>Location Analysis of a Franchise Resturaunt>>Kristoffer Eyvindson
<>>University of Saskatchewan>Geography
319.3>>Problem Statement:> Boston Pizza International Inc. is a
Canadian owned and operated>restaurant. It has many facilities in
Canada and has opened facilities in>the United States and in Southeast
Asia. Boston Pizza is penetrating>further into the Canadian market and
is opening at a new location on 8th>Street in Saskatoon. The chosen
location has been the home of many previous>restaurant failures. It
seems odd that any restaurant would want to open in>a location which
has proven to be unsuccessful. What characteristics does>Boston Pizza
have that other restaurants don't have that may allow this>location to be
successful? This new location will be the second Boston>Pizza franchise
in Saskatoon, complimenting the facility operating on 50th>Street. Will
the market areas of these two restaurants overlap? >* * * *
*> The early beginnings of this restaurant occurred in
Edmonton,>Alberta. In 1963 the first Boston Pizza and Spaghetti House
opened. The>name of the restaurant is seemingly odd because Boston
is the name of a city>in the United States, and has nothing to do with a
pizza restaurant located>in Edmonton. Ron Coyle, the original owner,
named the restaurant 'Boston'>because the Boston Bruins NHL hockey
team was the favorite of the Edmonton>area in the 1960's and he wanted
his business to use sports as a promotion.>Another reason, which may
have been more of a coincidence, was that his>accountant's surname
was Boston ("only way", 37).> Boston Pizza and Spaghetti House
became a popular restaurant and in 1968 it>began to operate as a
franchise. In mid-1968, Jim Treliving, a former drum>major for the
RCMP, and his friend Don Spence bought the franchising rights>for
British Columbia with the exception of Vancouver. They opened
their>first unit in Penticton, British Columbia, and in the first year
of>operation the pizza restaurant grossed $52,000 and the nightclub
which was>co-located with the restaurant grossed $80,000 (Cameron,

16). > Meanwhile, franchise units opened in Edmonton, Winnipeg and
Vancouver. As>the pizza chain grew, Treliving and George Melville (who
had become involved>with Treliving's restaurants as a financial planner)
became involved in real>estate ventures in Hawaii and the Okanagon
Valley and also in oil>investments in British Columbia (Cameron, 16). In
1983, these two men>purchased Boston Pizza Spaghetti House from the
original owner Ron Coyle for>$3 million. This money was raised from
private lenders ("recipe is simple",>16). During that same year, the
headquarters of Boston Pizza was moved from>Edmonton, Alberta to
Richmond, British Columbia where it is found today.> In the past decade,
#1601 8th Street East has not been a very successful>location from
which to operate a restaurant. Since 1985, four different>restaurants
have occupied the facility. This location originally housed>Ponderosa
Steakhouse from 1975 until 1984. The restaurants which occupied>the
facility over the past decade were: Geno's Pizza (1985-87), East
Side>Sids (mid-1987-88), Taster's Whole Earth1(1989-1990), and Just
Buffets>(1991). Since 1992, the facility has been vacant.> In 1994,
Boston Pizza became interested in this location. Although the>location
had been unsuccessful in the past, a new Boston Pizza facility will>more
likely operate successfully. The previous building, torn down only a>few
months ago, was a dull brown color which didn't attract attention.
The>new Boston Pizza building will use the kitchen of the old facility, but
the>service area is being constructed similar to other Boston Pizza
restaurants.>It is shaped and colored in a way that will grab the attention
of vehicular>traffic. The building has an angular bright red roof and will
have a bright>red and blue sign when construction is complete. > When
the 8th street location opens its door, a market will already exist.>People
working at the nearby businesses Bank of Montreal and Jubilee
Ford,>may decide to eat lunch at Boston Pizza. In the evening, after
work these>same people may stay and relax at BP's lounge. Families

looking for a>convienient place to eat quality food may decide to eat
here. > One problem remains, and it is a problem that Boston Pizza
can not change.>The center barrier on 8th Street makes Boston Pizza
accessible to vehicles>traveling west only. Vehicles traveling east would
find it difficult to>access Boston Pizza. Therefore many potential
customers will pass by and>find another place to eat.> The location
of this new Boston Pizza will not affect or be affected by>the operation of
the 50th street location which has been in operation since>1987. The
50th street facility has not been a very successful operation>since its
opening. Its location has, however, provided transient customers>on
weekdays. Many employees who work at nearby industrial facilities
eat>lunch here. > The 50th Street Boston Pizza is located relatively
close to the Saskatoon>Airport and Saskatchewan Place. The Airport
and Saskatchewan Place have>also provided some of Boston Pizza's
customers. However, although it is>close to the airport, Boston Pizza is
not close to any hotels or motels and>so only a limited number of
travelers come to eat. After large events at>Saskatchewan Place, Boston
Pizza is a popular restaurant. After Billy>Graham spoke at
Saskatchewan Place in late October, the restaurant was>packed.
Usually, this location has only a few late evening visitors. It>has not been
very successful at attracting families because of its>inconvienient
location. An alternative location for a Boston Pizza in the>north end of
the city would be on Idywyld Drive. Traffic flows to and from>the Airport
and Saskatchewan Place are much larger on this street. This>street is
also much more accessible to families.> Business success can be
attributed to the use of a franchising system. When>Treliving and Melville
bought Boston Pizza in 1983, "the two men owned 16 of>the 36 existing
outlets, but sold them all to new franchisees" ("recipe is>simple", 16).
Treliving didn't want to compete with franchisees that were>recruited.
Instead Treliving and Mwlville wanted to look after the other>people's

stores so that there would be no favouritism. In order to>concentrate on
franchising, Treliving and Melville created a "management>consulting
firm" ("recipe is simple", 16).> According to Treliving, "The system
[franchising] provides franchisees with>a brand name, a proven business
system and ongoing support" ("30 years",>81). A franchisee takes a
smaller amount of risk than starting his or her>own business because he
or she buys into a system for which the unexpected>has been planned.
The problems which a franchisee may experience have>already been
encountered by the franchisers over the years. Thus, the>franchiser has
learned how to overcome the obstacles which may come about>and the
franchiser can provide answers to all the important questions:>"What type
of location is successful? What size trading area will ensure a>large
enough customer base? What are acceptable labor costs? What
lease>cost is acceptable? How much parking does a location require?
What>upcoming demographic changes will affect the business?" ("30
years", 81)> Boston Pizza uses the business format franchise: >>[The]
business format franchise involves the use of not merely goods
and>services identified by a trade mark or invention, but a package
or>'blueprint' containing all the elements necessary to establish the
business>and run it profitably on a predetermined basis. The package or
blueprint is>carefully prepared from the company's wholly-owned and/or
pilot operations,>thereby minimizing the risks involved in setting up a
conventional small>business (Felstead, 48).> Boston Pizza provides
plans for a building, helps the franchisee to>choose a location, and
provides training for franchisees before they begin>to operate their new
franchise. "There are two months training and two>meetings each year
attended by all franchisees " ("recipe is simple", 16).>In order to provide
training, "one company-owned unit in Richmond serves as>a classroom
and training headquarters" ("only way", 36-7).> Franchising has
proven itself a strong system that works. In 1989 16,500>franchised

establishments were operational in Canada, and that number grew>in
1992 to 20,200 ("30 years", 81) . "Franchising businesses account for
42>cents out of every dollar spent on retail goods and services today,
and that>number is expected to grow to 50 cents by the year 2000. Quite
simply, as a>business system, franchising works" ("30 years", 79). > A
person with no previous experience who opens a new business runs
a>considerable risk. This risk can be seen by considering the
following>statistics: Half of all non-franchise restaurants close within the
first>year and the United States Department of Commerce has stated
that 90 percent>of franchise businesses are still in operation after 10
years, compared with>18 percent of independent businesses ("30 years",
81). > Treliving also compares his franchise method, which
is exclusively>franchising, with the methods used by other successful
restaurants.>"Restaurant chains like McDonald's, Burger King and Pizza
Hut have a mix of>franchisees and corporate managers" ("30 years",
81-2) . Boston Pizza uses>the franchising system exclusively and
believes that franchisee>entrepreneurs are more motivated than
managers, because they have invested>their own money and therefore
are more likely to succeed.> Treliving has attributed his
success to the use of a franchising system,>gourmet pizza, and diverse
menu (Cameron, 16). He believes that "Ma and Pa>pizza operations
[which specialize in delivery out of a small facility] are>going the way of
the dinosaur" because "they can't keep up with our>high-tech society and
emphasis on gourmet pizza" (Cameron, 16). In the>past, a lower quality
of delivered pizza was accepted because the person>responsible for
making the pizza was far away, and the delivery person was>gone by the
time you began to eat so there was no one to complain to.>However, in a
restaurant where people sit down and have a meal, they>complain to the
server if the food is sub-standard. These complaints are>inevitable
because nothing is perfect. Customer complaints can be used

as>opportunities to learn about customers problems. "Research has
shown that>one of the best and most loyal customers is the one who had
a complaint that>was satisfactorily resolved" (Lewis & Chambers, 72).
Because Boston Pizza>also delivers pizza, Ma and Pa are either forced
to generate a higher>quality product or go out of business.> Advertising a
diverse menu has been one way Boston Pizza has drawn>customers.
Boston Pizza has always prided themselves on using only
fresh>ingredients when making their gourmet pizza. In 1986 Boston
Pizza went one>step further and introduced salad into their menu. This
addition was found>to attract female customers (Cameron, 16). Since
then Boston Pizza has>become dedicated to offering and highlighting a
diverse menu which can>satisfy a broader range of consumers (Mackin
"more than a feeling", 24).>The restaurant "offers exotic pizza flavors and
a broad menu of pastas,>salads and grill fare" ("Boston Pizza says, 3).
They have reflected this>diversity in their latest broadcast campaign
which was released in late 1994>across western Canada. A new slogan
,"'Come and get it all' conveys the>message that Boston Pizza serves
more than pizza "(Boston Pizza says, 3). > The newly released
broadcast campaign also featured television star John >Ratzenberger,
who is known as Cliff the mailman from the Cheers television>series. The
Boston city location of the Cheers bar was one connection which>helped
in selecting this character, but there was also another factor.>Boston
Pizza serves 3 distinguishable markets: business lunch, a
family>enjoying a dinner together, and a late night post-cinema, or
post-ball game>crowd ("only way to go", 37). "Ratzenberger's klutzy
mailman evinced a>certain 'humor and humanity' the restaurant would
like to project [and]>the character also appeals to viewers across
generational lines">(McCullough, 3) making him a fine choice to speak to
Boston Pizza's diverse>market. > In 1986, Boston Pizza were
fortunate to have three outlets on the site of>Expo 86. Treliving and

Melville both remark that this location is>responsible for making Boston
Pizza "known internationally" ("pans out",>D7). The publicity that was
attained through Expo 86 spawned interest from>businessmen in other
countries which would later result in growth. The>restaurant took its first
steps to expand into the international market when>the first Asian outlet
was opened in Tai-chung, Taiwan in the year 1988. >Further
development of a stronger network of Boston Pizza
restaurants>throughout the Pacific Rim is of primary interest. Treliving
has spoken for>Boston Pizza: "Our plan is to develop the Asian market
through joint>ventures with Asian partners" ("30 years", 79). By
developing through>joint ventures with Asian partners, Boston Pizza can
"tap into the local>culture"("30 years", 79) as it moves into the foreign
markets. Boston>Pizza can then become familiar with the differences
between the foreign>market and markets in Canada and the United
States. The new markets can be>treated accordingly.> In August
1992, Boston Pizza opened the "first pizza restaurant in>Guangzhou,
China." (Mishima, D2) . The agreement was a joint venture>between
Boston Pizza International, the Chinese Government and a
local>franchise operator, T.K. Wong. The three parties made an
arrangement to>share the profits ("Boston Pizza.", B17). The Chinese
like the style of the>restaurant because it possesses a "North American
concept" (Mishima, D2),>but the menu had to be changed in order to suit
the culture better: no>alcohol would be served, and a smaller pizza size,
corn soup, and a salad>bar would be available.> The restaurant
franchise has proven that they can overcome cultural>differences by
opening many successful facilities in Southeast Asia. The>franchising
system allows them to do the same at a less significant level>within more
familiar markets: "We accept that there are regional differences>that we
have to adapt to. The franchising system is the only way to go>because
the owner lends his or her personal touch depending on the>location."

("only way to go", 37). If Boston Pizza located on 8th Street in>Saskatoon
is to succeed it will probably be due to the fact that it is a>franchise
operation which is nationally advertised and is known for its>quality food.
>>Bibiliography. >>"Boston Pizza exclusive." Canadian Hotel &
Restaurant v.64(1) January 1986: 10.>>"Boston Pizza opens new
headquarters." Vancouver Sun. January 22, 1992: B5.>>"Boston Pizza
splits with agency." Marketing v.98(42) October 18, 1993: 1.>>"Confucius
say, 'Mama mia!'" Marketing v.93(32) August 22, 1988: 7.>>Felstead,
Alan. The Corporate Paradox: Power and control in the
business>franchise. London: Routledge, 1993.>>Hogben David. "Expo
86 keeps pizza order coming." Vancouver Sun. July 5,>1991:
D2.>>Jones, Ken & Simmons, Jim. Location, Location, Location:
analyzing the>retail environment. 2nd Edition. >>Mackin, Bob, Jr
"Boston Pizza expands to untapped Chinese market:>Guangzhou
Restaurant opens this summer." Marketing v.97(6) February 10,>1992:
D2.>>Mackin, Bob, Jr "Boston Pizza moves $1m AOR business to
Glennie Stamnes.">Marketing v.96(45) November 11, 1991:
4.>>Mendelsohn, Matin. The Guide to Franchising. 3rd Edition. Toronto:
Pergamon>Press, 1982.>>"New account for Grey." Marketing v.92(7)
February 16, 1987: 16.>>