Famoso Neapolitan Pizzeria: A Case of Restaurant Marketing[1]

Marketing decision-making is a collaborative process in Famoso Inc., comprising of the Marketing Department and the Famoso partners Jason Allard, COO, Justin Lussier, CEO and Christian Bullock, Chief Business Development Officer. The commercial name of Famoso Inc. is Famoso Neapolitan Pizzeria or simply Famoso Pizzeria or Famoso. The headquarters of the company used to be located in Edmonton, Alberta and are now located in Richmond, British Columbia. The company currently has several plans and challenges. The company plans to continue to expand in Canada, in particular in British Columbia, Ontario and Saskatchewan. They are also currently investigating the market potential for Famoso Neapolitan Pizzeria in the United States and they plan to start thinking about what other country markets can provide opportunities for the Famoso Inc. business model.

Creating Customer Value, Relationships, and Experiences through Marketing

In the summer of 2005 Famoso Inc.'s co-owner Mr. Justin Lussier traveled throughout Italy and Naples and fell in love with the mouth-watering fire-roasted pizzas served[2]. Naples is the birthplace of pizza, where eating a margherita pizza is a daily ritual and where culinary traditions in pizza making have gone unchanged for 200 years. After eating at Pizzeria Sorbillo in Naples, Mr. Lussier looked for a payphone and called his friends and future partners, Mr. Jason Allard and Mr. Christian Bullock. They decided that they needed to bring authentic Neapolitan pizza to Canada. Training with the Association Verace Pizza Napoletana, an organization preserving the standards of authentic Neapolitan pizza[3], Famoso Inc.'s owners learned about the unique ingredients and cooking process required.

Famoso Neapolitan Pizzeria was founded on the passion for authentic, fire-roasted pizzas from Naples, Italy. Whether you eat it on the streets of Naples, or inside Famoso Neapolitan Pizzeria, experiencing authentic Neapolitan pizza is an unforgettable experience. The business concept is a franchised fast casual pizzeria that offers authentic Neapolitan pizzas, fresh salads, espresso and gelato/desserts among others. Famoso updated its business model in 2015. Locations became full table-side service and the menu was expanded to include pastas. New Famoso pizzerias have an expanded menu of appetizers, a line-up of six pastas, and feature a centre bar with eight beers on tap and lounge area with high top tables and big screen TVs[4]. The stores provide atmosphere and style allowing for a comfortable meal whether it's a quick lunch or a wine-filled evening[5].

The Famoso pizza is made of "00" Caputo flour and Campania tomatoes imported straight from Italy and other fresh ingredients. These ingredients will help to form a beautiful pizza that is cooked in authentic bell ovens. This is the same way that Italians have been doing it for centuries[6].The'00' in the flour refers to highly refined, low-gluten flour that produces both a soft and a crispy crust, and because of the low levels of high quality gluten, it allows the consumer to digest and feel great. Famosopizzaiolos stretch every pizza dough by hand and no rolling pins or machines are allowed because an authentic Neapolitan pizza is about more than ingredients, it is about the methods. Famoso imports tomatoes from the Campania region of Southern Italy. They contain a lower acidity level and a natural sweetness that helps them caramelize in the intense heat of the fire-oven. Famoso uses fior-di-latte (fresh, whole milk mozzarella), the larger version of 'bocconcini' on all of their pizzas. This cheese was invented in Naples and has a rich creamy texture. Famoso also uses fresh basil leaves. Famoso imports bell-shaped fire ovens from Italy that cooks the pizza at 900 F in 90 seconds[7].In summary, Famoso has a passion for authentic Neapolitan pizza, a great guest experience and being profitable. Famoso's unique and quality-driven concept has been carving a niche in the pizza market nation-wide and has drawn a lot of attention and positive feedback[8].

Developing Successful Marketing Strategies. Famoso Inc. Marketing Strategy

The competitive advantage of Famoso Neapolitan Pizzeria resides in the following. The pizza making process adheres, passionately, to the strict standards of the Associazone Verace Pizza Napoletana. Famoso Inc. imports ingredients - flour and tomatoes- directly from Naples, and every pizza is topped with fior-di-latte (fresh whole milk mozzarella).Famoso Inc. imports bell-shaped fire ovens from Italy that cooks the pizza at 900 F in 90 seconds.After being cooked in fire oven for 90 seconds, the final product becomes a thin-crust pizza that cannot be compared to any pizza available on the market today. The pizza is light, both soft and crispy, and because of the low levels of gluten in the flour, allows consumers to digest and feel great[9].

Famoso's marketing strategy focuses on guest experience in the restaurant, or what they call "4 walls marketing". They place emphasis on marketing inside the restaurant, the hour-and-a-half to two-hour consumer experience in the restaurant is critical to the success of Famoso. It is a priority for them to provide an excellent guest experience when it comes to food quality, excellent service and a memorable atmosphere - the ultimate goal is that the guest leaves happy; an aspect that is easier said than done. Some of the key marketing metrics they use to measure effectiveness are word-of-mouth and willingness to recommend, and Returns on Investment.

To date, Famoso Neapolitan Pizzeria has been ranked as one of Canada's fastest growing companies, by PROFIT 500 guide[10]. Famoso Inc. experienced a revenue growth from 2010 to 2015 of 680%, with approximate 2015 revenues from $2 to $5 million. The company had 16 full-time employees in 2015. Famoso Inc.'s owners have taken the Famoso franchise across Canada; there are currently 29 franchises in Canada (18 in Alberta, 5 in British Columbia, 2 in Ontario, and 4 in Saskatchewan). In 2014, Famoso had 25 franchises. Mr. Lussier has plans to open restaurants in the U.S. in the future[11]. Because of the results Famoso Inc. is achieving, it has received media attention by the Canadian Broadcasting Corporation (CBC), in March 2014. Also, Famoso's pizzas have been ranked the best pizza in Edmonton by Avenue magazine[12], one of the most popular new restaurants in Toronto, Vancouver, and Edmonton by Urbanspoon 2012, and one of the 5 best gourmet pizzerias in Calgary by Where Alberta 2013.

Scanning the Marketing Environment. What Are the Opportunities and Threats for Famoso Inc.? An Environmental Scanning

The industry group that Famoso Inc. belongs to is the North American Industry Classification -72251- full-service restaurants and limited-service eating places. Full service restaurants (NAICS 722511) are "establishments primarily engaged in providing food services to patrons who order and are served while seated and pay after eating. These establishments may sell alcoholic beverages, provide take-out services, operate a bar or present live entertainment, in addition to serving food and beverages. This Canadian industry includes drinking places that primarily serve food"[13].

Some of the key trends and developments, provided by Euromonitor International, in the consumer food service in Canada (NAICS 72251) are detailed as follows[14]:

Currency fluctuations impact domestic consumers but attract tourists.A steep decline in world oil prices had a marked impact on the value of the Canadian dollar, offering mixed blessings for consumer foodservice. The oil-rich provinces of Alberta, Saskatchewan and Newfoundland and Labrador notably faced below-average economic growth and job creation in 2015, with this expected to continue into 2016 and beyond. However, the lower value of the Canadian currency could attract more international tourists and boost exports, and is thus likely to be good for business in many parts of the country. There was notably a strong surge in tourists in 2015, with currency fluctuations making a trip to the country more affordable[15].

Canada is expected to continue to be impacted by currency fluctuations. In 2016, the U.S. Federal Reserve is expected to raise its key interest rate, which will further strengthen the U.S. dollar at the expense of the Canadian dollar, while the latter could remain weak into 2017. Low oil prices are meanwhile anticipated to continue to impact the oil-rich provinces of Alberta, Saskatchewan and Newfoundland and Labrador. A fiscal stimulus package will be introduced in 2016 but this is unlikely to show results before 2017. Domestic consumer spending on consumer foodservice is thus likely to remain subdued at the start of the forecast period. Many consumers are likely to be attracted by price promotions such as meal deals as a result, as they seek to save money. However, rising income disparity is also expected to result in stronger demand for premium options. A weak Canadian dollar is meanwhile set to result in further growth in tourist numbers and demand at the start of the forecast period, with tourists also typically more attracted by more premium options. As a result of these contrasting trends, overall consumer foodservice is expected to see 2% value Compounded Annual Growth Rate at constant 2015 prices[16].

Smartphones and social media encourage shift in strategies. There was a surge in the ownership of smartphones during the review period, with the household penetration of these devices rising from less than 19% in 2010 to a dominant 66% in 2015. This in turn resulted in further growth in the percentage of internet users, with this rising from 80% in 2010 to 89% in 2015. However, the widening ownership of smartphones also changed the way that many consumers use the internet. There was a growing tendency to access the internet while on-the-go, while social media is also seeing soaring popularity in the country. While internet usage is increasing among all groups, millennials were however at the epicentre of this trend[17].

Smartphones are expected to be almost ubiquitous in Canadian households, with a further surge in household penetration rates to almost 84% by 2020. This will also result in widening access to the internet, with 94% of the population using the internet. The widening ownership of smartphones will meanwhile also result in ongoing growth in the popularity of social media websites such as Facebook and Twitter. These trends are expected to have a marked impact on players' strategies within consumer foodservice. There is expected to be a growing focus on social media marketing, both among chains and independents, with the latter benefiting from the low cost and targeted reach offered by this form of marketing. A growing number of the leading players are also expected to offer combined payment and loyalty apps, such as that offered by Starbucks. Widening ownership of smartphones is however likely to result in an ongoing surge in popularity for third-party online ordering sites such as Orderit.ca and Tasteaway.com continue to grow in popularity. These sites are meanwhile likely to attract a growing number of players from across all channels in consumer foodservice, including outlets that previously did not offer online ordering or home delivery. This trend is likely to result in growing competition for 100% home delivery/takeaway, while boosting home delivery sales for fast food, cafs/bars and full-service restaurants[18].

Population ageing encourages focus on health and vegetarian options.The Canadian population is ageing, with the country's median age reaching almost 41-years-old in 2015, up from 37-years-old in 2000. This trend is meanwhile encouraging a stronger focus on health and wellness when eating out, with older consumers being more likely to focus on nutrition. However, there is also a strong health and wellness trend being seen among younger consumers. Vegetarianism is notably seeing growing popularity, with an estimated 33% of Canadians either being vegetarian or cutting back on their meat consumption according to a 2015 report by the Vancouver Humane Society. This trend is proving particularly strong in British Columbia, Quebec and Ontario. Younger Canadians aged 18-34-years-old are notably proving likely to opt for full vegetarianism, while older consumers aged 55-years-old or over are most likely to cut back on their meat consumption[19].

The health and wellness trend is expected to intensify further in Canada in the near future. Younger consumers are increasingly focused on health and nutrition, with this preoccupation often fuelled by health blogs or social media. Population ageing is also expected to contribute to this trend, with older consumers more likely to focus on health rather than indulgence. There is thus expected to be a growing focus on nutrition and health across consumer foodservice in the forecast period. This will benefit channels that have a healthy image, such as juice/smoothie bars, but players across consumer foodservice are expected to seek to offer a widening range of healthy options. Vegan and vegetarian dishes are notably likely to feature more on menus across all channels, while there will also be a growing focus on using Canadian ingredients. Organic ingredients, particularly Canadian, are also expected to gain a greater prominence. A growing number of players are meanwhile likely to join the Informed Dining programme, which encourages the display of full nutritional information, or will introduce such information onto their menus or websites. Many major players will meanwhile make dramatic changes in their suppliers, with McDonald's and Cara Operations for example planning to fully switch to cage-free eggs by 2020 or 2025. From 2018, McDonald's will meanwhile offer only antibiotic-free chicken, while in February 2016 A&W launched the first bacon free from antibiotics and artificial ingredients in North American fast food[20].

Players respond to millennials' taste for adventure and authenticity. Consumers born between 1977 and 1992, otherwise known as millennials in Canada, were an increasingly important consumer group for consumer foodservice during the review period. These consumers are meanwhile often more adventurous in their food preferences in comparison to older consumers, often seeking distinctive taste experiences. They are also more likely to put an emphasis on authenticity and heritage, while conversely also enjoying customisation. Millennials are also very comfortable with technology and tend to source a lot of information online, while also being avid social media users[21].

Ethics and Social Responsibility for Sustainable Marketing. How Can Famoso Inc. Integrate Social Responsibility in its Marketing Strategy? The Role of Personal Moral Philosophy

Famoso is also heavily involved with the community, and they consider this as a critical part of their organization. The aim is to position every store to feel like a local pizzeria, a pizzeria that belongs to the community. Practically, each pizzeria should be involved in local charities, sponsorships and events. For instance, they host community leagues at Famoso pizzerias. They support events that focus on socially motivated issues. In 2013 during the Christmas season, Famoso bottled and sold their tomato sauce for the first time and donated all the money to local food banks in seven cities (voted on social media by Famoso's fans). They also provide sponsorships through food donations. All these activities allow Famoso partners and employees to connect with people on a personal level. Mr. Jason Allard, one of the founders, comments that treating franchisees as restaurant partners and involving them in the process is a crucial part for the successful execution of this strategy.

From a Famoso consumer perspective, having the ability to make ethical choices is an important aspect of society welfare. Those choices are based on the personal moral philosophy of an individual. Moral philosophy is learned through the process of socialization with friends, family, and formal education. This is also influenced by societal, business, and corporate cultures in which an individual finds himself or herself. Moral idealism is a personal philosophy that considers certain individual rights or duties as universal (e.g. right to freedom, right to know, do no harm). Utilitarianism is a personal moral philosophy that focuses on "the greatest good for the greatest number" by assessing the costs and benefits of the consequences of ethical behavior. This philosophy underlies the economic tenets of capitalism and, not surprisingly, is embraced by many business executives and students. Ultimately, ethical behavior rests with the individual, but the consequences affect many[22]. Given the opportunity, Famoso Inc seeks to support activities that can promote ethical choices, as in the case of the Christmas promotion in 2013.

Consumer Behaviour. The Purchase Decision Process of Famoso's Consumers

The consumer food service industry in Canada is a $51 Billion industry[23]. This industry is composed of home delivery/takeaway, cafes & bars, full-service restaurants, fast food, self-service cafeterias, and street stalls/kiosks. Full-service and fast food restaurants represent approximately 85% of the industry. The most preferred restaurant brands by consumers in Canada are as follows. The four most preferred brands of chained full service restaurants are Boston Pizza, Swiss Chalet, St. Hubert, and Pizza Hut. The most preferred brands in the chained fast food category are Tim Horton's, McDonald's, Subway, and A&W.

The role of millennials in food service in Canada is becoming more important. As consumer foodservice players face strong competition and an increasingly discerning Canadian consumer base, there is a growing focus on catering to consumer demands among the leading players, even when this required a degree of reinvention. A&W notably rolled out in 2015 a new store format aimed at appealing to millennials, with this having a "hip nostalgia" positioning. Second Cup also reinvented its store format and brand in an attempt to appeal to millennials. A focus on brand reinvention is meanwhile likely to continue in the forecast period, with McDonald's set to offer customisation and table service from 2017[24].

Growth in consumer foodservice in 2015 was almost entirely driven by chains, with independents seeing overall sales stagnate. Chained players benefit from stronger economies of scale, with this enabling them to cater to consumer demands for premiumization without sharp price increases. The leading chains are thus shifting towards higher-quality, healthier and more ethical ingredients, while independents are struggling to compete. There are some areas where independents are outperforming chains, however, such as street stalls/kiosks and bars/pubs. Millennials in particular often prefer independent outlets in these channels, viewing these as offering greater individuality and authenticity[25].

Chains will continue to drive growth in consumer foodservice in the near future. There is expected to be a strong focus on offering higher-quality and more ethical ingredients, with a number of leading players such as McDonald's for example shifting to cage-free eggs. There is also expected to be a growing focus on convenience, with online ordering and app-based payment systems notably likely to feature increasingly[26].

Understanding Organizations as Customers. How Can Famoso Inc. Seize the Opportunity of Targeting Corporate Buyers?

In general, Famoso Inc. mainly competes in the business to consumer market rather than in the organizational market. The franchising business model allows Famoso Inc. to target other organizations to be franchisees of the Famoso Neapolitan Pizzeria restaurant. The question is whether Famoso Inc. can target corporations or other organizations as potential customers.

Perhaps in an effort to target corporations, Famoso currently offer "Feast Packages". These packages offer a group price considering the number of people in a group attending to a Famoso restaurant. For instance, the price for a 10 to 12 people package is $157, the group can choose 4 items from appetizers and salads and 7 pizzas, desserts and add-ons are available. The price for a 13 to 16 people package is $215, they can choose 5 items from appetizers and salads, and 10 pizzas. The price for a 17 to 20 people package is $283, the group can choose 8 items from appetizers and salads, and 12 pizzas[27].

1.What are the needs and wants of Famoso's consumers?

2.How does Famoso satisfy consumer needs? Does the conventional marketing process of discovering and satisfying customer needs really work for Famoso?

3.Which are some of the uncontrollable forces that impact Famoso's marketing program?

4.Based on the information provided, what business orientation does Famoso Inc. potentially follow