Company analysis piada

COMPANY ANALYSIS Group 2 Kim Pillari Joe DiFrancesco Devin Thomas Nicole Thomas Kyeonwon Kim Nick Ostrander (We hope you aren’t hungry...)

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Overview of Piada

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iada Italian Street Food is a restaurant that was founded in Columbus, Ohio in 2010. This fast-casual Italian restaurant was opened by the Bravo Brio Restaurant group, and was inspired by the charming family-owned food carts and corner markets scattered through Italy. Piada offers a variety of products, with scattered financial performance and a short but interesting history.

Piada is a restaurant designed to give consumers Italian food in a new way that is very customizable. In fact, Piada is sometimes referred to as “Italian Chipotle,” and offers a variety of dishes such as salad, pasta bowls, cannoli chips, soup, and garlic bread. However, the most popular item on the menu is the “Build Your Own Piada”.

A piada is essentially a burrito made with a thin, doughy crust similar to a tortilla (pictured to the right). As people file into line at the restaurant, all of their food is prepared to order. Customers follow a food preparation assembly line for their meal, ensuring they receive their meal exactly how they like it. The first step in making a piada is putting the thin flat crust of the piada on the grill and buttering it. The pasta is added after the crust is warm.

Then, a grill item such as chicken or sausage is added, followed by your choice of sauce, vegetables and other dressings and toppings. The piada is then rolled up into a pocket for the customer to enjoy by eating it with their hands. The price point for a piada is approximately $7, which provides relatively good value for the consumer. According to Kneiszel, the average check at Piada is under $10 and that includes a drink!6 In order to enhance the feeling of a genuine Italian experience, Piada offers Italian sodas to be paired with their meals, featuring flavors like berry and lemon.

The Bravo Brio Restaurant Group is made up of four Italian restaurant brands including Piada, Bravo, Brio Tuscan Grille, and Bon Vie Bistro. One share of Bravo Brio Restaurant Group’s stock is worth around $11.2 The stock has actually been steadily decreasing since July of 2011, where it peaked at $24.62 per share.2 The current market capitalization is approximately 2

$173,100,000, the earnings per share is approximately $0.66, and the P/E ratio is 17.26.2 While it may appear that the Bravo Brio Restaurant Group is not doing anything particularly impressive, the Piada brand has quickly become incredibly successful. Piada started with just one location in 2010, and by 2013 there were 14 locations in Ohio and the surrounding areas. Now, Piada is planning on expanding to other states outside of the Midwest. Piada has been extremely successful and it is anticipated that they will continue to do so.1

Piada captures the under-penetrated and under-developed segment of the Italian fast and casual dining category.9 Its main rivals are that of other fast and casual restaurants such as Chipotle, Panera, Bibibop and Fusian. Yet, unlike Chipotle, Piada has the upper hand in adult beverages and a much wider selection of food options; not only can you completely customize a meal, but for the indecisive customer, the restaurant has created a variety of entree items.9

The concept for Piada started when founder and CEO Chris Doody, also co-founder of the Bravo Brio Restaurant Group, traveled to Italy with his executive chef, Mike Bomerger, where they learned the art of creating the piada.9 Doody also studied some of the best brands in the industry, creating a test kitchen in Columbus, OH, and conducting focus groups that provided feedback on the food.9 Everything about the restaurant has been carefully thought out, from the materials within the restaurants to the menu items.9 Executive Vice President Darren Tristano, at Technomic, a food-industry research and consulting firm, states that, “We continue to see double-digit growth from the fast-casual segment, primarily because not only have sales continued to increase, but the unit expansion is really driving a lot of the sales.”9 Doody is set to take the concept national with new target areas in Texas such as Austin, Dallas and Houston, along with Denver, Colorado, Jacksonville, Florida, and Minneapolis, Minnesota locations possibly to come between 2015 and 2016.9 With only a handful of current locations, Piada “has consumers from California to Charlotte, N.C., talking about its approach to salads, bowls and its signature wraps, or piadas, which some describe an Italian burritos.” 5 Their marketing director, Matt Eisenach, says that their key to success is social media and “finding people on a one-off basis and making them screaming fans.”5 Piada uses social media such as Facebook and Instagram to engage fans, and also has a rewards-focused mobile app that keeps track of credits, rewarding customers with free entrees for frequent visits.5 According to Tristano, the success of Piada depends on two factors, “how well it performs in its Columbus and Midwest core markets, and how well it can translate to other markets in terms of regionalizing flavors and beverages.” 9 He states that, “Overall, their strategy seems realistic to accomplish — given the way we’ve seen fast3

casual grow — and they certainly seem to have the type of brand that can do it.” 9

Piada has some major competition in the fast casual restaurant environment but its’ primary competition is with Chipotle and Panera. Since Chipotle offers the customizable meal and Panera has entrée items that customers can order, Piada creates a union between these two styles of fast and casual dining. These two industry giants both started small and expanded rapidly in the last 1015 years, and Piada is trying to earn a piece of their enormous market share. Whereas the average lunch at Piada is about $8, the average lunch at Panera and Chipotle is about $9. This provides customers a reference point, which could support the claim that Piada is offering better value for consumers. The perceived quality of food is approximately the same for Piada, Chipotle, and Panera, helping Piada appeal to the high-quality food standards set by many of their millennial consumers.

Piada also offers a casual dining environment that many people prefer over Chipotle’s industrial experience. The difficulty is that Chipotle and Panera each have over 1,800 locations in the United States, while Piada has significantly less. The current challenge is expanding Piada to be a larger competitor for Chipotle and Panera, which is why Piada is opening up many more restaurant locations within the coming year.

Who Are Piada Consumers?

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iada’s target consumer is the millennial generation, but they are also targeting Generation Z. By targeting millennials and Generation Z, it is apparent that Piada wants to appeal to the younger consumer.

Most millennials are aged 20-35 years old, and the up-and-coming Generation Z is aged 11-19 years.11 One day, the millennial generation will be spending more money in the restaurant segment than any other generation, which will be beneficial to Piada since millenials are their target consumer.18

In addition, the median annual income of a millennial is $30,000 for women and $35,000 for men.4 This younger consumer is ideal for Piada since the food they offer is fast, casual, and high-quality. Young consumers are often on-the-go, and may not have time to stop and sit-down at restaurants. Piada offers these consumers a convenient way to eat fresh, inexpensive food. A recent study found that 45.2% of 25-34 year old food expenditures is spent away from the home.11 This translates into $6,091 being spent on food away from home each year. Examining the under 23 age group shows that the percent of food expenditures spent-out-home is greater than the 25-34 year old age qsrmagazine.com

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group, but the annual spending expenditures on food away from home is about $2,000 less. This information reveals that younger consumers are eating out more, but want to spend less money eating out then 25-44 year olds.

Piada’s pricing aligns with these younger consumers’ desires to eat away from home for reasonable price, while receiving hefty portions and meals with high-quality ingredients. Millennials desire sustainable farming practices, premium ingredients, and a meal that has nutritious value all at a reasonable cost. Fast-casual dining menu items usually fall between $8-$12 dollars which can be called the “sweet spot” for consumers.8

Consumers believe they are receiving high value for their money relative to what they would receive at fast-food or sit-down restaurants.17

Relative value is extremely important for fast-casual consumers. Consumers perceive fastcasual as satisfying their desires for top quality, low price, positive customer service, and an inviting environment. Younger consumers look for a place they can go where they can stay awhile and chat with friends, or just quickly grab a bite to eat. Piada offers a bright, welcoming environment for consumers where they can leisurely eat their pasta, or sit at a high-top table and enjoy their piada during a quick lunch break. Piada can serve as consumers’ “third place.” A third place is a place other than work and home where people gather to enjoy each other’s company. Piada provides consumers a place to stop by during, or after, their work day that is comfortable, friendly, and relaxing.12

Lastly, Piada consumers are adventurous and creative. The ability to customize each ingredient of their meal is appealing and special. Consumers can enjoy a more generic pasta dish from Piada, such as spaghetti, meatballs, and sauce, or they can indulge in more unique ingredients, such as calamari and zucchini. Millenials and Generation Z like to experiment and try a variety of food items. They take pleasure in eating familiar food, but with a twist.7 Many people make pasta at home, but it is difficult to incorporate the breadth of ingredients Piada offers into their pasta dishes. This customization provides value and creative freedom to consumers.3 In addition, many consumers have dietary restrictions, 5

which makes customization of ingredients even more beneficial.

After analyzing the demographics and psychographics of Piada consumers, an idea of the typical Piada consumer can be created. Piada consumers can be categorized as 20-35 years old, looking for high-quality food and unique ingredients, typically on-the-go, with minimal disposable income. The infographic provided summarizes the consumer demographics for Piada.

Piada’s Current Pricing and Promotional Strategy

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iada offers three types of entrees and customizable meals: the piada, pasta bowl, and salad bowl. The price of entrees varies from $6.50 to $7.65, based on the particular grill items selected and restaurnt locations. Piada also offers a seasonal entrée, the Farmers Market salad, which is priced at $8.95. In addition to their entrées, there are a number of side items, ranging from $1.50 to $4.95. Piada even does catering for a gathering of 6-8 people, charging $49.99 per recipe, which includes one menu item for each member in the group.

With a group of this size, it costs between $6.25 and $8.33 for each guest. Another catering option is for a group between 20 and 200 people. This option costs $11.99 per person and allows each person to order either a pasta bowl or salad while limiting the number of toppings each person may add to their entrée.

Piada has an integrated marketing communications scheme that not only prices their products competitively, but also promotes a rewarding consumer experience and a brand image that resonates with the local community. Pricing for a fast-casual restaurant has been standardized by segment leaders like Chipotle and Panera Bread.

Their staple products (burrito and pick two combo) are priced at $6.65 and $6.29 respectively which undoubtedly played a factor in Piada pricing their staple product, a piada, at $6.50. This price point equates to customers valuing their food more than traditional fast food eateries, but not quite as high as a traditional sit down restaurants. Piada also offers higher priced items for as much as a dollar more.

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These items do not take value away from their staple, but positively affects the value the consumer perceives they are getting for their money.

Furthermore, if you choose to ‘create your own’ with ‘hand-rolled piada’ or ‘pasta or salad’, you can expect a price range between $6.85 to $8.95. The price can vary because of the choice of meat and choice of types of piada. For example, if you choose regular hand-rolled piada with chicken, it costs $7.25. However, if you choose small pasta bowl with chicken, it only costs $6.85.

The consumer promotions that Piada utilizes are designed for consumers to want to come back. Their newest promotion, Piada Rewards, gives the consumer $5 of in-store credit for every $50 they spend.

Each purchase the consumer makes gives them a monetary incentive to bounce back. On a larger scale, Piada ran a promotion that gave the consumer a $25 gift card for simply using their catering service. Catering is intended to feed large masses of people so Piada is getting their product into the mouths of potential customers while simultaneously rewarding the loyal consumer for spreading the brand.

In terms of promotions, Piada currently focuses on their brand’s social media presence. This includes YouTube, Twitter, Instagram, and Facebook.

Through their social media pages, they communicate and create awareness about all of their promotional activities. Piada uploads new content to their social media pages on a daily basis, where it is common for the content posted to overlap with one of their other social media outlets.

The Piada YouTube page is a more unique platform compared to their other outlets. Videos are only posted a few times per year, and the purpose of these postings is to inform their followers more about the company. Currently, Piada’s YouTube page provides fourteen videos, two of which explain the Piada experience in detail.16 Not only do they demonstrate how to order at the restaurant, but they also promote their “chef driven company” that feels like a family social gathering.16 These videos are geared towards attracting customers and informing guests about Piada’s superior fastcasual experience. The focus on quality food is extended in the remaining twelve YouTube videos called “Test Kitchen.”16 In these videos, new side dishes are introduced to Piada followers, as well as where the idea for the dish came from and how it is made. These videos focus on familiarizing 7

customers with the atmosphere and giving customers an experience with the food they consume.

Piada’s stories of culinary inspiration from traveling to Italy are being told through these videos, and help build relationships with customers. Followers of Piada’s YouTube page are aware of what type of food is served, but the “Test Kitchen” videos show followers that Piada chefs are always looking to create new types of food. In addition, posting these videos on a social media platform allows Piada to receive feedback and ideas from followers. This type of interaction is building loyalty with Piada customers and is trying to ensure loyal customers will continue to visit Piada and try their new dishes.

Furthermore, Piada ran a promotion called “March Madness Campaign” on YouTube. They ran this promotion few months ago, and rewarded person who win this video contest with free piadas for life. Being a relatively small company, Piada has also used mobile sampling to extend their brand’s following.

Food trucks with the brand plastered on the side hand out free samples to consumers with the objective of luring new customers into the restaurants.

In addition to Youtube, Piada’s Twitter feed is filled with customer interactions where Piada employees converse with satisfied customers and solve problems for guests that had a poor experience.10 The goal is to extend their communal atmosphere to social media pages and build a friendly brand in the eyes of consumers, especially millenials.

While Twitter acts as a conversational device, Instagram and Facebook act more as an awareness tool for Piada, despite the common overlap in content between outlets.

All promotional contests and sweepstakes take place through Instagram and Facebook.

Piada consistently posts contests where their social media followers receive some type of store credit if they fall in the category of “first to post”.15 For example, Piada ran a

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promotion where the first twenty-five people to post a picture of a particular image were each given a $25 gift certificate to Piada. These types of promotions are frequently used with the goal of getting more people to try Piada. Free credit to the restaurant gives customers an incentive to try Piada even if they have not before, or if they have tried Piada in the past, it brings the customer back to the restaurant for a repeat visit.

When promotions are posted on social media pages with the intent of receiving responses in a short amount of time, it can be assumed that the promotion is geared towards a younger generation. Piada is targeting frequent social media users who will not only see the promotion soon after being posted, but also have the ability to respond with the correct message quickly in order to win the contest. These types of social media users are known to be younger generations that are technologically savvy. In addition to quick response contests, Piada has created promotions where followers send in extended created videos to try and win the contest. For example, Piada started a contest called #PiadaMadness where followers of Piada would post videos of why they enjoy piadas.15 The videos received ranged from raps about Piada all the way to dancing pasta videos. From these videos, Piada chose their three favorite submissions and gave free Piada for a year to the two-runners up and free piadas for life to the winning video.15

Another example of this was their #HowIPiada contest where their followers posted videos about how they eat piadas, explained in a creative video. This contest, however, did not give away free food. Instead, Piada gave away a white scooter to the winner.19 By engaging in these long-term commitments, Piada is improving customer loyalty, but they are also interacting with their customers and humanizing themselves. They are projecting an image that they are able to connect with their customers and engage them on a personal level by encouraging creativity. When this type of connection is being made, Piada is able to create relationships with customers. In addition to the social media contests, Piada has offered high school promotions where the school with the most votes receives a “Free Piada Nightâ€? as well as a $3,000 donation to the school. The different schools receive votes after a customer purchases an entrĂŠe at any Piada restaurant and then casts their vote for which school they are supporting. A strong effort has been made to be the favorite fast-casual restaurant for high school students with their promotions, thus targeting Generation Z. Piada has run other promotions geared towards high school students as well. For example, specific Piada locations have promotional nights where if students come to the specified Piada wearing their high school athletic gear, they receive free food from Piada. Another example is the number of sports camps that are supported throughout the state of Ohio. One of these is the AJ Green ProCamp where all campers were given 9

free lunch from Piada. The persistent promotions towards high school students shows Piada is trying to engage a younger demographic to try and create a relationship with them before they become independent adults who spend their own money. By targeting them in high school, Piada is creating an attraction that will hopefully pull them away from other fastcasual competitors such as Panera and Chipotle.

Furthermore, Piada has raised awareness in the community through a number of initiatives. The Piada team partnered with Leukemia and Lymphoma Society where they started a flash mob at the Easton Town Center. They have also taken part in Pelotonia Races, which raise money to help end cancer. Riders who wear a Piada jersey receive a free piada, or pasta bowl, or salad. In addition, riders wearing any jersey could come into Piada and receive a “Buy one Piada, get one free� deal.

Employees of Piada have also taken part in the ALS Ice Bucket Challenge and posted it to a number of social media sites. Piada has made an effort to engage with the communities that surround their locations help those places become cleaner and safer as well as helping people be healthier and safer. Again, this is an effort to create a friendly brand image that is a part of their communities.

Piada is a company that puts a high importance on community involvement as a means to create exceptional public relations. There are countless examples of Piada spreading their brand image and product in their origin city of Columbus, Ohio. They have used the aforementioned food trucks to set up makeshift restaurants and hand out free meals to breast cancer survivors at the Columbus Komen Race for the Cure and have even teamed with the LGBT community to sell shirts with the proceeds being donated to the LGBT Columbus Pride Parade. Piada has set a high standard for supporting the local community and as a result they have created a positive brand image for themselves.

Advertising in the traditional sense is not something that Piada typically does. Commercials and print advertising are currently not part of their plan because they are not as personal as community outreach, which is what Piada prides itself on. The most direct advertisements that Piada uses are billboards, which tend to be simple and direct. Piada does however use digital marketing to advertise their products and promotions. On Piada’s Facebook page, they post not only foods or menus, but also pictures and videos that relate to their brand. These advertising tactics are less invasive which lets their consumers choose whether or not 10

to be involved. So far with only ~32,000 Facebook ‘likes’ and ~150 Twitter ‘followers’, Piada has some work to do in making their social media presence felt.

Recommended Pricing and Promotional Strategy

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hen looking at the customer funnel, we see Awareness, Consideration, Trial, Repeat, and Loyalty, Piada does a great job focusing on Repeat and Loyalty. Repeat is seen through their contests and “buy-one-get-one” offers and loyalty with their Piada app that rewards frequent customers. Since Piada is such a small but growing business, it has been utilizing the positive wordof-mouth that its loyal consumers have been sharing with other possible consumers. They also do a great job of keeping in contact with their loyal customers by interacting with them on social media and providing a consistently great experience for all of their guests. However, Piada could do some work is at the front end of the funnel, focusing on other deographics.

Although their core customer is someone in the millennial generation, Piada should begin putting some focus on others as well. The simple truth is, there is a large number of people outside the millennial generation, that do not have any Awareness of the brand. Since Piada may not have the required advertising budget to run a successful commercial campaign, we recommend they go with directly interacting with new customers. We recommend that Piada focuses on sending creative direct mail to customers who may not be in their direct core customer segment, by reaching out to the suburbs in established communities. This direct mailer could resemble a wrapped piada on the outside and would unfold to reveal photos of the food and menu item descriptions. This tactic will help bring awareness to a wide variety of people that probably do not know of the Piada brand. It would probably be best if there was also a “buy one get one” coupon on the mailer. This is something that Chipotle does to bring in customers that are not in their target market, and it seems to work. If these mailers were sent directly to neighborhoods in the middle and upper-middle class areas, it could be extremely effective in reaching older demographics. There is no reason to send these mailers out to college campus or urban areas (at least in Columbus) because the awareness is already there. We believe the Consideration and Trial stage of the funnel will be more effective by offering a “buy one get one free” coupon to these consumers outside of the current target. If a couple in their mid- 40’s want to take their two kids out to eat at a fast-casual restaurant, they would be willing to try something new (like Piada) if they have a coupon that provides value to them.

The Repeat stage of the funnel gets a little more difficult. It is important for the consumers to 11

feel like they are being provided with good value in order to get them to return to Piada. Since the quality of food at Piada is already at a reasonable price, the goal is to give that extra little push to get consumers to prefer Piada over Chipotle or Panera.

We believe that a bundle deal will be helpful in this. If Piada were to offer a $0.99 side of cannoli chips or a piada stick with the purchase of an entrée and a drink, customers will be willing to spend more money. This is a great deal for consumers because they can get a dessert or side with their meal without feeling like they are paying a lot extra for it. The mindset of a customer who hears “Would you like dessert or side for 99 cents more?” would be very positive, because the consumer thinks, “that’s not even a dollar, I won’t be able to find a side like that cheaper anywhere else”. This will hopefully drive up the transaction amount and bring customers back for the increased perception in value for their hard earned money.

We believe Piada is doing a great job maintaining their Loyal customers with their mobile app, their social media presence, and their community outreach, but maybe they could do a little better.

We believe the idea of giving away a scooter is something Piada should continue to do occasionally but instead of a generic scooter, a branded scooter could be a great idea. With a Piada branded scooter, in either the iconic grey or orange with a medium sized logo, could be a great way to attract attention to the brand. Piada could develop a unique, fun way to award the scooter to one lucky customer, such as more social media contests (to increase social media presence) or an email signup raffle (to increase mailing database). It will also help raise awareness since the Piada scooter will roam the street, causing other people on the road to see the scooter and be interested to learn more about Piada. This scooter will also provide a talking point to the loyal consumers, while providing positive word-of-mouth to non-loyal consumers of Piada. There is also the “media factor” involved when giving something away or doing something different. If the scooter contest or sweepstakes can attract media attention, it will greatly help spread the brand.

Piada is a great, young, and fun brand. It has lots of potential to grow and become even more successful. We believe that if they were to follow our recommendations to improve their promotional strategies, they would become “the next big thing”.

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