Inside Job
LaRosa’s Pizzeria drives dine-in sales with a new look, menu and service training.

By Donna Hood Crecca

Between 42 and 50 percent of the takeout and delivery pizzas consumed on a given day in Cincinnati bear the LaRosa’s Pizzeria name on the box, according to the chain.

But by the late 1990s, the mature brand had saturated the Cincinnati market. Seeking new growth opportunities, executives turned to their customers for direction.

“For years, we’d been driving off-premise sales, and when we asked the customer what they thought of us, they were thinking dine-in,” recalls T.D. Hughes, CEO of LaRosa’s, which operates 14 full-service pizzeria restaurants and franchises 42 locations in Cincinnati. That changed everything for the chain that in some units sees as much as 70 percent of sales in takeout and delivery.

Based on research from the Cincinnati chapter of The Center for Quality of Management, a nonprofit organization that studies management practices, Hughes set a goal: Grow sales from last year’s $117 million to $250 million in 2010 by jump-starting the dining room and opening 90 to 100 locations in new markets within a 250-mile radius of Cincinnati. Project 2010 forced the 50-year-old, family-run company to completely re-examine its concept and operations.

Four years later, LaRosa’s is rolling out a new look, menu and service style that have boosted the chain’s average check by $1.50 and increased unit volumes by at least $1 million.

Bigger and Brighter
LaRosa’s started with the building. The company’s new cross-functional Quality Teams worked with Columbus, Ohio-based design firm Chute Gerdeman to update the restaurant’s look.

The opening of the prototype location in Centerville, Ohio, in November 2002 marked LaRosa’s first foray outside of Cincinnati. At 5,400 square feet housing 150 seats, the Centerville store is nearly 2,000 square feet and 60 seats larger than its predecessors. The contemporary design replaced the traditional Italian decor with a palette of soft gold, olive and brick, accented with tile flooring and wood trim. Pendant lights highlight a wood bar—a first for LaRosa’s. A new logo treatment and rendition of the chain’s Luigi character evoke the brand’s heritage as a “neighborhood pizzeria,” according to Pete Buscani, executive vice president of marketing. “Throughout the process, we drew upon the attributes that resonate with diners and created a new look with familiar elements.”

The company has since opened locations in Florence, Ky., and Beavercreek and Middleton, Ohio, with the new look. It remodeled 10 existing LaRosa’s in 2004; the remaining will be updated this year.

Variety Spices Up Sales
To accompany the new look, LaRosa’s rolled a new menu to all stores in March 2004, infusing it with “more flavors and excitement,” says Vice President of Food and Product Development Mark LaRosa.

The meat sauce, for example, has a boost of herbs and garlic. Kitchen Chips, $4.09 for large or $2.39 for regular, thin-sliced potatoes fried and served with diablo sauce, and Onion Straws, $4.79 and $2.59, expanded the appetizer offerings. Chicken, deli and steak ciabatta sandwiches, $6.49, immediately proved popular, as did the Philly Cheese Steak Calzone, $5.69.

Pizza, with dough made in LaRosa’s central bakery, remains the hero. The new Buddy Topper Pizza, $16.59 for a large, featuring pepperoni, two types of sausage, capicola, banana peppers and extra provolone, has taken off, according to Mark LaRosa. Pizza makes up 50 percent to 60 percent of sales.

Spirits now join wine and beer, as does a signature cocktail. The $4.50 Lemoncello blends lemon liqueur, vodka, triple sec and lime juice. LaRosa’s alcohol sales average 12 percent of dining-room sales and 6 percent of unit volume.

Checks average $16.65 in the dining room, which now generates 50 percent of unit sales, up from 30 percent at traditional locations. While dining-room sales are higher as a percent of unit volumes in the new locations, takeout pizza volumes are on track with traditional locations. The average pick-up pizza check is $17; delivery is $21.

Smiles, Everyone, Smiles
Executing the new menu in a more casual-dining-oriented restaurant required a sea change in operations and human resources.

“We revisited the skill set for managers, keeping in mind the goal of changing the sales mix to involve more dining-room activity,” says President and Chief People Officer Michael LaRosa. A new screening tool helps identify promising candidates, and LaRosa’s began recruiting managers from outside its organization.

Management training now includes leadership skills and a greater understanding of the LaRosa’s concept and strategy. A mentoring program provides ongoing support and leadership development.

“The goal was to get managers off the line, where they’d been helping make pizzas, and into the dining room to deliver on service,” says Michelle McMahon, vice president of operations. “The managers are now leaders, not line cooks.”

Rolled out in fall 2003, LaRosa’s “You Make the Meal” service training emphasizes hospitality, says Dave Fromson, corporate manager of training, who joined LaRosa’s from an Applebee’s franchisee two years ago.

“There are a few basic ideas: Smile and greet everyone who walks in the building and empower all our people to do something to make the guest feel special, whether it’s walking them to their car with an umbrella or just looking them in the eye when you greet them,” he says. “It’s all about letting them know that we realize they could have gone anywhere and they chose LaRosa’s, so we want to make it special for them.”

Fromson tracks the progress of hourly and management employees through the training programs, evaluating effectiveness with follow-up sessions and performance analysis. “All the classes tie directly to measurable results. Are food costs going down after the manager took the food-cost management class? Are service calls reduced after taking the service courses? Everything is results-oriented,” Fromson says.

An opening team spent three weeks at the three units that opened in 2004. The new restaurants require more people in the kitchen, in positions ranging from cook to the newly added expediter. A buddy system, wherein a server is assigned a colleague who pitches in when needed, helps keep things moving in the dining room. Stricter policies on scheduling, guest seating and table rotation “balance that service requirement against the need for speed,” Fromson says.

Managing Change
Since the new menu and service standards rolled into units in early 2004, LaRosa’s Quality Teams have worked with corporate and franchise operators to control costs and help them make the transition.

Tarik Daoud, LaRosa’s largest franchisee with 10 restaurants, welcomed the new format. He opened two locations in the past two years and opened his third in March.

“The whole idea of the dining-room focus and the look of it, along with the bar area, helps us attract customers we were not getting before,” he says. “It also separates LaRosa’s from the discount-pizza concepts and brings us into the family-casual segment, which is where the growth is today.”

Daoud built a Project 2010 location in Florence, Ky., in January 2004 not far from where he had an existing LaRosa’s unit on which the lease had expired. Sales in 2004 were $3.1 million—46 percent over the annual sales at the previous location. Dining-room sales account for 58 percent of unit sales, compared with 41 percent at the previous location.

The more complex menu and service style did challenge Daoud and his staff at first. But by working with LaRosa’s various teams and ensuring personnel undergo the new training programs, Daoud says he manages operations and costs more tightly.

“The past three months have been much better,” he says. “I’ve heard some operators say it’s such a challenge, that it’s so much more complex. Honestly, the kitchen is larger and better designed, so operations there are actually easier, which gives us more ability to focus on the dining room.”

Cost Control
LaRosa’s is also working to contain building costs. The development cost for the prototype was nearly $1.5 million. “We’ve shaved about $300,000 out of it by taking a few feet out of the height and including fewer curves, using different building materials, changing some finishes on the fixtures—things that the guest wouldn’t register but that save us costs,” explains Kevin Burrill, chief operating officer.

LaRosa’s will open two locations in Cincinnati suburbs in first quarter 2005 and a third by year’s end, with three or four opening annually after that. The company will open a corporate store or two in a new market and then franchise additional locations. “We have not actively franchised in about 12 years, but once we get the building costs completely in line, we’ll be developing new franchisees,” Burrill says.

Thanks to the number of LaRosa’s in Cincinnati, including venues in Kings Island Amusement Park and the Cincinnati Zoo, the brand enjoys a high level of awareness within that 200-mile radius, says Michael Hartings of Global Consulting Partnership, a business consulting firm based in Wayne, Pa.

“LaRosa’s has a strong regional reputation, and as they go to cities and towns surrounding Cincinnati, the brand is known for pizza, hoagies and casual family fare. It’s a mid-market experience, and a good one,” Hartings says. “Expanding dine-in seems natural. I don’t see why they couldn’t pull this off in other markets.”