CiCi's Pizza expects big things from smaller units, takeout-only variant

Nation's Restaurant News,  Oct 29, 2007  by Ron Ruggless

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COPPELL, TEXAS -- As more operators work to reduce real estate, development and occupancy costs by shrinking restaurant footprints, CiCi's Enterprises LP is poised to unveil new, scaled-down branches of its 620-unit Cici's Pizza chain in the Upper Midwest by year-end.

"What we are trying to do is give the same experience in a smaller building," said Craig Moore, president and chief executive of Coppell-based CiCi's. The almost entirely franchised chain had long been known for its signature $3.99 buffet price, which recently has grown to $4.49 in most locations for the same reasons prompting the real estate strategy.

"Everybody knows costs are going through the roof," Moore said, "not only for real estate but also the ongoing costs after you buy the property."

Though CiCi's may be alone in taking a nearly 13-percent across-the-board menu price hike, the chain is among a growing number of operators that are reducing their restaurants' square footage through so-called value-engineering techniques. The 11-unit Razoo's Cajun Cafe recently economized by reducing front- and back-of-house space in a store that opened in 2000 in Irving, Texas. Other chains, from Rising Roll in Atlanta to O'Charley's of Nashville, Tenn., are trimming the size of their newer units.

Just over a year ago, CiCi's introduced a takeout-only CiCi's To Go store format, of which there now are eight units. The chain now plans to cut 600 square feet to 700 square feet out of its standard restaurants' dimensions. Branches being launched in Akron and Canton, Ohio, and Detroit won't have the typical 4,000 to 4,500 square feet of most CiCi's units. Moore said the "sweet spot" had been 4,200 square feet, but that will drop to between 3,300 and 3,800 square feet in the new restaurants.

The buffet is expected to shrink from 40 feet, including salad offerings, to about 35 feet.

"We'll shorten the salad bar a foot or so, and we'll take a couple of pizzas off," he said. "We normally present 12 pizzas and we'll knock that down to nine or 10, depending on the building size. We will be presenting less food. It will inherently be a little fresher, because it will turn a lot faster. It will put some strain on production, but we'll have to figure that out."

Seating will drop from the cur rent average of 170 to 180 down to 140 to 160, Moore said.

"We're going to try to get more efficient with the size of the tables," he said. "Anytime you shrink the size of the building, you affect not only your real estate costs but you affect your heating and airconditioning, hopefully your labor somewhat, and things like that."

A smaller CiCi's in Houston, which opened in mid-2006, provided the first steps toward the smaller units, whose signage will remain the same, Moore said.

The new, downsized restaurant "will include some things that will initially look a little bit different for a CiCi's, but it will still have the same offerings," Moore said.

"The back-of-the-house needs to be condensed a bit, but we'll take space from everywhere," he said. "As a guest, you really won't be able to tell the difference. We'll know, because we'll be in tighter quarters."

Depending on the area of the country, CiCi's units average $50 to $70 a foot to build out, Moore said. Building costs range from $210,000 to $300,000 now, and the upfront savings will cut $30,000 to $50,000 off that.

"The utility savings, we think, will be a much bigger effect," Moore said.

Given the constraints of the chain's signature price point of $4.49 for its all-you-can-eat buffet, CiCi's faces a constant challenge to keep costs low, Moore said.

"We think this [downsizing] can help keep us doing that," he said. "We're actually going through a price adjustment across the system with all the costs that have gone up over the past year."

Maintaining unit volumes will be another factor.

"The challenge will be whether we can run enough people through the smaller unit on Fridays, Saturdays and Sundays to keep the volumes up," Moore said. "We also have a lot of party traffic--after ball games and for birthdays--and when you start taking seats out, the normal guests fill up the dining [room] and you will carve off parties."

Moore said CiCi's plans to continue developing its carryout-only CiCi's To Go units.

"We expect another 10 in the next four or five months," he said.

rruggles@nrn.com

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