Peter Piper Pizza plans to open 50 new units in the next five years through franchising growth, amid talks over the 143-unit chain’s sale.
Hours after announcing its growth plans, Peter Piper president and CEO Charles Bruce confirmed to Nation’s Restaurant News that the Scottsdale, Ariz.-based chain is up for sale by owner Acon Investors, which bought the chain in 2006 for an undisclosed price.
Bruce said Acon has received multiple bids for Peter Piper since April, adding that a deal could be completed as early as October.
The new franchising push would have happened in the regular course of business, regardless of the sale, he added.
“The two efforts are complementary,” Bruce said. “As we’ve been engaging potential buyers, they’ve viewed that effort as positive and of value to the company.”
According to an unidentified source cited by The Wall Street Journal, Peter Piper could fetch a multiple of 7.5 times. Bruce said only time will tell what multiple the company receives.
The company’s operating team wasn’t surprised by Acon’s desire to sell the chain. “They’ve held on to it for a long time … since before the Great Recession,” Bruce said. Private-equity groups “don’t always hold on to companies that long.”
Bruce said Peter Piper’s desire to boost franchise growth began after examining results of an extensive consumer study it conducted more than a year ago. It revealed a significant opportunity to serve more families, including the nation’s surging Hispanic population. He said the concept is uniquely positioned to serve adults and children equally, as well as large groups.
“We found a real and underserved need for a place where families and groups can have great gathering,” said Bruce. “You can’t go to Applebee’s with a group of 40 and have an event.”
Founded in 1973, Peter Piper combines pizza and entertainment options to draw families to its 10,000-square-foot restaurants. Average unit volume is $1.9 million.
Nation’s Restaurant News named Peter Piper a Next 20 brand for its potential to break into NRN’s annual Top 200 ranking of restaurant chains by U.S. systemwide sales.
The company’s 48 units in Mexico, in addition to those in its core Southwest market, make Peter Piper, “an ideal Hispanic brand because of our experience with that demographic. The Hispanic population is growing at seven times the rate of the rest of the U.S., so we see a big opportunity to serve them,” Bruce said.
Markets targeted for new growth include Nevada, Idaho, Utah, Colorado, Nebraska, Oklahoma and New Mexico. Bruce said the company would entertain expansion opportunities nearly everywhere, but that Peter Piper’s success with a simpler, concentric-circle growth model has served it best.
“When you’re in Arizona and someone wants to open a unit in Bangor, Maine, it’s awfully hard and expensive to give them good support,” Bruce said. “To expand in the states we’ve mentioned especially makes make sense from a logistics perspective. It’s also smart to move into (nearby) markets where media costs are reasonable and where we can create awareness.”
Bruce said the chain has also lacked a growth vehicle for many years, leading it to roll out a new restaurant design dubbed Peter Piper 2.0 two years ago. He said sales increases since the redesign have been impressive.
“Franchisees really embraced the new look and like it,” he said. To date, eight of the company’s 32 units have been remodeled. “We said, ‘Let’s give it a year or so to test and make sure it’s good.’ It’s worked extremely well, so we decided that now is the time to get ready to grow.”
While its restaurant design has changed, Bruce said the menu and entertainment offerings won’t.
“Broadening the menu is not something we think is very wise, but we’re always looking for depth,” he said. “Our main categories are pizza and wings, and we’re always looking for ways to be creative there.”
This article has been revised to reflect the following correction:
Correction: Sept. 16, 2014 An earlier version of this article misstated the basis for Nation's Restaurant News' Top 200 ranking. It is based on U.S. systemwide sales.