CEO Mike Mrlik wants to take full advantage of the “eatertainment” concept while reinvigorating a classic restaurant brand. Don Sadler reports.
When restaurant industry veteran Mike Mrlik was offered the position of president and CEO with Mr. Gatti’s Pizza last year, he saw it as a once-in-a-lifetime opportunity that he couldn’t pass up.
“It was a chance to take a very strong brand that has been primarily in the Southeast and Southwest and build on its success,” said Mrlik, who joined Mr. Gatti’s last May from his position as COO at New World Restaurant Group, whose brands include Einstein Bros Bagels, Noah’s Bagels, and New World Coffee. “The potential to grow the eatertainment concept even further is huge.”
Mr. Gatti’s Pizza was founded in 1964 in Stephenville, Texas, by Colonel James Eure. The Colonel moved to Austin in 1969 and opened his first store there under the name “The Pizza Place.” By this time, he had developed a secret recipe for making pizza that tasted like no other, using higher quality ingredients and rich provolone cheese, instead of the more common mozzarella or imitation cheeses.
By 1974, the Colonel had opened 13 stores in and around Austin. That’s when he changed the name to Mr. Gatti’s Pizza in an effort to create a more distinctive image and brand. “Gatti” was actually his wife’s maiden name, but it was Italian and easy to remember—and it stuck.
Throughout the 1970s and ’80s, Mr. Gatti’s grew beyond its original Austin borders, eventually expanding throughout the Southwest and into the Southeast. The company created what is now known as the “All-You-Care-To-Eat Buffet” in the early 1980s and began to integrate family-oriented entertainment and small game rooms into the restaurants, a concept that would soon become known in the restaurant industry as eatertainment.
Today, 26 of Mr. Gatti’s 146 locations are “GattiTowns,” eatertainment complexes of 18,000 to 40,000 square feet that include enhanced game rooms complete with carnival-type arcade games, high-tech video and virtual reality games, as well as a relaxed dining area, a Fun Flix Video Room, and private rooms that can be reserved for birthday parties or other social functions.
New directions
One of the keys to Mrlik’s plans for growth is to expand the GattiTown concept (each of which costs as much as $4 million to build). “The eatertainment concept has exploded over the past decade or so,” he said, with chains like ESPN Zone and Dave & Buster’s among the other most recognized names in the eatertainment niche.
Another key to Mr. Gatti’s growth, said Mrlik, is expansion of the chain’s traditional stores through franchising. Currently, about 70% of the chain’s locations are franchise owned. “Until recently, franchising wasn’t a priority at Mr. Gatti’s,” he noted. This has changed since the 2004 purchase of Mr. Gatti’s by Blue Sage Investments. Shortly after the purchase, Mrlik’s first hire was Marl Levis, a new director of franchise sales.
“Hiring Mark was critical to helping us implement the franchise recruitment model that will enable us to aggressively go after new franchisees,” said Mrlik. “At the same time, we want to strengthen our relationships with our existing franchisees, who are critical to our success. At Mr. Gatti’s, the franchise system really drives EBITDA and cash flow, so we want to make sure we’re taking good care of our franchisees.”
Mrlik said the company hopes to add 10 to 12 new franchise locations this year, focusing especially on multi-unit franchisees, who he said understand the real estate and operational sides of the business and can really drive growth. Longer term, Mrlik’s personal goal is to double the current revenue of about $145 million and hit the $300 million mark within the next five years. “I believe we can do this if we execute every day and hold ourselves accountable to what’s set forth in our growth plans.”
In an effort to demonstrate the company’s commitment to franchisees’ success, Mr. Gatti’s recently introduced a newly refreshed store concept to its Franchise Advisory Committee. “Our stores’ basic footprints have not been modernized since the 1980s,” explained Mrlik. “We did market research to find out what families and kids want when they go out for pizza or to an eatertainment complex, and we incorporated this feedback into the restaurant we remodeled earlier this year in Austin.”
Three more restaurants in Austin will be refreshed this summer and tested before they are presented to the entire Mr. Gatti’s franchise community. “This is the direction Mr. Gatti’s wants to go, and it shows our franchisees that we’re here to support them and really grow the company over the next three to five years,” said Mrlik. “They will have to make an upfront investment in the new store footprint, but they will reap benefits over the long term.”
Careful considerations
To survive and prosper in the cut-throat pizza business, Mr. Gatti’s is planning its growth and expansion strategies carefully. “We know we can’t compete with the pizza giants like Domino’s and Papa John’s in advertising or in the largest markets,” says Mrlik. “So we focus on opening new stores in secondary and tertiary markets—small and mid-sized cities are where we’ve always had our greatest success.”
But in the end, the key to Mr. Gatti’s success always comes back to focusing on Colonel Eure’s legacy: the quality of the pizza. Like the Colonel himself more than 40 years ago, Mr. Gatti’s restaurants today use only the highest quality ingredients: garden-fresh vegetables; yeast-risen dough prepared in each restaurant daily; the Colonel’s tangy, secret recipe pizza sauce; and rich provolone cheese.
As Mrlik puts it, “When you have great food, take care of your store footprint and consistently deliver a product that people enjoy and value, the rest takes care of itself.”