How I transformed a pizza chain and sold it for $24 million

Michael Logos and Costa Anastasiadis started the Crust Gourmet Pizza chain from humble beginnings in a family-owned restaurant. Now, with dozens of stores, the chain has become one of the most successful franchises in the country.

This week the market learned it had been sold for $24 million to the Retail Food Group, which earlier this year bought the Pizza Capers chain as well.

The pair speak to SmartCompany about building their business and the sale process – along with how their franchisees are taking the news.

So how’s everything been going in the past few months?

Michael: It’s business as usual really, we’re doing very well.

Well, you’ve got RFG on your door so that’s a good sign. How did that all come about?

Probably over the last 12 or 18 months we’ve been approached by a number of different companies. I’m not going to mention who, but it’s easy to figure it out. But mostly we were comfortable with the way our business was going and we saw a lot of opportunity for growth in our own forecast.

Retail Food Group approached us about five or six months ago – just after they announced their intention to purchase Pizza Capers. So we knew about that, and for us it was very much a curiosity thing. We wanted to hear what they had to say.

And what did they say?

Well, we were quite impressed. We were impressed with what they offered, and we started talking about the possibility of the two brands co-existing under that space. Jumping from competitors to co-existing is interesting and doesn’t happen overnight, and we were satisfied they knew what was happening.

We really thought it was a good enough strategy for us to be taken to the next level.

What do you mean by taking it to the next level?

Costa: The space we operate in is the premium gourmet space, and obviously we are restricted to the point where in respect to our numbers, we’re just very selective with regard to where we put our stores.

Obviously our stores are higher performing than the traditional pizza store, so we’re always in a position to reach critical mass and saturation with good performance. We’re very selective with our stores, and that’s why they’re so well performing.

So we’re restricted in that sense and in terms of just organic growth, we had to make a decision about where we could go in our growth in three to five years’ time. So for us it was a matter of working with that and figuring it out.

Did you ever build the business with the intention of selling?

It’s interesting because when we started we had no intention of franchising. That was never on the cards. It was just day by day, let’s make sure we’re doing it right and always be in the mindset that if something came along to benefit the business then we would explore it. Fortunately enough, this came along.

What attracted you to the RFG deal?

We saw what they had. We saw what they had done with other brands. And for us, it’s business as usual and we can run the brand independently.

And how have the franchisees reacted so far?

Surprisingly there was a lot of positive sentiment throughout the whole network. I personally thought there was going to be a ripple effect, and it’s really been encouraging because the feedback I’m getting is that they’re very positive about the whole thing.