Valentino's makes expansion push into convenience stores, more cities

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Posted: Saturday, July 13, 2013 12:00 am

Valentino's Pizza may be coming to a gas station near you.

That's the goal for Terry Schmidt, who was hired by the Lincoln-based pizza chain in November to lead its recent push for franchising of its To-Go and Express stores.

Franchising isn't new to Valentino's, but the recent focus on smaller To-Go and Express locations is new, Schmidt said.

The company recently began to focus on the franchising of its smaller operations rather than the large buffets — found in Omaha, Lincoln and several other Nebraska cities — that were the focus of franchising in the past. The latest effort will be focused on the Midwest, particularly Nebraska, Kansas, Missouri and Iowa, he said.

With the newer types of stores, Valentino's joins a push the last few decades to make pizza more of a fast-food option. This push meshes with convenience stores' interest in getting pay-at-the-pump customers to come inside.

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Omaha-based Godfather's Pizza began franchising inside convenience stores, where pizzas are always made on-site, in 1986, said Kathy Johnson, vice president of franchise services.

The company now has 21 of these express locations in Nebraska and 445 across the country, with one in Bennington and another in west Lincoln that opened last week inside a U-Stop. The company also operates three locations out of airports, including Omaha's Eppley Airfield, as well as in colleges and universities, including Creighton University.

Ankeny, Iowa-based Casey's General Store introduced pizza in 1985 to a Waukee, Iowa, store. The company is now the fifth-largest pizza chain in the U.S. and the 10th-largest convenience store chain.

All but maybe 100 of its 1,735 stores now make pizza from scratch, said Casey's vice president of finance, Brian Johnson. Prepared food and fountain drink sales accounted for 30 percent of total gross profits in fiscal year 2012 and about $500 million in sales.

Schmidt noted Casey's success as one reason the idea of adding Valentino's might be attractive to convenience store owners.

“The light bulbs are going off for a lot of these operators that might not have (pizza), and that's where a brand like ours would be appealing,” he said.

Smaller, easier and cheaper to open and operate than buffets, Valentino's To-Go locations operate like a pizza restaurant, offering pizzas, pastas and salads for pickup, delivery and dine-in as well as the daily Express Lunch special, which runs from 11 a.m. to 1:30 p.m.

Some, including the corporately owned store that recently opened in Bellevue, are also offering drive-throughs. The company has plans for another To-Go location in La Vista at 72nd Street and Giles Road.

Express locations, on the other hand, typically operate within an existing venue, particularly convenience stores, and offer pizza by the slice all day as well as pies for carry out.

Valentino's has one Express location in Bruning, Neb., and another on the way inside a Mobil gas station in Ceresco, Neb., expected to open at the end of the month.

“The gentleman out there (in Bruning) has just hit a home run with that thing,” Schmidt said. “He's been our prototype.”

Valentino's has a To-Go store as far away as Rochester, Minn., and buffets in Sioux Falls, S.D.; Ames, Iowa; and Seneca, Kan.

For both types of stores, Schmidt said, “We're trying to speak beyond the Omaha and Lincoln area and get out to the other cities where we don't have a presence yet.”

The Express locations will be focused on “the Cerescos of the world,” Schmidt said, which might not have a large enough population to support even a To-Go restaurant.

Larger cities that already are familiar with Valentino's and are within an eight- to 10-hour drive from the Lincoln headquarters are a target for To-Go franchising, Schmidt and Valentino's co-owner Mike Alesio said. College towns like Manhattan, Kan., also are on the company's radar.

Like Valentino's, Godfather's typically has focused its convenience store locations on smaller towns and travel stops that don't have the population to support a larger restaurant.

Kathy Johnson noted that with pay-at-the-pump options for gas, people aren't going inside convenience stores as frequently to buy other items. Pizza pickups bring them in.

“I think more operators will bring food in because it has a healthy (profit) margin,” she said. “If people are going to Cubby's in Bennington to pick up a pizza and get gas because they're there, then that is successful and the partnership has worked.”

Casey's Brian Johnson said his company also has rolled out sub sandwiches in about 600 stores, after acquiring some with Blimpie stores inside and realizing there was a demand for those, too. The company also is testing pizza delivery in some midsized markets.

“We don't know for certain where it works and where it doesn't yet,” he said. But he said stores that do offer delivery so far have seen a 30 percent to 40 percent increase in pizza sales with no dropoff in in-store sales.

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