How Kotipizza is Handling 300+ Restaurant Outlets Centrally

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About The Episode

In this episode, we have a very special guest, Heidi Stirkkinen, who wears the hat of CEO at Kotipizza Group Oy, a company that boasts an impressive network of over 300 locations.

As we chat with Heidi Stirkkinen, we’re about to explore the world of Kotipizza, a well-known name famous for its tasty pizzas and great service. With more than 30 years of experience, Kotipizza has become a favorite pizza brand in the Nordic region. Today, we’ll dig deep to discover what’s made them so incredibly successful.

In our conversation, host, Carl Jacobs, CEO of Apicbase, and Heidi Stirkkinen will talk about lots of interesting stuff that you’re bound to find fascinating. Heidi is going to tell us all about how Kotipizza keeps its 300 restaurants running smoothly. They’ve got some really smart ways to do it, and it’s a lesson that can help anyone in the restaurant business.

Read the interview

Carl: Hello, I’m Carl Jacobs, and I’m Co-founder and CEO of Apicbase. At Apicbase, we are building the world’s best food and beverage management platform. But in this podcast series, it’s all about finding answers on how to grow and scale your food service business. I’m talking to numerous experts and industry professionals who are passionate about building a healthy food service industry. Join me on this fascinating journey of entrepreneurship in food.

Welcome, everybody, to this new podcast with Heidi Stirkkinen. She’s the CEO of Kotipizza, and she’s from Finland. And I’m very excited, actually, to let you know that this is actually the first podcast of our second season. So we only started this ten months ago. We already have 13 episodes wrapped up, and I want to thank the hundreds, if not thousands, listeners that have already tuned in to our podcast. So today it is Heidi from Kotipizza. And my first question, as always, is, who are you and where did you come from?

Heidi: Hi, there. Thanks for inviting me. Thanks for having me. It’s a great pleasure. Very inspiring also. So my name is Heidi Stirkkinen I’m the CEO of a company called Kotipizza Group, based in Finland, and we are running three businesses. It’s Kotipizza, which is a fast casual pizza chain. Then it’s a burger chain called Social Burger Joint, Artisan Burgers. That’s about. And then it’s a wholesale and logistics company called Helsinki Foodstock. So that’s the three businesses, three phase our business is standing at.

I joined the company six years ago, two last years, I’ve been the CEO. I started six years ago as the chief operating officer for the company. And Kotipizza has always been in the operative role. Kotipizza, our restaurants, the franchisees, they were the core of my role back then.

So that means you already had a career before Kotipizza. I’m always interested in hearing what is the career path of the current CEO of a large restaurant chain?

Heidi: Yeah, of course. I have been always in various roles of marketing, brand management, in actually durable consumer goods businesses earlier but partly also franchising has been part of it at some point. And then from the role of a, let’s say, marketing manager, brand concept director, I have been moving more and more in the years towards leading a business, and that then has actually led me here, where I am today.

Carl: Maybe also, could you tell us a little bit more about Kotipizza? Because I believe that’s the biggest one of the three brands.

Heidi: Yes, absolutely. So, Kotipizza, we are a fast casual pizza franchise. We are based in Finland and Finland only, so that’s our home turf. We are in operation since 1987 already, so 36 years this year. And actually, we were among the very first to bring franchising as a business model also to Finland today, also very active in the local franchising association. We are the market leader what comes to fast casual pizza in Finland. 305 restaurants today covering the whole country. And we are the biggest, not only in Finland, but also in the Nordic countries as a pizza chain. And all our restaurants are franchised. So led by franchisees, which makes this, of course, very interesting. It’s not only us doing the great work towards the consumers, it’s also as much or sometimes even more all the people who work for Kotipizza in all our restaurants and our franchisees that are leading them.

Carl: Of course, how many people work in total, including franchisees for Kotipizza?

Heidi: Franchisees 280 and then some of them are single unit franchisees. Some of them have several units, up to ten units today. And then in total, they employ approximately 2000 people. So that’s the full staff even today in our restaurant, serving customers. And the pizza, by the way, can we talk about the food as well? Of course, that is the main ingredient. Yeah, I’m jumping into it because that’s, of course, so inspiring always. Thin crust is our pizza. So we are not about any other type of pizza. No cheese, no cheesy crust? Cheesy crust? Yeah, no cheesy crust no. So our crust is thin and very high quality ingredients always. We are very also seriously taking the challenge of being a responsible business operator. And that all has started. All these sustainability questions we have been taking very seriously in terms of our ingredients already since many, many years.

Carl: 2000 employees that are working for Kotipizza, how many are in headquarters? I’m interested in that because I want to see how big is the team that centrally organizes everything and how big is, let’s say, global or countrywide team.

Heidi: We are 72 persons in the Kotipizza group team. So that’s the team then with the specialists, with our own tech department, our marketing department, customer service, finance, et cetera. And with these 72 persons, we then serve and cooperate with the 280 franchisees who then employ, of course, the employees to the restaurants. So none of the restaurant employees are directly ours, the group. And that’s, of course, because of the franchising as a business model.

Carl: And if you talk about franchising and being the biggest one in the Nordics, what is the lesson that if you want to work with franchise, what is the number one thing you need to keep an eye on when you onboard new franchisees or what is the biggest challenge, if I may, in terms of onboarding and finding new franchisees?

Heidi: It’s of course, to find the right set of skills combined with motivation towards this business. And the motivation at its best comes from motivation to serve customers. So to really understand the meaning of quality, actually, and not only quality in products, but quality throughout the whole process towards the customer. And that, of course, goes as far as cleanliness of the restaurant, the behavior of the delivery guy with the car or that type of thing.

So the motivation really to serve customers well and to understand the meaning of high quality customer service, high quality as such. And then that combined with a skill set that yeah. You also need to be quite ready for change. Since I’m in this branch as well as any other, the world is changing quite rapidly. So we have many things affecting us. The digitalization, I mean, the guys and the franchisees who started with us like 25 years ago, it was a totally different world. The pizza was the same. All most at least, of course, that has been developing as well throughout the years. But we still have people with us from those years, early days. And why they have been sticking with us is the fact that they have the correct skill set also towards change.

So do you feel that this is a challenge within the business? I mean, like, making sure that the old franchisees follow the trends? Do you feel resistance?

Heidi: I mean, we are human, aren’t we? Sometimes we don’t like things to change, at least not too rapidly. But I think it’s a skill, even in a person that is very much needed in franchising too.

First of all, of course, you need to be able to understand that this is a form of entrepreneurship where you are dependent on something. You need to be very much aware and willing to obey rules. And you are, in a way, you are renting a concept. You need to respect what is written in the concept, instructions and guidelines, et cetera. And you need to implement it the way it was meant to be. So you need to be also ready for observation. You need to be able to take feedback, do corrective actions when it’s time, but of course, at the same time understand where is your possibilities to make an impact and also have an impact in how the concept is developing.

So that’s, then again, the dialogue between us, the franchisor, and each of the franchisees.

We have a certain process in recruiting new franchisees that we, of course, follow very closely from the first contact to different interviews and, of course, checking the background, checking the financials. And also nowadays test to check that the skills and the ability to learn new things and the motivation are in place. And is there a heavy investment involved in becoming a franchisee for the chain?

Heidi: Usually a new restaurant, of course, depending a bit on what kind of location, what kind of city. Finland also is a big country, so there are smaller cities and areas that are more rural than the big cities. But usually roughly, you could say that €170,000 up to €250,000 You can open a new restaurant.

You just mentioned it’s over 300 outlets actually at the moment Yeah, 305. 305, how do you maintain consistency in such a large network? Because I guess that’s one of the biggest, biggest challenges you have.

Heidi: Yes, you are perfectly correct. It’s, of course, with the help and support of the regional managers. We have six in our team of 72 here at the headquarters and their role is to be the closest contact to the restaurants, to the franchisees. They have their regular rounds and meetings with the franchisees and that’s where it starts, of course.

And then there is an auditing process so very typical to any franchise business, the concept is audited on a regular basis just to see that the implementation is according to the guidelines.

And then, of course, we have several occasions throughout the year where we meet bigger groups of franchisees at the same time in meetings. So I think key is to have the dialogue going on, really, to stay on top of the issues that are currently sometimes bothering, sometimes just somehow actual to this point with the franchisees.

All right, let’s move into another topic. I guess, as with a lot of pizza businesses, I believe you have dine in opportunity, but also delivery and takeout. What is the biggest one? Or are they 50 50?

Heidi: Yeah, we have all three. And now, of course, pandemic blurred the picture for a while a bit, of course, but the situation today is that we have 50% takeout and the other 50 is divided by two. So 25 is delivery and 25 is eat-in. So that’s roughly the picture. But of course, it might vary a lot from restaurant to another depending on the location.

But the main thing is takeout. So people coming to the restaurant and taking the pizza with them. Yes, they are taking it out by themselves, so coming to the restaurant, but they might order it online. So we have an online store, kotipizza.fi, and 50% of the receipts today, 50% of the sales we are making in that channel. So that’s then the customer, of course, punching in the order and there he or she chooses whether he wants to eat at the restaurant, takeout or have it delivered to the doorstep.

Carl: All right, so delivery very important, or at least delivery Yes 25%, take out the other 50%. Can you tell me a little bit about the importance of having the eat-in experience and how important it is on people’s decision to buy a pizza from Kotipizza and not from somebody else? Or is that totally separated nowadays?

Heidi: That’s also a bit depending on the location and also on the occasion. So consumers have, of course, different needs for eating a pizza. Lunch is many times for a consumer, something that during a weekday that they do at the restaurant, so they come and eat in, but then again, the same customer might be the one who orders the pizza for Friday night to home.

So yeah, eating experience is very important. We offer it today in all our restaurants. We are in constant discussion, of course, about future and how this concept will of course be the winner in the future as well. And even though we see a very very strong convenience trend among consumers, which means that they want more and more pizza delivered or takeout also. But at the same time we see that we don’t want to give up eat in. So the experience dining in at the restaurant at Kotipizza is also important. But it might be that we see in some years to come, Kotipizzas that are specializing in takeout and delivery might be located, for example, in a big city center.

Carl: Yeah, I get it because I think you must be in a constant discussion about 25% of the revenue comes from the eat-in. But probably the eat-in areas are the most expensive part of the whole operation. So I guess that’s a constant discussion that you’re in.

So this ordering online, I heard that you are having an app for that and you’re having the whole customer journey in your own hands. Why do you take a decision like that? And why don’t you work together with the Deliveroos and the Uber Eats of this world?

Heidi: The reason why is actually very simple. It’s about owning the value chain and being able to control the customer experience. And basically you could say that’s the starting point for the decision. Then of course, we are in franchise business and we need to be also a responsible franchisor in that way that we understand the meaning of profitability to our franchisees. Of course. And that is of course, one part of the picture that the delivery concept, how we operate it, it needs to be profitable business to our franchisees.

And knowing that at least today, the third party delivery services companies, they of course need to make their living as well and their earnings. And that’s based on a commission. And at least for now, we have seen that the best possible and most efficient, also most profitable way to operate the delivery in our business is to have it in-house.

Carl: We are not afraid. We are just happy, of course, that there is competition. We actually have Wolt and we have Foodora and those are the brands that are present in the Finnish market. I think it’s good that there are options, of course, for consumers to choose from and they can then make the decision based on what they value.

So of course, what we are offering is the high quality and deliver in our own hands. Meaning that of course we want to send the signal as well to our consumers that we take care of the franchisees and the franchisees take care of the business, they take good care of their employees. So that’s about the value chain thing. We want to be also very yeah, we take it very seriously that it’s done well and when you have it in your own hands and we anyway all the time have the dialogue going on and control in a way towards our franchisees about the concept as such then of course delivery is part of that.

Another topic that I’m curious to know more about is dynamic pricing. I believe that you guys are pioneers in this already. Before the pandemic you were already experimenting with this. Can you tell us a little bit about that?

Heidi: Yes, sure, happy to do that as well. We started to cooperate with a Finnish startup company called Pricef before pandemic as I said. And the idea was to find a way and a mechanism to somehow balance out the delivery peak hours. Since our delivery is in-house, franchisees anyway are leasing the vehicles and if you are not able to use the vehicle then it’s in a way a sleeping asset. You anyway have the cost for the vehicle even on a Monday or a Tuesday when you have less deliveries. So we wanted to boost the deliveries from Monday to Thursday and then at the same time somehow to balance the very high peak hours of Friday nights, Saturday nights.

And that’s where we then came up with the partnership with Pricef, started to work with dynamic pricing. And now after these years, we have been learning together with them quite a lot. What kind of algorithm needs to be. Of course that’s based on AI. And usually, of course, the way it works is so that when you have less deliveries, less demand, then of course the price for the deliveries or the delivery fee is less expensive. It’s cheaper for the consumer and then again when it’s peak hour then it’s more expensive. And then of course as the customer you make the choice if you still want to take the investment of having the pizza delivered on a Friday night even though you recognize it’s a bit more expensive right then.

Carl: So how does it then work? I mean is the pizza becoming more expensive or is there a surcharge on delivery that is more expensive?

Heidi: Actually that’s a good point. Our pizzas have the same price whether you take out eat in at the restaurant or have it delivered. But then it’s the delivery fee. We used to work when we started to work with deliveries before dynamic pricing, we used to work with delivery fee anyway and that was just kind of a standard fee, €5.50 or €5.90 Now it’s then the dynamic fee that is in place.

Carl: And what is the percentable let’s say fork where you work in. I mean, what is the low? Let’s say at Friday…

Heidi: It’s from two, aah, did you ask about the fee or the hours?

Carl: No, the fee. The percentable fork of the fee?

Heidi: Yeah. Well, or the real fork? Yeah. In Euros, it’s from €2.90 to €7.90. So that’s how do you call The price fork Those are the lowest and the highest. And then if you make a preorder, it’s €8.90. So that we also have a preorder opportunity for consumers.

Carl: How much is it then €3.90.

Heidi: €8.90

Carl: Okay. Does that also depend on how many pizzas you buy or is it like one delivery fee?

Heidi: It’s one delivery fee whether you buy one pizza, 10 pizzas, 15 pizzas, always one fee.

So you started a long time ago with this concept?

Heidi: Yeah, well, a long time ago, but dynamic pricing, 2018- 2019. So we took the first kind of piloting steps before pandemic, and then during pandemic, when we also actually quite rapidly introduced delivery to all our restaurants. Before that, it was optional. But now then in pandemic, of course, that was the only way, basically besides takeout to sell anything. So that was really a lifesaver for us that we had it already, the concepts up and running, online store and the delivery concept.

And then that’s when we started to, of course, get more and more data. And data is then the other thing. I pointed out that owning the value chain from consumer point of or customer experience point of view earlier. But of course, then today, when the business is so much depending on the online channel and digitalization as such, then of course the meaning of customer data becomes very important. Of course, this way we of course gather.

Carl: Yeah. And that’s sometimes just the thing that the delivery tools don’t give you. It’s the customer insight.

Heidi: Yeah, of course. Well, depending of course I think from the kind of partnerships you have with the companies. But at least when having it in house, you have it all to yourself, and then you can make your choices on how you utilize it for future business decisions.

Carl: So if you then talk about the headquarter team, I guess there is also a big team doing data analytics. We have some people that are very skilled in analytics. Yes. All right. And then if you talk about dynamic pricing, have there been exercises where you try to change the price of the pizza and you say on peak hour the pizza is more expensive? And how does that work or has that worked?

Heidi: That is something we have not yet tested. We have been having some preliminary thoughts around that, and that might be, in a way, phase two in our dynamic pricing. All right. World is changing rapidly. I’m very curious to see how that evolves. Maybe in a few years time, or maybe not even years, we should have a second podcast where we discuss this evolution.

Absolutely. Happy to do that. We’ve talked a lot about Kotipizza. Maybe one last question about that. What’s the ambition of Kotipizza? Is it to stay in Finland or are there international plans?

Heidi: First of all, we want to be the most loved brand for the Finnish consumers and have a very good and big footprint in the Finnish market. Our market share today is more than 30% in pizza. So that’s our main ambition, to really serve well this market. The consumers here today, we are owned by Orkla, the Norwegian big food company, food industry company.

And today one of the twelve portfolio companies Orkla has in its portfolio is a company called the European Pizza Company. And there we have two sister companies, one of them in Poland called Da Grasso and the other one in the Netherlands called New York Pizza. So we three belong to the same company, the European Pizza Company today. And there might be more. So that’s then that’s our link to abroad, which we are very enthusiastic about how the future will be for us.

All right, as I said, we talked a lot about the Kotipizza Group. How about the Social Burger Joint? What’s their story and what’s the ambition with them?

Heidi: It’s artisan burgers. It’s eight units. So we are running this plenty to go, quite large, quite large pizza business and then the very small, still small today, artisan burger business. Actually, there we also have corporate units, six of them and two franchised. Okay. And the ambition is, of course, to grow. We started with the founders, two of them in 2017. So that’s also a pretty new business in our concept portfolio at Kotipizza Group.

All right. And then maybe the final thing that we haven’t discussed is food stock. It’s your own procurement platform?

Heidi: Yes, you are perfectly correct. Procurement company they are and logistics as well. So they are serving all Kotipizza franchises and Social Burger Joint restaurants with sourcing, all the ingredients that are needed in making pizzas or burgers. They are also handling with an outside partner the logistics to the restaurants. And then they are also serving actually customers outside Kotipizza Group but in the Finnish market. So they are specialized in chain driven restaurant or cafeteria businesses. That’s their core logistics.

Carl: All right, so that is not just for the Kotipizza and the Social Burgers for everybody in Finland, or large business in Finland could make use of this. And when did you start with this?

Heidi: Well, 20 years ago. The reason was cost cutting.

Carl: I mean, why not take this part of the chain in our hands ourselves? Or, what is the reason behind having a slightly different business even though it’s adjacent? It’s a different business model.

Heidi: Yeah, it’s a business model of its own, right? And of course, when you have that kind of operation within your group, you are also very much prepared to serve the franchisees and serve the concept also because once you have, let’s say, recipes for pizza, but also, I mean, times are changing, tastes are changing. You need to do quite active as we are also doing very active product development.

And the closer you are with your partner to the source of the ingredient, of course, then the better possibilities you also have to have in doing a very good and active product development. So at least for us, this has been the way to stay on top of what consumers want in a way. And at the same time, of course, they are the partner for our franchisees to secure the best possible price, quality combination for the ingredients.

It’s great to have that kind of partnership, really franchises. I have one final question for you. It might be not the easiest one, but still I want your opinion there. As a CEO of such a large group. What are the trends that you see happening in the restaurant industry at the moment? What are the things that are going to dominate the agenda in the coming years?

Heidi: Digitalization for sure is going to just continue. So this company, as many other restaurant businesses, chain restaurant businesses today, are not anymore only about food, but also very much about tech, technology. So that for sure is going to continue. Of course, convenience we talked about earlier already we see that trend still to strengthen and that of course, it’s very important to understand what that then means to our business and what we discussed with you, the eat in versus other ways of having your pizza to you. And then of course, what we have been very much into the recent years since 2014-15, sustainability and a variety of sustainability questions, not only issues that concern food, but issues about how you treat your people, et cetera, that kind of things.

Carl: Of course, as the CEO of a tech company myself, I’m a bit interested of course in understanding a little bit about when you say digitization, what do you mean with that? What are the core things that you think will be digitized, et cetera?

Heidi: Since we already have an online store, I think that’s something that there’s not going to be a revolution in that sense in our business model. But I think more and more of the orders we see coming through online channels and there perhaps we need more channels than we have today.

So at least that and at the same time then I think we will more and more put focus here also resource wise at the headquarters to data and business analysis with data. So that’s then the combination.

Carl: And when I hear you talk about digitization, many of the things you mentioned are front-of-house or customer oriented. How about the back-of-house. How digitized are you there?

Heidi: Actually, there is a very interesting project starting already pre-phase, very much ongoing, where we also want to bring more digital tools to our restaurants and especially kitchen. Today already the delivery guys, for example, they are working with the delivery app and in that way we can keep our customers, the delivery customers understand when their order is coming, but then, of course, the very traditional cash register is most probably disappearing.

And then of course, since the focus at the restaurant to make the business profitable needs to be a lot on the efficiency, efficiency of the operation, starting with the staff planning and also then of course, how you run the kitchen process and how you prepare the food according to the recipes, et cetera. And there we haven’t yet utilized all possible digitalization all right means that we will do in the future.

Carl: Well, that may be interesting also to have a conversation after the podcast and see how maybe Apicbase can mean something there. But for now, I want to thank you because we are already 45 minutes in the podcast. Thank you very much for that. And I think it was a very interesting one, a very good one to start a second season. Thank you very much Heidi for joining me. And I wish you the best of luck in deploying the rest of the business.

Heidi: Thank you, Carl.

Carl: Thank you. Goodbye. Bye bye.

This webinar is best for:

What you'll learn:

Guest & Host

Heidi Stirkkinen

CEO
Kotipizza Group

Carl Jacobs

Co-founder & CEO
Apicbase

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