XO Pizza launches indie pizzeria franchise network

Canadian Pizza
November 29, 2017
By Canadian Pizza
Concord, Ont. – XO Pizza is seeking independent pizzerias who are interested in joining what it calls a “franchise of the independent.”

Alon Zohar, co-owner of XO Pizza in Concord, Ont., shared the pizza business’s vision with Canadian Pizza.

Zohar said he interviewed two dozen mom-and-pop pizzerias to learn more about the independent pizzeria landscape. Out of those interviews grew a plan to create a network of pizzerias that could work in tandem with his business and potentially convert their locations to the XO Pizza brand.

He likened it to the FTD Florist model, in which orders come in through a central service and are farmed out to local shops for delivery.

XO, which is based in Concord, Ont., in the Greater Toronto Area, will provide access to its online ordering systems, email marketing, direct sales programs, XO branding, recipes and a network to call upon for advice, in exchange for a percentage of the pizzeria’s sales.

The network provides two possible approaches. Through the first option – what he calls “legging in” – businesses can test the concept before committing to it. XO Pizza would install a mini fridge full of its signature ingredients, train staff on how to make its pizzas and send online orders to the pizzeria. The products and orders complement the individual business without requiring any changes to its identity, signage or established products. In this scenario, Zohar said he foresees five to 10 per cent of a pizzeria’s revenue eventually coming from XO products. In exchange, the local pizzeria pays the network eight per cent of sales from XO pizzas.

A second option is to fully convert a pizzeria to the XO brand, selling only the new brand’s pizzas and changing the front signage to the XO Pizza name. Pizzerias pay four per cent of current sales. As Zohar explains it, when a pizzeria chooses to fully convert, “if they had $4,000 in revenues prior to conversion they will pay four per cent on the first $4,000 and eight per cent on anything over.”

The model is different from traditional franchising in that XO does not require an up-front investment and takes a lower percentage of sales, Zohar said.

Such a network also would give his company a street presence, Zohar said. The business, whose pilot location opened in August, currently does delivery-only from a shop in an industrial park with no storefront. They make eight types of pizza all the same size (14 inches) and price ($20). “We don’t discount our pizzas,” he said.

The signature pizzas are a blend of ingredients developed by the chef and his business partner and mother-in-law Cordon Bleu-trained chef Aliza Levy. Luau Party, for example, is made using slow-roasted pulled pork shoulder, grilled fresh pineapple and ripened mango.

Zohar and Levy competed in the most recent Chef of the Year competition, where Zohar took third place in the non-traditional division with his Perfect Pair pizza, made with grilled Asian pear, prosciutto di Parma, French chevre and aged balsamic vinegar.

Zohar, who trained in the culinary arts at George Brown College but has experience in business and technology, believes customer engagement is important and that one of his most effective marketing methods is knocking on doors.

“I’ve learned a lot over the years about marketing,” said Zohar, who garnered 20 to 30 pizza orders per week from local car dealerships he visited to provide complimentary pizza to promote the product. He’s had success doing the same at orthodontist and other medical offices who like to offer the pizzas – through a promo code – to their own clients in appreciation of their business.

“We opened our pilot location to hone in on making the best pizza, perfecting our sales and marketing techniques and procedures,” Zohar said, adding that members of the network can then use this same model, pricing and technology.

The network is designed to help independent pizzerias increase their revenues and profit margins, streamline processes and costs, and expand their customer base to include corporations and catering, he said. Another goal is to increase equity already invested in a pizzeria should its owner decide to sell the business, he added.

Zohar has big plans for the network. He said they hope to have 15 to 20 pizzerias on board by the end of March, then grow to 50-plus and eventually 500 across Canada and the United States.

“We’re looking at the long play, not the short play,” he said. “The idea is to offer high-quality, great-tasting pizzas. We don’t want to enter the price wars.”

For more information about the network, visit XO Pizza’s website.

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