Mazzio's Corporation

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Mazzio's Corporation

4441 South 72nd East Avenue
Tulsa, Oklahoma 74145-4692
U.S.A.
Telephone: (918) 663-8880
Fax: (918) 641-1236
Web site: http://www.mazzios.com

Private Company
Incorporated: 1987
Employees: 4,000
Sales: $207 million (2004 est.)
NAIC: 722110 Full-Service Restaurants

Mazzio's Corporation is a privately-owned Tulsa, Oklahoma-based holding company that operates two regional Italian casual restaurant chains, Zio's Italian Kitchens and Mazzio's Pizza, as well as a pizza delivery service. The 17-unit Zio's is the more upscale of the two concepts, offering brickoven pizzas and traditional Italian cuisine. Mazzio's Pizza numbers nearly 200 units, about half of which are franchised operations. Mazzio's restaurants are located in Oklahoma, Texas, Arkansas, Mississippi, Georgia, Tennessee, Missouri, Illinois, Kansas, and Iowa. The company is headed by its founder, Ken Selby.

Selby Meets Pizza in Mid-1950s

Ken Selby was born and raised in southern Oklahoma, then earned a teaching degree from Northeastern State University in 1958. Two years earlier, while on a trip to Chicago, he visited a pizza parlor for the first time in his life. "I had never even heard the word 'pizza' before," he told the Tulsa World in a 2000 profile, adding, "I thought it was the best food I'd ever eaten." It was an experience that would eventually change his plans to make teaching a career.

Selby's introduction was not that unusual for the time. Although pizza had been available for decades, it was mostly limited to major cities, primarily the East Coast and its large population of Italian Americans. However, a pizza craze swept the country after World War II, resulting in a large number of mom-and-pop pizza parlors. Pizza soon attracted entrepreneurs in America's Heartland with bigger plans. In 1958 Frank and Dan Carney opened the first Pizza Hut in Wichita, Kansas, and a year later opened their first franchise unit in Topeka, Kansas. While Pizza Hut was devoted to a table and chairs environment for pizza, Detroit native Tom Monaghan founded Domino's Pizza in 1960 and pioneered the delivery concept. A short time later Michael Ilitch, also from Detroit, founded Little Caesars, which focused on the carry out of inexpensive pizza. While each man would take his concept to a national stage, the demand for pizza was so strong that there remained a place for small pizza shops and regional chains. In 1960, for example, Pizza Inn was launched in Dallas to compete in the pizza restaurant category, and a short time later Ken Selby planted the seeds for his own regional chain in Tulsa, Oklahoma.

After graduating from Northeastern, Selby taught high school chemistry in Missouri before moving to Tulsa to take a position in a local junior high school. To supplement his income he worked part-time as a cook at a small pizza shop. In 1961, at the age of 24, he launched his own pizza business, renting a tiny vacuum sweeper shop in Tulsa for $150 a month, and cobbling together the rest of the operation. He found a used stove, moved in some old tables and chairs, and had a sign that read "Used Cars" repainted to read, "The Pizza Parlor." Using his own recipe for sauce and mixing the dough in a No. 2 washtub, Selby opened for business on Saturday, November 11, 1961. With a ten-inch pepperoni pizza selling for $1.50, he rang up $35.25 in sales that first day.

The Pizza Parlor was a hand-to-mouth business for several months, as the till was raided each day to pay for ingredients. Selby continued to teach chemistry from 8 a.m. to 4 p.m., then baked pizzas until midnight. He hired his first employee, an art student at the University of Tulsa named Bill Williams. For the first three months Selby was unable to pay him, although he did help the young man with his rent and car payments until the Pizza Parlor was generating enough cash flow to allow for a regular pay check. Not only did Williams help make pizzas, he used his art talent to paint a mural of an Italian village on the restaurant wall and even designed the placemats and a pizza man logo that Selby used for several years.

The Road to Expansion in Mid-1960s

For four straight years, Selby taught school during the day and ran his business at night. Finally in 1965 he was able to quit teaching, launch a second pizza parlor in Tulsa, and devote himself to his restaurants full time. He also changed the name of his stores to something slightly less generic than The Pizza Parlor, adopting the name Ken's Pizza Parlor. He also became interested in franchising Ken's, an idea that was gaining currency in the fast food industry with the success of McDonald's and others. In 1966 he sold his first franchise, which relied on his special sauce and thin crust pizza dough. The chain enjoyed steady, although not meteoric, growth over the next decade. By 1975 the Ken's Pizza chain totaled 100 company-owned and franchised units and had spread beyond the Oklahoma borders.

Along the way, Selby began to have regrets about using "Ken's," feeling it was a name more appropriate to an auto repair shop than an Italian eatery. He recalled reading From Here to Eternity during college and an Italian-American character named Maggio. "If I had just thought," Selby told Oklahoma City's World Reporter, "I wouldn't have named those places Ken's. I would have named them Maggio's." In the late 1970s he decided to create a second, larger, more upscale restaurant format that would include the increasingly popular thick-crust pizza and a greater variety of Italian fare and a large salad bar. Selby planned to call it Maggio's, but his attorney soon discovered that a Philadelphia food processor had already appropriated the name. One of Selby's employees suggested he replace the two G's in Maggio's with the two Z's from pizza and call the restaurants Mazzio's. Thus in 1979, Mazzio's Pizza premiered and proved to be an immediate hit with customers. He set a goal of opening 145 company and franchised Mazzio Units in five years, a number he easily surpassed. A major factor in the company's success was advertising. Until the late 1970s, before Mazzio's, Ken's spent no money on advertising beyond direct mail. Selby hired his first employee with marketing experience and began to try running television spots. He told Restaurant Hospitality in a 1988 article: "It was very effective for us. We became real believers because it really moved the needle for us. From that point, we evolved, moving away from direct mail/newspaper advertising to television when we had the option."

In 1982 Selby changed the name of his company to Ken's Restaurant Systems. Two years later he launched a pizza delivery operation called Scooter's Pizza Delivery, electing to use the Scooter's name until the bugs were worked out. In 1987 it became Mazzio's Pizza Delivery. By now, Mazzio's was the company's key brand. The old Ken's Pizza units were now converted to the Mazzio's concept, with only a handful of stores in Tulsa retaining the Ken's name because of long-term market loyalty. Because of this conversion to a single name, Mazzio's increased its buying power in such areas as logo goods (pizza boxes and napkins) as well as advertising. Ken Restaurant System also changed its name to Mazzio's Corporation in 1987. At this stage the company operated 133 company-owned restaurants to go along with 148 franchised units, spread across 17 Sun Belt states. It also began to diversify its menu, adding a number of pasta entrees.

Mazzio's again changed directions in the early 1990s, as it became clear that it was losing dinnertime business to a new breed of casual restaurants, including the likes of Bennigans, Chili's, and TGI Fridays, which offered an extensive menu and a full bar. Selby and his management team decide in 1992 to develop their own Italian cuisine entry in this category, the goal to offer quality food in ample portions at affordable prices, serviced in a comfortable atmosphere. The result of 14 months of effort was the 1994 opening of the first Zio's Italian Kitchen in Tulsa, a 5,000-square-foot-freestanding structure modeled after an Italian villa, capable of seating 250 guests. The concept proved immediately popular and led to larger units opening in Oklahoma City, Kansas City, and Springfield, Missouri. In March 1998 a Zio's opened in Houston and appeared to be well on its way to enjoying success but on the third night of operation, with the restaurant packed, smoke was detected. It quickly became apparent the attic was on fire. Everyone was quickly evacuated and within a matter of minutes the structure burned to the ground. Not only did Mazzio's rebuild on the same location, before the end of the year it opened a second Houston location.

At the time Zio's opened, the Mazzio's chain totaled more than 230 units generating $130 million in sales. However, as Mazzio's was upgrading its menu and Zio's was going more upscale, the company felt that it was forgetting about it's long-term customer base, the value-oriented family market. To appeal to this segment, Mazzio's launched the Pizzetti's $2.99 all-you-can eat concept. It was supposed to attract large families, the members of which would eat varying amounts. Over time the restaurants simply attracted big eaters, and a high volume, low-margin business to begin with became even less profitable. The parent company preferred to invest its money on its other concepts. Pizzetti's units outside of Tulsa were sold, and the handful located in Tulsa were converted to Mazzio's.

During the 1990s Mazzio's made regular changes to its menu. In 1992 it began offering specialty pizzas that instead of a traditional red sauce used an Alfredo sauce. The chain then moved to products with much the same appeal as pizza. In 1994 Mazzio's introduce a calzone ring, essentially a stuffed pizza brushed with garlic butter seasoning and served with a marinara dipping sauce. This item was followed a year later by stromboli. In 1997 Mazzio's began to offer wraps, and in 1998 it unveiled the quesapizza, an ultra-thin-crust pizza that came with a salsa dipping sauce.

Company Perspectives:

Over the years, Mazzio's and Zio's have continually received consumer awards for "Best Tasting Pizza" and "Best Italian Restaurant" from restaurant, news and city publications. This performance is testament to Selby's commitment to use only the finest ingredients in his restaurants.

While the focus of Mazzio's had shifted toward the casual dining arena and greater variety in the menu, it did not neglect pizza and the pizza delivery business. It established call centers in Tulsa and Moore, Oklahoma, to field calls from a single advertised number of delivery and takeout. The orders were then routed to the closest restaurant. In the late 1990s Mazzio's leveraged the power of the Internet and created a virtual private network to link units outside of Oklahoma to the two call centers. In this way, instead of $800 a month to connect to the Oklahoma call centers, an amount that was cost prohibitive, a remote restaurant could now link up at a cost of about $100 per month, making it worth while to join the system.

Late 1990s Upgrade of Mazzio's

By 1998 the Mazzio's Pizza chain numbered 250 units, of which about 110 were company-owned. The decision was now made to elevate the concept and establish it in the casual dining category, albeit a much smaller operation than a Zio's. The company devoted more than two years developing the new concept, which would simply be called Mazzio's, dropping Pizza from the name since pizza would now be just a small part of what the full-service restaurants had to offer, including wine and beer, appetizers, salads, entrees, pastas, and desserts. Because the Mazzio's name was so connected to pizza rather the casual dining, the company had to prove to franchisees as well as to itself that the new concept would work. Hence, it closed a successful Mazzio's unit and converted it into a prototype. Converting a less profitable unit, then producing an increase in sales would not have proven the viability of the new Mazzio's concept. The prototype was a success as it turned out, and the company began to switch the older Mazzio's Pizza shops to the new Mazzio's casual dining restaurant concept at a cost of about $150,000 per unit.

As a private company, Mazzio's Corporation did not have the financial resources to quickly transform the Mazzio's chain to the casual dining format or expand Zio's as rapidly as management would like. In 2000 the company began to expand Zio's beyond the Texas-Oklahoma corridor in which they had been operating, opening eight restaurants. The hope was to have 24 units opened by the end of 2001, but the company failed to reach that number. The company had to contend with pizza price wars that hurt margins. If 2003 was a challenge, 2004 proved even more so, impacted by rising dairy and gas prices, and a faltering economy. Rather than the pizza category growing, companies were simply swapping customers. Mazzio's did better than most of the competition by continuing to update its stores and upgrade its menu. The chain dipped below 200 units in size, but in the long run it was better positioned than if its had stayed the course and remained Mazzio's Pizza. Although not as widespread as management had hoped by this point, Zio's was also succeeding in its markets. Ken Selby was well into his 60s but indicated that he had no plans to step away from the business he founded on a shoestring budget in 1961.