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Tulsa-Based Mazzio’s:The Pizza Guy

August 4, 2008

By Kirby Lee Davis

Greg Lippert sees a “perfect storm” brewing around the nation’s dining sector, a confluence of uncontrollable factors starting with high energy prices and extending from surging cheese and flour costs to rising labor costs.

“We are now competing with international prices,” said Lippert, president and chief executive of Mazzio’s Corp. “This is a challenge facing the whole restaurant industry.”

Oklahoma’s energy sector provides something of a cushion, he said, with the state’s key indicators still growing at 2 to 3 percent a year. But with consumer confidence at a 17-year low, today’s economic turbulence threatens to make dramatic cuts in consumer eating habits.

“Typically restaurant sales have a direct relationship to consumer confidence, discretionary income,” he said. “Whole segments of our population are struggling with price-driven needs.”

But Lippert has seen such storms before – in 1984, when he joined the Mazzio’s staff to create a marketing department, the Sooner State still reeled from the Penn Square Bank debacle and the onset of a near-depression, and then again as commodity prices jumped in the early 1990s and after the 2001 terrorist attacks brought retail traffic to a near standstill.

Lippert instigated and oversaw dynamic changes over those years to strengthen the Mazzio’s brand, repackaging the restaurants, broadening the menu and taking innovative steps to add more products and services while retaining founder Ken Selby’s reputation for quality.

The company also has earned national kudos for sustaining a family-friendly working environment, reflecting a culture Selby created and Lippert maintains.

Those improvements have kept Mazzio’s revenue up 3.2 percent this year, building on unit sales that top their competitors. Mazzio’s 173 restaurants, 64 company-owned, now generate average sales of $1.25 million per eatery, more than double where unit sales stood when Lippert joined the firm in 1984.

“I see him as just an extremely creative and visionary person who is very passionate in a positive way about his ideas,” said Lori Waldrich, president of Idea Studio in Tulsa. “Basically he gets his mind set on something and is extremely diligent on bringing ideas to reality.”

Family ties

Lippert entered the world in 1955, the son of Ray and Shirley Lippert of Cincinnati. Both encouraged a strong Depression-era work ethic, his father earning a medical degree between two wars, his mother instilling him with sporting competitiveness.

“I was with him when he made a hole in one,” said Todd Rollins, president of Tulsa-based Rollins Communications, who hits the greens with Greg about once a quarter. “He was so excited, the first thing he wanted to do was call his mom! And the reason he wanted to call his mom is that his mom has more holes in one than he has.”

Lippert revealed a thin smile at that tale.

“My mother was a really good amateur golfer in the state of Ohio,” he said. “She had five or six of them in her life.”

Schnake Turnbo Frank partner Steve Turnbo, who has worked on several occasions with the Mazzio’s CEO over two decades, said Lippert’s gentlemanly competitive nature is a vital ingredient in his success – although his modest personality can hide that.

“As a rule I take my customers out to play golf,” said Bill Stokley, the owner Stokley Outdoor Co. “I’m competitive, but I didn’t know how good his golf game was. I was willing to go out and play ‘customer golf,’ you know, not play my best game. Well, it took me about four or five holes to realize he was better than I was. After about four holes I realized I didn’t have to play customer golf – and he still beat me.”

“He’s a triathlete, or was,” said Rollins, whose firm buys Mazzio’s radio and television ad times. “He raced against Lance Armstrong once.”

Greg developed a love of soccer as well as golf, which led him to DePauw University, a small liberal arts school in Greencastle, Ind. While playing on the university’s NCAA varsity soccer team he targeted a career in advertising, working at restaurants and other places to pay his way through school. He also fell in love with speech pathology major Elizabeth Loupee.

“She had lots of energy and personality,” he said. “That was probably what I noticed right off.”

They married one year after his 1977 graduation, which saw him land a job with Procter & Gamble. After several promotions he accepted a new post with Phillip Morris in 1979, working on the struggling 7UP brand.

“Elizabeth is always ready to try different things,” said Lippert, which worked well in a marriage where his career led them from Milwaukee to St. Louis to Miami to St. Louis over just a few years. Their first of three children joined them during that migration.

“She’s always supported me,” said Lippert. “She’s adventurous. Fearless.”

Crisp, clean and no caffeine

Lippert’s first big opportunity came after a 1981 national medical report linked caffeine to cancer.

“Every single drink at that time had caffeine to cleanse the palate, give it a kick,” he said. “7UP never had caffeine.”

Lippert came up with the catchy slogan ended with “Never had it. Never will.” Building on a decade-earlier 7UP ad campaign touting the Uncola, he brought back the distinctive vocal talents of dancer/ actor Geoffrey Holder.

The result: 7UP case sales went from a 4-percent decline to 8- percent growth, increasing annual brand profits by $35 million.

It proved sweet vindication, since the parent company, a seller of cigarettes and beer, at first resisted his health-conscious proposal. Lippert then realized he’d gambled his career on a slogan.

“I don’t know if I would have been able to have done that if I was 40 and had four kids,” he admitted.

But Lippert was able to show how consumers did not see 7UP as a sister brand to Miller Beer. He also could point to Miller Lite’s popular “Tastes great! Less filling!” campaign, which also played on health concerns.

“He does a good job of laying out a vision that the rest of the company can follow,” said Waldrich. “He leads in an enthusiastic way that people can really latch on to. People kind of catch that enthusiasm.”

In 1982, Phillip Morris made Lippert manager of the $1.8 billion 7UP brand and its 494 franchises. At 26, he was the company’s youngest brand manager.

“It was kind of one of those moments,” he said. “I was young enough to not know if I was able to handle those duties. It was exciting to take on a brand.”

But he soon found a better offer.

Enter Ken Selby

Selby’s life illustrated a classic entrepreneurial tale, the young schoolteacher who in 1961 opened a pizza shop across the street from the University of Tulsa. Before the decade was out he had established a string of franchised and company-owned Ken’s Pizza restaurants, building on very exacting quality standards – and an airplane.

“Selby became a pilot to keep up with the stores,” said Lippert. “His plan was to get as many open in a three- to four-state area as possible, as fast as possible. He’ll tell you that if he didn’t have that airplane, he would not have been able to grow that company as quickly as he did.”

As competitors like Pizza Hut and Godfather’s Pizza grew through the Sooner State, Selby adapted. The first Mazzio’s opened in 1979, offering a chewier crust and more toppings than the thin-crust Ken’s pizza pie. Slowly Selby began to transition Ken’s sites into Mazzio’s, but he lacked a central marketing plan to build the brand.

So Selby asked Lippert if he wanted to join the team and create one.

“Their unit count was good, but they had no organization to exploit the concept,” said Lippert. “It was a problem very typical of entrepreneurial growth.”

The offer came as Lippert realized he didn’t enjoy working within layers of bureaucracy. At 7UP, he had 35 people reporting to him in media and marketing positions. At Mazzio’s, he would start with one assistant and a promotion director.

“Ken Selby has always been a kind of ‘Let’s make it work’ leader,” said Lippert. “What Ken was offering was more sphere of control with less players with more ability to impact an organization. His smaller company really needed someone to handle its marketing efforts. And it didn’t take multiple presentations to get things done.”

Lippert also found himself longing to work in restaurants again, which he’d enjoyed in college. The industry is built on service, food and competition – all elements that interested him.

“He’s always been about excellent food,” said Waldrich. “He’s always been meticulous about what kind of food he can deliver consistently in his restaurant. I’ve seen that all the way through that restaurant and Zio’s.”

So Lippert moved his family to Tulsa in September 1984 – and entered the fire.

664-4444

At that time Oklahomans were hoping the Penn Square Bank fallout had ended. But oil prices plunged to $10 a barrel twice in the next four years, fueling continued troubles in the state’s banking, energy, real estate and agricultural sectors.

Pizza offered some protection, since it was and continues to be considered a recession-proof, economical alternative for the family meal. Selby’s 52 Ken’s Pizza shops and 38 Mazzio’s restaurants continued to boast quality products made to Ken’s exacting ingredient standards. While some franchises struggled, and a few changed ownership, Lippert said other franchisees or Mazzio’s itself came forward to buy endangered units, so that none were lost.

But the era also brought new competition for Mazzio’s in the form of TGI Friday’s, Bennigan’s and other invading national chains. More pressing was the rise of Domino’s and other pizza delivery services.

As the director of marketing, Lippert answered by organizing a strategic growth plan that included product and service innovations alongside Mazzio’s brand-building efforts in its core markets.

The company took on the delivery movement by creating its own, pioneering the one-number phone system for the entire company. Lippert said the effort actually exceeded their expectations, reversing negative sales in the down economy.

Managing the 664-4444 system required building a telecommunications center that remains a vital part of the company, enhanced with online ordering five years ago and text-messaging systems this year. The Tulsa facility now handles 60 to 80 call-in orders per restaurant each month, with its flexible staff rising to 120 on Friday nights.

In 1986, Lippert invited all franchises to Mazzio’s first annual workshop, where they could express their concerns and ideas for their annual marketing and growth plans. At later meetings, he added suppliers.

“We all get in one room and typically spend two days going over new products, new promotions – and also labor-saving ideas, insurance, energy,” he said. “We have to have more of a community when times are tough. Over-communicating is a good thing.”

Mazzio’s now holds such meetings three times a year.

“He always had an open mind for new ideas and was always searching for new ideas,” said Stokley. “It’s what always made him different than your typical advertising executive, because you could tell he really, really cared.”

That’s where Lippert’s listening skills and product knowledge allow him to take charge.

“You come to a decision in a meeting and once the plan is approved by everybody, he will say, ‘OK, you do A, you do B,’ and he doesn’t micromanage,” said Turnbo. “He expects everyone to go out and get it done, which makes him very effective.”

Calzone rings and Three Pounders

Further innovation followed as the pizza industry battled with rising cheese and other commodity prices.

As consumer expectations rose for more variety and flavorful foods, so did interest in more healthy foods.

Mazzio’s focused on its primary customer base: mothers with children. As the company plotted product growth and diversity, it made a point to appeal to the woman’s palate with its 35-item-plus salad bar and other options.

“Mom’s the main decision maker,” said Lippert. “If we bypass Mom, we’ve missed it.”

New technologies also improved the speed and quality of pizza cooking ovens and other instruments.

In a starting effort to separate Mazzio’s from other pizza companies, Lippert not only recruited specialists to create new products, but worked with consultants and venders such as Hormel and Paradise Tomato.

That began Mazzio’s evolution from a pizza house to an Italian eatery, adding the Calzone Ring, Three Pounder, Dippin’ Zone, Free- fill Cup and other incentives toward repeat business.

Some were organic productions.

“We started around 1995, and didn’t advertise anything else for more than a year,” Lippert said of the Calzone Ring. “It’s been a 12- to 13-year phenomenon.”

Developed to add a hand-friendly finger food to the menu, the ring took form when Lippert suggested Mazzio’s cut out the middle of their calzones before cooking them – all to fix a baking problem. Trademarking the device that makes the hole (the center ingredients are then separated for later use), the product proved an instant success.

The Three Pounder represented a different type of success – marketing.

“It was a very simple idea,” said Lippert. “We realized the large combo pizza weighed three pounds, and we couldn’t find a competitor that could make the same claim.

“For a lot of people, that’s what pizza is,” he said. “So we just said, ‘We’re not getting credit for selling three pounds of ingredients. Why don’t we tell people?’ That was another advantage that we had that we just weren’t telling people”

The biggest innovation of the era represented a way to grow the value of Mazzio’s Corp.

In 1994, the private company launched Zio’s Italian Kitchen – an original restaurant concept serving a more upscale menu, with a footprint twice the size of a Mazzio’s restaurant. Its sales target: $3 million annual per unit, at a time when Mazzio’s averaged $676,000.

Developed by Lippert, Zio’s soon grew to 18 Mediterranean-decor restaurants from Colorado and Missouri to Texas – but like Mazzio’s, the concept sometimes struggled in a food sector dominated by regional tastes.

Last year Mazzio’s sold the 15-restaurant chain to FMP Inc. of San Antonio.

“FMP had the financial strength to grow it faster than we could,” said Lippert. “Really, they provided us an exit price we couldn’t turn down.”

Moving on

With the menu grown to where pizza makes up just 55 percent of sales, down from 70 percent two decades ago, Lippert ended the 1990s by rethinking the Mazzio’s environment and image.

Now the company’s senior vice president of marketing, research and development, Lippert led discussions on revitalizing everything from table tops and awnings to the logo and name. That four-year project made its 2003 debut as Mazzio’s Italian Eatery, matching limited table service to a well-rounded menu and entirely new atmosphere.

The corporation immediately began to phase in the look at its stores. Franchisees weighed the transformation cost of $125,000 to $300,000, depending on their store’s configuration, against a projected 29-percent return on investment.

Mazzio’s suggested the results would take two to three years to pay off – although Lippert wouldn’t be there to see it. For in 2003 he accepted the chief marketing officer post at Fazoli’s Management Inc., McDonald’s Italian food partner.

Lippert left Selby’s side after deciding he had seen little career growth over the last four years. Joining the Lexington, Ky., office of Fazoli’s gave him another chance to reach his goal of chief executive officer with a large corporation.

“I was happy at Fazoli’s,” he said. Soon promoted to chief concept officer, he oversaw its research and development, culinary training and other tasks. “I enjoyed the experience of working with other brands like Chipotle (Mexican Grill), Boston Market.”

Then Selby came knocking again, wondering if Lippert had an interest in returning to Tulsa.

With family and grandchildren there, and the CEO position open and available, Lippert took the job in 2005. Selby, now 71, stepped into the chairman’s role.

Lippert said his stay at Fazoli’s made him better equipped to be president and chief executive of Mazzio’s than if he had not left. His new contract pledged him to transition Mazzio’s into a high- growth chain, turnaround Zio’s and acquire or develop a third restaurant concept. In his first two years, he increased profits by more than $5.1 million, recording 6-percent growth in 2006 and 2007.

Adapting to the times

Ramping up for today’s depressed time, Mazzio’s will experiment not just with text-message ordering and new point-of-sale systems, but self-serve kiosks and other innovations.

“If you can be the first to do it, you’re going to own it,” said Lippert. “We’ve always said, ‘Let’s try to allow customers to do business with us as easy as we can.’

“Every three to four years, your technology ramps up,” he said. “You have to decide to stay on it or you can get behind.”

At the same time they protect the core strengths of Mazzio’s pizza: its iconic spicy sauce, with more poured on than the competition, topped by more ingredients, on a crust made daily at each restaurant.

“It’s the pizza that brings you back,” said Lippert, quoting a marketing line.

To monitor that, Mazzio’s continues another Lippert innovation, consistent customer loyalty testing. Polling 10,000 a year, the company not only identifies how customers view its overall performance, but rates individual restaurants – now ranging from Georgia to Texas to Missouri and Kansas, with core markets being Oklahoma, east Texas, Arkansas and Mississippi.

In a tight labor market, Mazzio’s also has taken steps to protect and retain its 3,200 employees. Following Selby’s lead, the company encourages a balance between work and family. It also trained workers to multitask, boosted general manager pay above industry standards and designated them as managing partners, able to get five- to seven-year payouts on the profitability of their restaurants.

That has helped keep its general manager turnover to just 16 percent, almost half the 30-percent industry average.

“We never lose our priority of family first, company second,” said Lippert. “That’s something we can do as a regional company that we might not be able to do as a national chain.”

Lippert has added touches of his own, such as “no e-mail Fridays” at the Mazzio’s headquarters. Started in June, this prohibition forces more movement and personal discussions, which he favors. It also stops the late-Friday e-mails that can stress workers over weekends.

“When I first got into business, you had more face-to-face contact,” said Lippert. “I think we’ve lost that in this e-mail- driven contact.”

These steps should help the company continue to grow in today’s “perfect storm” environment, better managing food, labor and energy costs to maximize profitability.

“It’s not going away,” Lippert said of today’s squeezed economics. “It feels very much like the mid-1970s when we had rapid inflation, mandatory energy fees, 50-mile-per-hour limits.”

Back then, a Ken’s large supreme pizza cost $5.25. Today it runs around $15.

That points to the personal income challenge presented by today’s economy: will salaries rise enough to offset increases in gas, food, and other bills?

“That’s the parts unknown,” said Lippert.

One key to overcoming these economic limitations is for the private company to remain focused on its core markets, he said.

“We have survived and done well by doing that,” he said. “I think if you make a decision to go national, you take on a financial risk, decide to go public. It was not our desire to do that.”

Lippert also believes Mazzio’s has plenty of room for growth in those south-central states, including Oklahoma. By respecting its loyal customers and maintaining expected quality standards, the company hopes to grow its repeat business from 25 percent to 35 percent.

“We’re not trying to get a non-user to eat at Mazzio’s,” he said.

Lippert even sees more opportunity for brick and mortar. While the company may have a 70-percent market share in Tulsa, Oklahoma City and other Sooner State areas remain more fractured and split by national chains. That should make room for franchisees as well as company locations.

“We want to own Oklahoma in five years,” he said. “When you think pizza in state of Oklahoma, you should think Mazzio’s.”

SIDEBAR

Resume: Greg R. Lippert

* Mazzio’s Corp., Tulsa, president and chief executive, August 2005-present

* Fazoli’s Management Inc., Lexington, Ky., chief concept officer, April 2004 to August 2005

– Chief marketing officer, August 2003-August 2005

* Mazzio’s, senior vice president, marketing, research and development, April 1999 to August 2003

– Project leader, new concept development for Zio’s Italian Kitchen, 1994

– Vice president, marketing, May 1987 to April 1999

– Director, marketing, September 1984 to May1987

* The 7UP Co., St. Louis, brand manager, 7UP, April 1982 to August 1984

– Section director, southeast USA, Atlanta, June 1980 to April 1982

– Program manager, 7UP, St. Louis, July 1979 to June 1980

* Procter and Gamble, Cincinnati, various marketing and sales positions in Cincinnati, Louisville and Milwaukee, June 1977-August 1984

* Education: DePauw University, Greencastle, Ind., September 1973 to May 1977

Originally published by Kirby Lee Davis.

(c) 2008 Journal Record – Oklahoma City. Provided by ProQuest Information and Learning. All rights Reserved.




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