Pizza Pizza - Delivering Awesome Since 1967: Supply chain strategy and culinary innovation at Pizza

Delivering Awesome Since 1967:

SUPPLY CHAIN STRATEGY AND CULINARY INNOVATION AT PIZZA PIZZA

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Delivering Awesome Since 1967: SUPPLY CHAIN STRATEGY AND CULINARY INNOVATION AT PIZZA PIZZA

Marcelo Melo, Vice President of Supply Chain at Pizza Pizza discusses the Canadian company’s transformational journey.

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SINCE ITS LAUNCH IN 1967, PIZZA PIZZA HAS OPENED MORE THAN 750 RESTAURANTS IN CANADA AND HAS GROWN TO BECOME A TRUSTED AND BELOVED FOOD SERVICE BRAND LEADER IN THE PROCESS. company prides itself on the quality of its food and serving communities from coast to coast in Canada. The pride is well-earned – Pizza Pizza has a venerable list of accolades under its belt. In 2023, it won Brand of the Year for restaurants by Strategy Magazine and was named as a recipient of the Franchisees’ Choice designation, during the Awards Gala at the 2023 Canadian Franchise Association (CFA) National Convention in Niagara Falls, Ontario. Pizza Pizza also won numerous other advertising awards including three Effie Awards and three Strategy Awards, while also receiving the Canadian Franchise Association (CFA) Diversity 4

& Inclusion Award for its outstanding contribution to the Canadian franchise community.

In recent years, Pizza Pizza has embraced a transformational journey bringing together culinary and supply chain innovation alongside a sustainability agenda which has allowed the business to maintain growth despite broader industry challenges such as the COVID-19 pandemic.

Here to tell us more about the strategies behind Pizza Pizza’s expansion and development is Marcelo Melo, Vice President of Supply Chain.

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Marcelo’s background is in the Food Processing Engineering field and he has worked at Pizza Pizza for 15 years. Marcelo oversees four interconnected departments: logistics and distribution, procurement, quality assurance and regulatory, and culinary innovation.

Introducing us to the company and explaining its operational structure, Marcelo says, “Pizza Pizza is a leading pizza chain in Canada, with over 750 restaurants across the country and we have a presence in almost every province. Most of the restaurants are under the Pizza Pizza brand, about 650 of them, and about 100 are under the Pizza 73 brand in the province of Alberta. Of the 650 Pizza Pizza locations, about 450 are what we call our traditional locations. The other locations are called NTS’s (or non-traditional sites), for instance where we have partnerships with sports teams and arenas, amusement parks, theatres, colleges and universities. The Toronto Zoo for example is a terrific partner of ours.

“One aspect that is very particular to our model with Pizza Pizza is that we control our distribution to over 90% of our stores. All our vendors deliver to our main warehouses – for Pizza Pizza, this is in Toronto, and Pizza 73’s main warehouse is in Edmonton. From these bases of operation, we manage stocks and we deliver directly to our stores on 6

average two to three times per week and rotate the products quickly to ensure freshness for our guests.

About 10% of our distribution is managed by partners in regions where we are in a growing market, for instance in British Columbia.”

Marcelo explains that Pizza Pizza’s commanding presence in Canada’s fast casual food industry is the result of strategic vision and embracing a transformational journey in recent years.

“ONE ASPECT THAT IS VERY PARTICULAR TO OUR MODEL WITH PIZZA PIZZA IS THAT WE CONTROL OUR DISTRIBUTION TO OVER 90% OF OUR STORES. ALL OUR VENDORS DELIVER TO OUR MAIN WAREHOUSES – FOR PIZZA PIZZA, THIS IS IN TORONTO” “Despite the tremendous challenges we’ve all faced in the past few years, the company has done really, really well,” says Marcelo. “In the last three years, we have opened over 130 new locations and we are

deploying an aggressive expansion plan. We have completely revamped our menu in terms of innovation, adding new products and removing some. We call this process our Menu Simplification 7

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Approach – every year we look at things that are moving well and those which are not moving so well, because we need to create space for new ideas and unique and trendy products to bring into our system. As a company, we are known for our innovation and creativity when it comes to our ideas and menu. We were the first in the Canadian market to offer a gluten-free pizza, cauliflower pizza crust, keto pizza crusts and many other examples. Alongside this expansion and innovation, we have also changed our internal structure by promoting many of our people to senior positions in the company.

Every department has grown so we balance these internal promotions with bringing in new talent so fresh ideas are coming into the mix as well.”

Marcelo adds that striving for sustainability has underpinned Pizza Pizza’s transformational journey and permeates the company’s entire operation.

Major areas of focus include energy usage, packaging, distribution and partnerships.

“We consider sustainability in everything we do, from sourcing ingredients, 11

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packaging and equipment to how we operate in our offices,” says Marcelo. “In 2009, we moved into a new head office where we have three wind turbines and a rooftop solar panel that helped us reduce our electrical load by approximately 15-20%.

What’s more, the lighting in our warehouses is all energyefficient lighting that helps us reduce energy usage and our environmental footprint.

and by using recyclable materials we have been able to save thousands of trees every year. It's not only pizza boxes but also the napkins, paper bags and all our packaging items are made from compostable materials or at least recyclable materials.

“In addition, we make sure that all of our vendors and partners have strong sustainability and environmental programmes in

“PIZZA PIZZA SOURCES RECYCLED AND COMPOSTABLE MATERIALS AS MUCH AS POSSIBLE. WE DESIGNED OUR PIZZA BOXES WITH OUR VENDOR AND BY USING RECYCLABLE MATERIALS WE HAVE BEEN ABLE TO SAVE THOUSANDS OF TREES EVERY YEAR” “We make dough in our dedicated facility, close to our head office and we buy our flour, water, oil and all the components in tankers or big totes. This allows us to reduce the total amount of packaging, cardboard and plastic used in our process. Every day, we look for opportunities to reduce wastage in our operations.

“Pizza Pizza sources recycled and compostable materials as much as possible. We designed our pizza boxes with our vendor

place. We have also changed one of our major and long-time vendors recently and moved to a company with manufacturing plants across Canada, rather than their predecessor who only had one plant in Ontario.

By making this strategic shift and decentralising production, we have been able to not only create a contingency plan for this product but also reduce the carbon emissions in our logistics operations for this particular item by over 30%. This is something that we're looking to achieve 15

with all our vendors, with the motivation of how we can be more efficient in distribution firmly in mind.

Related to this, we have also reduced the number of deliveries to our stores to reduce our overall carbon emissions. Our sustainability initiatives are taken very seriously across the company as part of our ESG board, and we have seen great results from our efforts.”

Another core aspect of the recent transformation at Pizza Pizza has been its enthusiastic approach to culinary innovation.

According to Marcelo, this process is driven internally but also weaves in external input from customers and partners alike.

“Early in 2023, we hired a new head chef,” recounts Marcelo. “He joined us with a lot of experience in the industry to head up our culinary innovation, working closely with my teams and the operations and marketing departments. Before changing our menu we look at our marketing sites, analytics and strategy, 16

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concurrently evaluating our menu in comparison with our competitors’ menus and broader industry trends.

We consider all kinds of data and analytics to help us determine if there is anything else that we can bring into our menus that our customers are looking for, including specific menu and flavours for specific regions across Canada.

alone we added stromboli, which is almost like a baked pizza roll, and it is performing excellently for us. We also recently launched our stuffed crust pizzas, with our famous garlic spread brushed around the edge of the crust and Italian seasoning adding a lot of flavour too, another innovative product addition which is very popular among guests.

“We know our customers really well in terms of demographics and we actively seek guest feedback. We love to hear what they have to say and take customers' comments on board – several of these suggestions result in us introducing new products. For example, this year

“Every week we have meetings to discuss our menu and ideas for new products. And innovation is not only an internal process, but many of our vendors are also involved as well. These partners come to us with proposals and we visit their culinary kitchens for

“EVERY WEEK WE HAVE MEETINGS TO DISCUSS OUR MENU AND IDEAS FOR NEW PRODUCTS. AND INNOVATION IS NOT ONLY AN INTERNAL PROCESS, BUT MANY OF OUR VENDORS ARE ALSO INVOLVED AS WELL”

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“CULINARY INNOVATION GOES HAND IN HAND WITH SUPPLY CHAIN TRANSFORMATION BECAUSE VENDORS AND PARTNERS ARE CRUCIAL TO HELPING THE COMPANY MAKE CHANGES TO ITS MENU OR OPERATIONS MORE BROADLY” ideation sessions with their Chefs and Marketing teams. We then take these concepts and test them in our Innovation and Learning Centre, which is a separate site from our head office. If we identify potential new products or ideas, we validate them in our kitchen environment and subsequently share the concepts with our marketing team before making any final decisions on changes to our menu offerings.

Whilst we remain laser focused on our core menu, we have always been opened to explore new opportunities.”

Marcelo explains that culinary innovation goes hand in hand with supply chain transformation because vendors and partners are crucial to helping the company make changes to its menu or operations more broadly. At Pizza

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Pizza, its supply chain transformation has four main components.

“When it comes to supply chain innovation, we pride ourselves on how we’ve built a responsible supply chain,” explains Marcelo. “Firstly, we source as much as we can locally. We like to support local industry partners and industries while also reducing carbon emissions. Secondly, our inventory is incredibly lean, and we rotate inventory every three to four days. Thirdly, as part of our vendor selection process, we have designed a process to ensure prospective partners meet our requirements not only in terms of quality and food safety but also in terms of

sustainability as well. We look at their sustainability programmes and their ESG credentials because these are important considerations for us. Lastly, we try to have as much automation as we can in our warehouses to assist our logistics and operations. We're about to finish the construction of a brandnew warehouse in Ottawa. It will become our most automated site with the best systems in place to control our inventory, reduce spoilage and ensure that we are running efficiently.”

Wrapping up our conversation, Marcelo reiterates that Pizza Pizza’s transformative journey

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in recent years has been made possible through hard work and strategic vision at the company, but it has also been empowered by partnerships. Here, Marcelo focuses on how Pizza Pizza’s warehouse operations and distribution teams work closely with partners in particular.

“We operate with great people in our warehouses who have been at the company for a long time.

They're very experienced and very passionate about our business.

That's a great asset to have as a business because we control aabout 90% of our distribution.

We have our own talented freight,

shipping and receiving crews along with brilliant managers and supervisors in our warehouses.

They do a fantastic job, ensuring that we run efficiently, have a lean inventory and are nimble to meet our franchisee’s expectation of fill rates and prompt deliveries. Together with our vendors, they optimise transportation and distribution, so our trucks are always fully loaded and our deliveries run like clockwork.

I am very proud of our teams.”

To learn more about Pizza Pizza, visit pizzapizza.ca.

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Added VALUE CONTINUING PROFESSIONAL DEVELOPMENT Marcelo embraces education as an ongoing pursuit in his career and highlights a course he took at the University of Pennsylvania in particular.

“As part of the Executive education programme at the Wharton School of the University of Pennsylvania, I completed an eightweek course called Global Supply Chain Management. It was an eye-opening experience for me, and I learned a lot about forging a modern, responsible supply chain management system. It really added value to my career, increased my knowledge and enhanced my networking. We worked with excellent professors and learned about fascinating case studies.”

Connect with Marcelo

Connect with Pizza Pizza

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pizzapizza.ca

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