Once an Italian, always an Italian
Just in time, the mark of Scooters’ success
Wreasons for Scooters’ success.
But given that its delivery service would stretch the bottom line of a potential entrant in this competitive market, how did Gonzaga plan to mitigate that? “Scale was always going to be critical. We had to extend our footprint to cater for even the most outlying areas. The idea was to have at least a Scooters outlet closer to our target market so that our delivery people didn’t have to drive far.”
Soon after opening the first Scooters franchise in Durban, Gonzaga was opening new outlets at a fast rate. “On average we opened one store every 22 days and this went on for about six years,” he says. Eight years into the business Scooters now has 126 pizza franchise outlets throughout SA.
The success of Scooters unearthed Gonzaga’s branding skills. In addition to the fledging Scooters, he pitched a successful offer in April 2005 to buy Maxi’s, a 23-outlet restaurant chain. He recently added NWJ, a retail jewellery chain, to his portfolio of companies. (In its 17 April 2008 edition Finweek reported on this acquisition, which does not form part of the group’s core operations.) HAT WOULD COMPEL a graduate lawyer to dump his degree for a less plum job in the vastly overtraded food retail sector? That’s a question Carlo Gonzaga, CE of AltX-listed Taste Holdings – made famous by, among others, its Scooters Pizza product – battles to answer. That Gonzaga barely had any experience in the fast food industry when he decided to become a Debonairs Pizza franchisee in 1996 baffles the mind.
“You need not take an Italian to school to teach him how to cook,” he chuckles. Gonzaga is right. Italians are known worldwide for their love of pizza and pasta. “And they’re better cooks, too,” he’s quick to add. That perhaps is a fitting explanation for his decision to partner his father in a Debonairs franchise business soon after he completed his law degree at the University of Natal.
Four years into his stint at the Debonairs franchise, Gonzaga and his father sold the business to explore other opportunities. He briefly toyed with the idea of setting up a business to sell hair cosmetics to blacks, but the fact he didn’t have direct knowledge of that consumer market prompted him to abandon the idea.
“I’m passionate about food,” he says. But Gonzaga knew that passion alone wouldn’t be enough of a prerequisite to crack the competitive fast food industry. In fact, Debonairs – which has turned out to be Scooters’ biggest rival – had the market almost sewn up, thus closing every possible opportunity for new entrants.
Aware of the challenges, Gonzaga’s business strategy focused primarily on positioning Scooters in the broader middle LSM market. But to achieve that he had to be innovative – hence the concept of a free delivery service when buying his pizzas.
“From a consumer perspective, we’re fundamentally a pizza delivery business – which explains why we aren’t concentrated in shopping malls. Our recipe is also different from the competition. However, most important is that our delivery waiting period is a maximum of 39 minutes, or it’s free,” says Gonzaga, adding the convenience of free delivery has been one of the most telling “The strength of our business lies in the depth of talented people we have.”
To fund his aggressive acquisition and growth drive, Gonzaga opted to list Scooters, Maxi’s and NWJ on the AltX through its holding company, Taste Holdings. The company’s combined staff headcount now stands at 47 and it indirectly employs 3 300 people. Taste’s projected revenue is expected to top the R500m mark this year.
Looking back, Gonzaga cites his decision to launch Scooters as the turning point. “I had a choice to either take on the established service providers in the fast food industry or get to practise my law career – and I opted for the latter. Looking back, I wouldn’t do anything different. In fact, I don’t regret the path I took.”
Did Gonzaga have a mentor? “I didn’t have one. I’m just grateful my father allowed me to make mistakes – some too grave – when we partnered in the Debonairs venture. My advice to emerging entrepreneurs is that they mustn’t listen to all sorts of advice when embarking on a venture.”
Passionate about food. Carlo Gonzaga