Professional Documents
Culture Documents
Papa Murphy's (FRSH) Franchisees Letters From PMFA
Papa Murphy's (FRSH) Franchisees Letters From PMFA
PMI
BOARD UPDATE
FEBRUARY 2014
PMFA 2014
CONVENTION
Fellow Franchisees,
Hopefully everyone had a great holiday season and is setting
their sights on a year of great sales and hopefully better profits. Just before Christmas all of you should have received the
results from the survey. We asked you to complete the survey to insure the PMFA Board of Directors direction is in alignment with the vast majority of the franchisee community and
secondly to see if the franchisees were in agreement with asking Terry Collins to take a lead position in future discussions
with management. We received 362 franchisee responses
representing over 1,000 stores. There was overwhelming franchisee agreement with the areas we have been focused on for
the past two years. Almost all responses supported our priorities in the 80-90% range. Having Terry Collins take a lead
position in representing us was supported by 91%.
What surprised us the most was the comments that you included. We dont know how anyone who read through all of
them could not come away with a clear understanding of just
how much these problems are not only affecting their businesses but their families and their futures. We provided PMI
management a copy of the survey results and the comments.
Last March a two day meeting between the PMFA Board and
management did not lead to any responsive action by
PMI. The PMFA membership met with Ken and his team at
our July meeting and again did not lead to any action. The
FAB and subcommittees have been in place during these past
two years and discussed many of these issues. If any of
these larger group meetings actually brought about change
we would not have seen the results and the comments that
came from our survey. As a result we asked that we set a
meeting of just four people to start working on answers to
those questions. Ken Calwell, John Barr, Terry Collins (a food
service executive with experience that included being in
charge of all the Pizza Huts and Taco Bells worldwide, founder and former owner of Papa Murphys International) and Lar-
JOIN PMFA ON
FACEBOOK!
Express your opinion or
just ask questions
Must be a PMFA member
Email Scott Bauer;
smbauer4@sbcglobal.net
and join today!
- BOARD UPDATE CONTINUED ry Hodge (a former food service executive with companies like McDonalds and Pepsico, PMFA President for
the past seven years and a former FAB member for 20 years) would meet to try to pave the way for some
meaningful discussions and changes. Management has come back and wants to have another larger meeting that would include some PMFA Board members, FAB members and management team. Our Board
strongly believes those types of meetings will not provide the timely and substantive changes needed to affect the lives of those that were crying out for help in the survey.
The information we have indicates that last year that there were approximately 430 stores that averaged
under $8,000 AWS. In the Eastern Division 241 of their 387 stores (63%) averaged under $8,000 AWS. The
Southwest Division had 114 of their 462 stores (25%) under $8K. The 52 new stores in the Eastern Division
averaged just $6,300. It doesnt take a CPA to figure out that these franchisees cant sustain their business
very long without some significant help.
The break-even point for a new store with a manager is just under $8,000 AWS. For a store with a manager and $175K debt service the break even is approximately $10,800. Again, at that point there isnt any
profit or return on investment. So how does a store doing $5-6K AWS get to break even? There arent any
easy solutions or the problems would not be continuing. You can always do more LSM. You can always
make improvements in your operations through better training practices. A free print drop will help and be
appreciated. Over time these things will help the franchisees situation. But many of these franchisees are
running out of both time and money. They need help now.
We believe we need to offer immediate and significant help to those most in need. We also believe we need
to be exploring bigger and bolder ideas to change our business model to a system where growth is profitable
for both the franchisor and the franchisee. What kind of ideas? Here are just a few to consider.
1.
Move 50% of the ADF to supporting the stores and markets below $8K AWS. That provides
25% for overhead, 25% for production and the rest to markets that need the help the most.
2.
Royalty relief on a sliding scale up to $8K AWS. PMI receives fees and royalties on stores we
are opening at $6,300 AWS and losing money every day. They need to put some of their skin in the
game and give up some of their EBITAD just like they ask franchisee to do.
3.
In these troubled markets we need a new store program like Papa Johns promotes (see attached) to encourage franchisees to take the financial risk and fill out their markets.
4.
Noble Roman is opening up take n bake shops for $150K. If they (or someone else who
comes up with a better product) can open stores for half our cost, their break-evens will put them in
a position to price and promote more aggressively than we can. Unless the new $300K Create design
can generate some very big numbers shouldnt our focus be on a $150-200K model? Has anyone
heard what sales and profit numbers the new Create stores that opened this year are actually generating?
5.
We need to spend some significant money on research to figure out why Papa Murphys stores
cant open in new markets with AWS that at least can break them even within the first 12 months.
The survey made it clear that the franchisees are fully behind Terry Collins taking a lead role with
PMFA. Our Board feels strongly that a meeting between Ken Calwell, John Barr, Terry Collins and Larry
Hodge on down store assistance and the other issues that were part of the survey results could provide a
blueprint of how both the franchisee and the franchisor can achieve mutual success and profitability.
- MESSAGE FROM TERRY COLLINS CONTINUED hitting the press instead of being discussed and dealt with internally will only grow. PMFA isnt promoting
either approach. Actually, it is just the opposite. Nobody wants to see any of that happen. It isnt in the
best interest of the franchisor or the franchisees. We should be able to work this out together.
PMFA would prefer a four-man meeting take place. But in the interest of moving the process forward Chris
Copp, a long-time Portland franchisee and member of both the PMFA Board and the FAB, sent an e-mail to
Ken Calwell suggesting a meeting with just four top management representatives, four FAB representatives
that the FAB would choose and four PMFA representatives. The meeting would have no presentations. Just
12 concerned parties sitting down and trying to find solutions to the very significant issues we outlined. I
am told the FAB has already recognized that a smaller meeting would be more productive.
This approach would seem to be a good-faith compromise that could lead to helping move Papa Murphys
past all this and toward making Papa Murphys stronger and profitable for everyone. Unfortunately, Ken
Calwell quickly turned it down and continues to insist on a larger meeting with over twice the number of
people. WITH OR WITHOUT a meeting PMFA will maintain its focus and continue to push for finding solutions that are right and fair for both the franchisee and the franchisor.
As a founder of PMI and a family member of franchisees owning 26 stores, I care a great deal and want to
see both the franchisees and franchisor prosper and move forward.
Terry Collins
ASAP Printing
Burke
Curtis Restaurant Equipment
Distribution Market Advantage
Fontanini Sausage
Hormel Foods
InLine Media
Mercury Werks
NCR
Pendleton Flour Mill
Pepsico
Pizza Blends
Sygma/Sysco
SILVER SPONSORS
AdArt Sign Co.
Aramark Crest Uniform
Bell Carter Lindsay Olives
The Clorox Company
Directed Equity
Handgards
Horne Group Accounting
KD Kanopy
Kens Foods Inc
Litehouse Foods
MindShare
Mitchell Restaurant Info
Ruth Burke & Associates
S& S Insurance
Secure Connect
Tyson
Valassis
Wasserstrom Equipment
BRONZE SPONSORS
John Soules Foods
Phizzle
CHEESE DISASTER
The cheese market has just exploded. While PMI has issued lots of marketing ideas and has taken control
of our ability to price our products they have yet to talk about the effect this never before seen cheese
pricing is going to have on our profitability.
The price of block cheese has gone from $1.65 a pound January 2013 to $2.34 (1-29-14); the effect on
this is huge in the cost of our pizzas. Under our current cheese contract you need to add approximately
$.16 to $.20 a pound to the block price to get the delivered price depending on where you are. You can
monitor the cheese pricing at http://www.cheesereporter.com/prices.htm.
It is crucial that we are paying attention to our discounting strategy, as food costs are going up. I would
highly recommend checking the accuracy of your scales daily, shredder plates need to be sharp, and not
over ordering. I am also watching the cheese itself as with most products as the price goes up the quality
comes down. Moisture is a big factor on cheese yield and the quality of the final product.
A couple of examples of IFC with some of our upcoming promotions with cheese at $2.50 delivered:
$5.00 Faves IFC for a one topping is $1.98 or 39.6%
The new pan one topping IFC $3.82 or 47.75% for those that are selling it at $8.00
There are two sheets to help you look at gross profit after IFC for all of our pizzas; one on dollars & one
on percentages. [Contact katbarr@pacific.net if you do not have copies]. You may remember these charts
from a few conventions ago when Larry presented it. To use these charts find either the pizza or the price
point you would like to promote and find the intersection. Again this is with cheese at $2.50 delivered. For
Pan Pizzas add $.48 to any pizza since there is no IFC chart for this product as of yet. We will be making
the charts available to our members on a monthly basis.
As an FAB member for many years I have always had a passion for our supply chain. The quality, pricing
and the way we receive our products are crucial to our business. I, like I am sure a lot of you, do watch
the cheese price almost daily. For many years I served on the Supply Chain Committee with different VPs
of purchasing from Bob Graham to the current VP Jeff McNally. We had been very interactive and secured
many contracts for not only cheese but all of our products. One of the things we had discussed back then
was eliminating the convention and ad fund money from our cheese purchases when cheese crossed the
$1.80 threshold. While this is or was at the time about $.05 a pound, those nickels add up. In 2010 the
supply chain committee was disbanded and was replaced with a store contribution committee that has
since been eliminated. The FAB has for the past two years asked that this committee be put back together
and you may recall that in a letter from Ken Calwell last spring he mentioned there would be two FAB
members on this committee. As of today it is not been formed.
I believe that PMI should stop collecting the funds ASAP and put a committee together so we the Franchise
Owners can be aware of all the purchasing contracts we are committed to.
DJ Cavanaugh
Check out this article from USA TODAY: YoungMoney: More cheese, please
http://usat.ly/1eByWin
HOTEL INFORMATION
JOIN US AT THE PMFA
2014 CONVENTION
MAY 4TH 6TH
AT THE
DALLAS/FORT WORTH
AIRPORT MARRIOTT
BE SURE TO MAKE YOUR
RESERVATIONS SOON
To make reservations call Marriott reservations at 1 (800) 228-9290 or (817) 358-1700
and mention "Papa Murphy's"
before April 17, 2014 to insure the rate.
Please note that if you choose to stay at a different resort you will be charged a convention fee of $ 100.00.
Our convention costs are tied to the number of rooms we book. It is more fun to be with the group!
_________________________________________________________________________________________
Phone No.
_______________________________________________
_______________________________________________
No of Stores
___________
Director
Director
Director
Director
Consultant
Remember ~
Only as a team can we be effective.
It's so critical for the franchisees to
have a collective voice