Speedy Pizza Chain Expanding

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SAN FERNANDOVALLEY BUSINESS JOURNAL
LOS ANGELES • GLENDALE • SANTA CLARITA • BURBANK • CONEJO VALLEY • SIMI VALLEY • SAN FERNANDO • CALABASAS • AGOURA HILLS • ANTELOPE VALLEY
THE
Volume 20, Number 25
COMMUNITY
OF
BUSINESS
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December 14 - December 27, 2015 • $4.00
Developer Bets
On Home Run
Up Front
REAL ESTATE: Cusumano moves
on residential project in Burbank.
By KAREN E. KLEIN Staff Reporter
Mounties light up
the night with
Woodland Hills
invention.
It’s been a busy year for Burbank’s Cusumano
Real Estate Group, signing a 100,000-squarefoot tenant in Thousand Oaks in the second quarter and then breaking ground on its Whole Foodsanchored Talaria at Burbank mixed-use project
early this month.
Cusumano also has major projects in Kern and
Orange counties and is not slowing down on its
home turf of Burbank, where it has a $200 million
mixed-use project, Premier on First, on the drawing board.
That premium residential rental community
PAGE 3
News &
Analysis
Filter maker takes
tax credit for
investment in
gear, personnel.
PAGE 5
TheLists
The Valley’s big
hospitals, ranked
by net revenue.
PAGE 10
Hospitals ranked
by staffed beds.
PAGE 13
MAIL TO:
PHOTO BY DAVID SPRAGUE
Please see REAL ESTATE page 34
Plushed: Tom Delaney, marketing director at Funrise, with line of stuffed animals for the holidays.
Toymakers Pile It On
Licensed products expected to be ‘Force’ in sales
By CHAMPAIGN WILLIAMS Staff Reporter
T
he Force is with San Fernando Valley toy
companies this holiday season, as blockbuster movies drive sales with a flood of
licensed merchandise.
Both the studios that created the films and
the toy distributors who market them are located
in the greater Valley region. And although
media-inspired toy sales are nothing new,
experts agree that this year’s movie crop lends
itself to merchandising.
None more so than the much anticipated Dec.
18 release from Burbank’s Walt Disney Co.,
“Star Wars: The Force Awakens,” which is
reportedly expected to sell over $3 billion in consumer merchandise.
Hollywood hits released earlier this year will
translate into consumer merchandise for the holidays, too. They include Universal Studios’
“Jurassic World,” Marvel Studios’ “The
Avengers: Age of Ultron” and “Ant-Man” as well
Firm Locks Up
Building Sites
SECURITY: Former deputy now
polices construction projects.
By STEPHANIE HENKEL Staff Reporter
Construction sites are littered with expensive
bulldozers, copper wire, stacks of reinforcing bars
and other materials and equipment that often cost
hundreds of thousands of dollars.
Most of those supplies sit behind a flimsy chainlink fence with little to no oversight, which raises the
question – who is watching all this stuff?
Kevin Wright Carney, who served 23 years
with the Los Angeles County Sheriff’s
Department, feels his new construction security
consultancy, Silver Gauntlet International, is
Please see SECURITY page 33
Please see MANUFACTURING page 31
SPECIAL REPORT YEAR IN REVIEW
Chain Offers Slice
DINING: PizzaRev in growth mode
with experienced franchisees.
By CHAMPAIGN WILLIAMS Staff Reporter
When PizzaRev co-founder Nicholas Eckerman
and his three business partners interview potential
franchise operators, they want one defining characteristic – previous restaurant experience.
“To have operations that can support growth, we
believe our franchisees should open multiple units,”
Eckerman said. “The infrastructure calls for them to
build more than one PizzaRev and we don’t have any
franchisees committed to less than three locations.
PHOTO BY DAVID SPRAGUE
Please see DINING page 32
Chef: Eckerman at Woodland Hills PizzaRev.
Equipment Financing Solutions
to help grow your business
*Bank Director Magazine, 2015. Among Banks with $5 Billion to $50 Billion in Assets.
CVB Financial Corp. is the holding company for Citizens Business Bank.
BIG STORIES: A look back at 2015, with recap
of stock market standouts, the year’s best
photos and a timeline of some of the Valley
region’s major business developments.
BEGINNING ON PAGE 15
R A N K E D
BANK
TOP 5
IN THE U.S.*
Core Values
Bank Director Magazine, 2014 & 2015
www.cbbank.com/equipment
Equipment
Financing
Equal Housing Lender | Member FDIC
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32 SAN FERNANDO VALLEY BUSINESS JOURNAL
DECEMBER 14, 2015
PHOTOS BY DAVID SPRAGUE
Pie Factory: Workers customize pizzas with an assortment of 30 toppings, followed by a stint in a 900 degree oven. They emerge in three minutes ready for the box.
Dining: Speedy Pizza Chain Expanding Quickly
Continued from page 1
It’s absolutely important that our operators
already have experience.”
The franchisee interview has become a corporate ritual at PizzaRev. Only three years
since its inception in 2012, the Westlake
Village company has 28 locations – 18 corporate restaurants and 10 franchises – the majority of which are in Southern California. It will
open its 29th restaurant, in Glendale, before
the end of the year.
Now, the management team is eyeing the
potential growth of the franchise model. The
fast-casual pizza chain has 150 franchises
under development and will further expand its
national presence into Washington, D.C., and
across 16 states including Arizona, Georgia
and Nevada starting next year.
PizzaRev and its competitors have reinvented Chipotle Mexican Grill Inc.’s assembly
line for customizing personal size pizzas. The
11-inch pizzas are cooked at 900 degrees in a
stone-bed oven for three minutes. Customers
can choose from an assortment of 30 toppings,
sauces and cheeses for a flat price of $8.25.
With national expansion in mind, the company plans to open 30 to 35 locations next
year, including the chain’s first entrance into
New York, Massachusetts, Ohio and
Tennessee. The rapid expansion comes with
strategic support and backing from
Minneapolis-based Buffalo Wild Wings, a
minority equity investor.
“We consider them a strategic partner and
they are assisting us in our growth and guiding
us as a partner,” Eckerman said.
Still, a fast build-out can be tricky. Though
the pizza chain already has 10 franchises in
California, Colorado, Minnesota, South
Dakota and Utah, its aggressive expansion
plans come with the challenge of launching the
brand into new markets.
David Gurnick, franchise attorney at
Encino law firm Lewitt Hackman, said it’s
important for a franchiser to develop critical
mass in a particular market before expanding
into neighboring regions.
“They’re based in California. It’s going to
be a challenge to watch over New York, Ohio,
Texas, and to have uniformity and a good supply chain while remaining thoughtful about the
needs of their franchisees,” Gurnick said. “My
recommendation is that you grow market by
market at least until you have infrastructure.”
International pizza
PizzaRev was co-founded by Irv
Zuckerman, Rodney Eckerman and their
sons Nicholas Eckerman and Jeff Zuckerman.
The foursome opened their first location in
2012 in Northridge, and when the concept
Fast: Nicholas Eckerman at the PizzaRev restaurant in Woodland Hills. The chain has 150 franchise locations in development.
proved a success the co-owners opened a second restaurant in Studio City within the year.
By 2013, PizzaRev had gained the attention
of Buffalo Wild Wings. Founded in 1982, the
public company is traded on Nasdaq and has
more than 1,100 domestic and international
locations in Mexico, Canada, Saudi Arabia and
the Philippines.
“Buffalo Wild Wings announced years ago
that they were going to invest in emerging
brands and they really believe PizzaRev is in
the sweet spot of the restaurant industry,”
Nicholas Eckerman explained.
With the larger chain’s financial and operational support, PizzaRev started franchising
and expanding into Colorado, South Dakota
and Utah in 2013 and 2014.
Company revenue for this year will be
more than $25 million, according to
Eckerman, and next year will mark the chain’s
first step into international markets. PizzaRev
will open a restaurant in Mexico by the first
quarter of next year, though the specific location was not disclosed.
The franchise deal was signed in August
with restaurant operator Grupo Galeria in
Monterrey, Nuevo Leon, which owns an extensive restaurant portfolio in Mexico – including
42 Carl’s Jr. locations, five IHOPs and four
Buffalo Wild Wings.
The franchise agreement calls for 20
PizzaRev restaurants to be developed in
Mexico City and the states of Mexico, Nuevo
Leon and Coahuila.
Eckerman said PizzaRev has a deal in place
with a second franchise group to bring a total
of 40 locations to Mexico.
“Our business plan focuses on an important tenet – we will open restaurants that are
best to market, not first to market,” he said.
“Growth in terms of sheer number of units is
not our priority.”
Multiple-unit franchisees
PizzaRev franchisees must open a minimum of three locations and pay a franchisee
fee of $30,000 for the first location and
$25,000 each for the subsequent ones.
Also, they must bring restaurant experience
to the table. For example, Southern
Restaurant Holdings in Atlanta, a new franchisee that signed an agreement in October to
Our business plan focuses
on an important tenet – we
will open restaurants that
are best to market, not first
to market. Growth in terms
of sheer number of units is
not our priority.’
NICHOLAS ECKERMAN,
PizzaRev
develop 16 PizzaRevs across Tennessee and
northern Georgia, is also an operator of eight
Steak n’ Shake restaurants. Another franchisee
is Phoenix’s Fire Em Up, which operates
more than 60 Dunkin’ Donuts locations
Please see HOSPITALITY page 33
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DECEMBER 14, 2015
SAN FERNANDO VALLEY BUSINESS JOURNAL 33
Security: Business Has Construction Sites in Sight
Continued from page 1
the answer. The Thousand Oaks company specializes in job site security and theft prevention
for the construction industry. Carney hopes
that by creating and implementing tailored
security plans for construction sites, he can
change the industry’s mind-set, which tends to
enlist security only after a theft has occurred.
“It appears to be the practice in the construction industry to roll the dice, because
security comes out of their bottom line on a
project,” he said. “They don’t implement it
until they feel the need is there.”
One reason construction security has
become an issue is the high price of metals,
particularly copper, which is used for electrical
wiring and plumbing pipe. The other main targets for thieves are equipment and tools.
National Equipment Register, a company
that maintains a database of heavy construction equipment, estimates the annual cost of
equipment theft ranges from $300 million to
$1 billion, with most estimates coming close to
$400 million.
Site security
In 2008, Carney transitioned from law
enforcement to security when he joined
Pacific Protection Services Inc., a guard service in Woodland Hills. On the job, he saw firsthand the problems with pilfering at construction sites. It inspired him to write his third
book, “Securing the Outdoor Construction
Site: Strategy, Prevention, and Mitigation.”
The book became the premise for Carney’s
business, which he launched in June.
Silver Gauntlet also developed out of
Carney’s consulting work at Pacific Protection,
and his new company aims to serve construction
and insurance companies through vulnerability
studies, site assessments and security plans.
On a typical job, the company will visit a
construction site and determine what it needs,
such as lighting, fencing, alarm systems, security cameras and/or guards. Silver Gauntlet will
then identify a point person within the client
company who will regularly be at the site to
help execute the plan. Once a plan is approved,
Silver Gauntlet will help implement it and provide support throughout construction.
The cost for this concierge-style construction security is around $1,800 a day plus
expenses. Most jobs take between one to five
days, and additional costs might be incurred if
other steps are needed after a plan is in place.
Silver Gauntlet also works on cases after a
theft and helps companies revamp their existing security plan with supplementary steps to
limit losses.
Although the company was established in
PHOTO BY DAVID SPRAGUE
Secure: Former deputy sheriff Kevin Wright Carney now runs construction security firm Silver Gauntlet in a Thousand Oaks office.
June, Carney waited to begin marketing the business until October when the book was published.
The marketing push includes social media, websites, speaking engagements and a presence in the
Blue Book Building & Construction Network, a
directory of commercial construction companies.
But the company must deal with competition from traditional security firms as well as
the doubts of contractors who are concerned
primarily about reducing costs during the job.
Scott Caswell, a real estate broker for
Delphi Business Properties Inc. in Van Nuys,
said that even when construction companies
hire guards, property is often stolen. Human
error still occurs, and then a construction company loses money both from the security
expense and the lost property.
“The cost of security to monitor a construction site is very expensive,” Caswell
said. “And sometimes those guys are less than
phenomenal.”
But Silver Gauntlet hopes to separate itself
from competitors through professionalism.
Carney has put together a team of security specialists comprised of himself, Pam Graham and
Paul Scauzillo, who all belong to the American
Society of Industrial Security International, an
industry professional association.
Graham, a retired FBI agent, oversaw several construction projects at the federal building in Los Angeles and was responsible for
physical, personnel and IT security issues,
according to her company bio. Scauzillo and
Carney attended the sheriff’s academy together and both held management positions at
Pacific Protection. Scauzillo specializes in
metal theft prevention.
“Metal theft in the United States is the most
frequent,” said Scauzillo. “From all sites,
including construction, it’s a billion dollars a
year (in losses).”
‘Dirty’ politics
Fifteen years prior to the inception of Silver
Gauntlet, Carney planned to enter politics until
his life took an unexpected turn when he was
charged with 16 counts of felony child
molestation. He was acquitted on four counts,
and a judge dismissed the case after the jury
was deadlocked on the other 12 counts favoring acquittal.
Carney was never convicted of a crime, but
the episode changed the trajectory of his
career. It caused him to resign his elected seat
on the Palmdale City Council.
“That is part of the dirty game of politics,”
he said. “It was done strictly for political reasons, and I’m not going to put my family
through that again.”
The ordeal cut the ex-deputy’s political
career short but he hopes his new venture will
show the bottom-line value of security for contractors and insurers.
“You get what you inspect, not what you
expect,” said Carney. “You can have the best
security plan in the world but if you don’t go
out, take a look at it and see how it is being
implemented, you may or may not get what
you are planning to get.”
Hospitality: Franchising Comes With Side of Risk
Continued from page 32
across four states. Fire Em Up signed an agreement with PizzaRev in November to develop
restaurants in Arizona.
Altogether, PizzaRev said it has signed
agreements with 18 major restaurant operators
to spread the brand across the country.
“We considered getting into the pizza business for quite some time, but it was not until
we discovered PizzaRev, and its revolutionary
take on pizza, that we were inspired to finally
take the leap,” said Bert Hayenga, a principal
of Fire Em Up, in a statement. “It’s the right
time, we have the best team in place and
PizzaRev is the perfect brand to help us introduce a new pizza experience to Arizona.”
Andre Vener, co-owner of gourmet hot
dog restaurant Dog Haus, said franchising is a
good way to grow rapidly into new markets
without taking on debt from bank loans or losing equity by taking on investors.
Like PizzaRev, Pasadena’s Dog Haus is
looking to expand nationally using the franchise model next year. The eatery has 18 stores
in eight states and 125 franchises in the works.
“We figured we could grow quicker and
wider across the nation if we went the franchise
route. We wanted to grow our business as quick
as possible and it’s a way to partner with people
without actually having a bunch of investors or
shareholders,” Vener said. “Now is the time to
move. We definitely want to be the Chipotle or
PizzaRev of the hot dog gourmet sausage.”
Growing pains
PizzaRev has thrived in a niche industry
with ample competition in Southern
California alone. Some competing fast-casual
pizza concepts include Blaze Pizza in
Pasadena, 800 Degrees in Los Angeles and
Pieology in Rancho Santa Margarita. It also
competes against traditional pizza-delivery
chains such as Domino’s Pizza Inc., Pizza
Hut and Papa John’s.
Despite the established business model, the
leap into mass franchising carries risk. Lewitt’s
Gurnick believes developing a solid distribution, marketing and operational infrastructure
is key to sustaining growth.
“The risk in growing too fast is a franchiser can get more franchisees than they are able
to watch over, and won’t be able to deliver the
service that’s needed,” he said. “There are
unique circumstances in each market – leasing,
zoning and customer preference – and you’ll
have better odds if you develop a critical mass
(in each market).”
For a fairly new franchiser such as
PizzaRev, protecting the integrity of the brand
is imperative.
“Putting the right people and systems in
place to meet our growth demands is the key
to avoiding growing pains,” Eckerman said.
“From the time our franchisees sign their
franchise agreements until they open their
doors, they engage weekly with our franchise
department.”
PizzaRev plans to continue to develop its
corporate footprint in addition to franchising,
and has two corporate-owned locations slated
to open next year in Westlake Village and
Thousand Oaks. Eckerman said that continuing to open corporate locations will further
support the company’s franchisees.
“We have the breadth of first-hand experience to guide franchisees through building
and growing successful PizzaRev restaurants,”
he said.
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