for each master franchise licence for a country, $10,000 for each store opened, and a 1 percent royalty (we aim to keep the initial price down to ensure franchisees are not overburdened with financial obligations).

As Hell was doing well overseas, that freed up capital to buy back the NZ business. We’ve largely avoided debt by accumulating savings before tackling the next stage of development.

Callum’s advice?

Hindsight is always great. I made many mistakes along the way (and I’m still making them), but many times I’ve learned things that I never would have, had I not made the mistake.

Managed growth has been an obstacle in itself. To be honest, the money was always secondary. It has always been about having heaps of fun and having a good time with the company. And as long as everybody is doing their jobs and doing what they said they’d do, then we’re all happy campers.

I’ve always believed that business really is about relationships, whether it is franchisees, suppliers or customers. You need to treat them right – it’s not just about the dollars.

Business Drill-down

• Business type: Food franchise
• Main products: Pizza, pasta and salads
• Number of staff: More than 300 staff with 64 stores in New Zealand as well as the UK, Ireland, Australia and Canada.
• Trading since: 1996; First franchise sold in 2001
• Main markets: New Zealand, Australia, Canada, UK, Ireland.
• Website: www.hellpizza.co.nz

• This information is provided by CapabilityNZ
  
  www.capabilitynz.org